The Role of Art & Antique Dealers An Added Value
Other dealers acted exclusively as agents, with little or no inventory held, primarily functioning as a middleman between sellers or artists and buyers. For some, their main revenue streams were built around selling consulting services to collectors, governments and institutions, with no requirements for inventory.
The most common model by far, however, was for dealers to engage as a principal or agent on a case-by-case basis. Dealers reported taking occasional consignments depending on sellers’ wishes and the particular context of the sale. For example, if a seller was interested in waiting for the highest possible price, a dealer might consider buying from them outright and paying a lower, wholesale price.
There have also been significant changes in the strategies pursued by dealers over time. In the larger markets such as the US and UK, many dealers commented that the majority of dealers were collector-dealers or principals up to the 1980s, but as prices spiralled, purchases in some sectors became unrealistic which gave rise to co-purchases. In a co-purchase agreement, a dealer pooled resources with other dealers or alternative third parties, and then shared the profits post-sale with the same group. Some dealers commented that these arrangements rose in frequency during the 1980s and 1990s, especially in certain sectors such as Old Masters, but in some cases became unmanageable with multiple parties involved in one transaction. Therefore, in certain sectors, some dealers were forced to become agents to continue making money as prices were too high and risks too substantial to conduct their business in any other way.
A number of dealers have also fluctuated between acting as principals versus agents over time, depending on external conditions such as movements in the economy and the availability of credit. A few of the dealers interviewed moved to dealing a larger fraction of their business on consignment during the most recent recession from 2007 through 2009 as bank credit dried up and private financing became more difficult.
Finally, there are also dealers that take a pragmatic approach to inventory based on risk assessment. For example some Contemporary dealers buy pieces on commission from an artist initially, but as they become more confident with their work, they buy them outright. Some differentiate by sector (for example buying outright in antiques, but on commission in Contemporary and Modern due to resale royalties) and by value level (for example buying outright at lower price points and on consignment at higher levels).
Whether a dealer acts as agent or principal to a transaction is important not only in terms of their inventory, but also regarding their responsibilities and legal duties to the buyers and sellers they act on behalf of. A dealer acting as an agent has strict legal and ethical responsibilities with regard to their principal, and must act in their best interests in any transaction. In major art markets such as the US and UK, a dealer acting as an agent has fiduciary duties to the seller or buyer they are acting for, implying that they must not only seek
28 Historical & Future Perspectives
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64