On one wall there will be a triptych of canvases, each painted a single bright colour, each with 20 butterflies glued on. Beside it will be another one of those small gallery texts: “This is one of hundreds of butterfly paintings produced in the studios of Damien Hirst in the first decade of the millennium. During the credit boom, art dealers and collectors believed that this decorative design was a powerful symbol of life and death, nature and art. Newly minted billionaires spent up to £2 million each on these works. They were not deterred by the potentially infinite number of these works available since, at the time, art critics argued that mass-production and repetition were the new values in art.” For centuries to come, the air around these works will echo with titters of derision and snorts of scorn from gallery visitors reading about this daft world.
As an art journalist and film-maker, I watched with growing incredulity the astronomical prices being achieved by contemporary art from 2006 onwards. At the peak, between the summers of 2007 and 2008, buyers were paying $19.3 million for a Hirst “pill cabinet”or a Lucio Fontana slashed canvas, $23.6 million for a Jeff Koons shiny hanging heart, $72 million for an Andy Warhol screenprint of a car crash, $73 million for a Mark Rothko and $86 million for a Francis Bacon. Whatever one thought of the art itself - some I liked and some I despised - these prices were out of all proportion to its aesthetic or historical value. The prices were so high that they obliterated the meanings of the works, reducing them to symbols of excess and obscenity. I suspected that these prices were a sign that something was going dangerously wrong in the world economy and the human imagination. So I spent the following year investigating the contemporary art market for a documentary.
For most of that time the art world disagreed with my criticisms. The opinion of the art adviser Abigail Asher was typical: “There are more people internationally that have the capability and the means and the interest to want to collect these iconic trophy objects and so they will chase each other and they will push the prices farther and farther up, because they want these things and they want them now.” But since October, when the contemporary art market began collapsing, I have been proved right.
After the greatest and swiftest rise in the financial value of contemporary art, the art market is now experiencing its greatest and swiftest fall. This week's contemporary art auctions by Sotheby's and Christie's in New York are a far cry from the dizzy heights of previous years. The evidence is in the catalogues.
Neither auction house's sales contain a work of art with an estimate of more than $10 million (£6.5 million). This time last year Sotheby's and Christie's between them had ten lots of more than $10m. Roman Abramovich paid $86 million for a Francis Bacon, while Victor Pinchuk spent $14 million on a Murakami sculpture. In October in London, Christie's sold a Jeff Koons for $23.6 million. At the time of writing Sotheby's was due last night to sell a Jeff Koons immaculately shiny enlargement of popular kitsch - an Easter egg - for an estimated top price of $8 million. There are no Bacons or Murakamis. Andy Warhol's screenprint Portrait of Man Ray was expected to fetch a maximum of $4 million. Price-wise it looks like at least a 50 per cent drop for the shooting stars of the contemporary art boom. The number of sales is also down to 49 lots from 83.
But the most important figure is what the auction houses expect to make from their sale. Last May Christie's made $331 million from its contemporary evening art sales. This year it is aiming for $105 million. In May last year Sotheby's made $362 million in the evening sale. This year it is trying to make a maximum of $73 million, not even 25 per cent of the previous year's sale.This is the reality of the contemporary art market. It's a reality reflected in the Sotheby's share price which peaked at $57 in October 2007, slumped to $6 in March this year and has now risen again to a little under $12.
The art world has got an excuse lined up for this catastrophe: in difficult times, it is difficult to sell big works at auction, because no one wants to look like a spendthrift and the bigger prices can be had privately. Yet the story from private sales is no better. One of Jeff Koon's six Hanging Hearts - each of which is in a different colour - sold for $23.6 million at Sotheby's in November 2007. It is reported that another was sold privately last month for $11 million. My friends in art galleries (none want to be quoted) tell me that they were selling work by well-known artists for 40 per cent off at the Brussels art fair at the end of last month, and even these sales were thin on the ground.
A picture by the British painter Jenny Saville, known for her loving depiction of naked fat people, which was offered for sale by Christie's at the Maastricht Art Fair in 2007 for £900,000, was auctioned in London in February for half that. In April 2008, a painting by the Chinese artist Zhang Xiaogang, Bloodline (Big Family) Number 3, sold for a record for a Chinese contemporary of $6.1 million. But in November another painting from this series sold for $3.4 million. Now this work would be lucky to achieve $2 million.
To listen to the art world, you would think that its players were on Prozac. They are convinced that prices, even for Zhang Xiaogang will “bounce back”. The New York Chinese contemporary art dealer, Michael Goedhuis, told me: “I have no doubt that Zhang Xiaogang will be a $25 million artist or a $50 million artist in the future, because I don't think that quality is the principal criterion that drives prices up today. In China today there are 50 people buying art out of a billion. But what happens when the next two or three people out of a billion come into the market?”
The art world argues that the auction houses' share prices have fallen in line with, or are less than, world stock markets. In fact, while Sotheby's shares have doubled in the past month, they have lost 56 per cent in the last year, compared with a drop of 36 per cent over the same period in Standard and Poor's 500 Index. There are plenty who believe it has much farther to go. As the hedge-fund guru Jim Chanos, the man who predicted the fall of Enron and who began shorting Sotheby's shares in summer 2007, told me: “All the frenzied bidding on the way up is going to be matched by frenzied selling on the way down.”
It's a belief strengthened by the knowledge that on top of the downturn in the world economy, the basic mechanism of the contemporary art market appeared to have been broken when, in September, on the very day that Lehman Brothers collapsed, Damien Hirst took his works direct to auction - cutting out dealers and galleries. The Beautiful Inside My Head Forever sale of more than 200 new Hirst works raised a record-breaking £111 million.
Since then, Hirst's works have not sold well. At sales in New York at Sotheby's, Christie's and Phillips de Pury, 11 out of 17 Hirst lots failed to find buyers. In March, Hirst consigned three big new works direct from his studio to Sotheby's first auction in Doha. None of them sold.
I believe that the reason for the success of the September Hirst sale and the reason for the collapse of the artist's subsequent auction market are linked to “bidding up” - a mechanism of the art market that is now severely damaged, particularly with regard to Hirst.
Bidding up works like this. Art dealers place bids at auction on works by artists whom they represent or collect to make sure that the works always sell above a certain price, or to set a new higher price for that artist's work. Those auction prices are then used as benchmark prices for private sales.
As a result, there was a hidden folie à deux, right at the heart of the contemporary art boom. On the one side, the new money believed that there was a network of experienced dealers who were supporting the value of the art they bought. But on the other side the “old money” believed that there was a growing group of new collectors who would pay ever-higher sums for art. Once the new collectors had paid this price, they joined the “old money” group who wanted to maintain and advance prices. Like two volatile chemicals coming together, these two dynamics produced an explosion in the market.
To many people in the art world it made perfect sense. As Josh Baer, a dealer and art market reporter, and the author of the art world's most carefully read insider tipsheet, Baer Faxt, told me: “These guys playing the game know what's going on. But wouldn't you rather buy into something, a Warhol maybe, knowing that the leading dealers, for the most part often protect the prices?” As Asher put it: “That game got out of hand.”
Hirst said at the time that his auction was an effort to reach a new market of collectors who didn't dare or couldn't buy from galleries. It is true that 35 per cent of the buyers at his auction were first-timers (in the last phase of a bubble, novices always jump on the bandwagon) but 65 per cent of the buyers were established collectors, many of them with big Hirst collections already. Jay Jopling, Hirst's London dealer whom press reports at the time said that the auction was meant to bypass, bid on almost half the lots in the evening sale.
I think that another reason Hirst held this auction was because he and Sotheby's spotted a way of profiting from the established system of collectors and dealers supporting the prices of artists whom they were “invested” in. Hirst's market had already been sluggish over the previous year. But this time Hirst's dealers and collectors faced the problem: they had to bid and support the prices of his work at the auction, or watch the value of their Hirst assets plummet. It was fine if one or two works didn't sell at auction, but not if hundreds went unsold. So the secret to the success of the Hirst sale was probably that it operated on the same principle that if you owe the bank $1 million you have a problem, but if you owe them $100 million it has a problem. And yes, it worked a treat on the night.
But then it backfired. My interpretation is that Hirst turned the dial up to 11, and the cogs came off the machine. He had simply pushed it too far. In the catalogue for Sotheby's contemporary art evening auction tonight (there are two very minor works in the day sale) there is not one work by Hirst, and Christie's has only one highly atypical early work from 1993. Even making allowances for a satiated market, this void is a remarkable 180 degree turn. Forget 25 per cent, 50 per cent or 75 per cent down, this is art-mageddon.
If Hirst led the rise of the contemporary art market, he is also probably leading its fall . This is no longer about boom, nor about bust, it is about backlash.
The art of the contemporary art boom will for ever be associated with the credit boom. Just as the values of that economic system are now discredited, so too will be the values of the art that went with it. In the future we will no longer have high regard for art that is mass-produced, or dictated over mobile phones to assistants in factory studios. We will be amazed that hedge-fund collectors paid $3 million for framed photographs of Marlboro adverts - works of art by Richard Prince, which were said to be the result of the important new artistic process of “rephotography”.
We will not look at the shiny reflective surfaces of Jeff Koons' sculptures (or the immacutely smooth multicoloured surfaces of Murakami's paintings and sculptures) and think that this quality of fabrication makes them important. We will come to regard the art as the baubles of the bubble billionaires.
Like all those packaged-up bundles of bad debts, contemporary art had no fundamental value. It was worth just what the market said it was worth. It was misplaced faith in future economic growth that drove up its value. Defenders of the art boom from the auction houses and art market will tell us that art - unlike shares in companies or property debt - never has had any fundamental value, and therefore is only ever worth what the market thinks it's worth. But the contemporary art in which the market speculated so heavily was the most worthless kind of art that had ever been speculated in. At least in the Eighties, the market boomed in Impressionist and Old Master artists who were dead, whose work was rare and whose reputations had been sealed by history. This time around, many of the artists were still alive, producing vast amounts of similar works, and often with no major museum shows behind them.
The billionaires spent so much on contemporary art because they believed that they were living in the best of times. Just as Gordon Brown said that he had ended boom and bust, the Sotheby's auctioneer Tobias Meyer said in 2007 when the boom was in full flow that the art market was “a one way street”. We now know all this wasn't true.
At the Damien Hirst auction the top lot was a Golden Calf, a work of art about the biblical worship of a false god, about the emptiness of the mania for contemporary art - and some minted maniac paid £9.2 million to own that thought. With the Calf, the circle was complete and the whole system intellectually short-circuited.
Hirst's butterfly paintings and his spin paintings, Murakami's Manga pop art, Jeff Koons's shiny hearts and eggs, and Richard Prince's framed photographs of Marlboro advertisements have all earned their place in history - but not one that you or I would envy.
In years to come these works will be seen as the ultimate symbols of the economic fairyland we have been living through in the past five years, an era in which the world lost touch with its sense of value. These were not masterpieces; they were the icons of idiocy.
London Times May 13,2009
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