What Is the Secondary Art Market?
August 6, 2021
When you begin buying art, you encounter a lot of terminology. One of these is the secondary art market. What exactly is it? And if there is a secondary market, what makes up the primary market?
The simplest way to think of these two markets is this:
- Primary market: when art is sold for the first time
- Secondary market: when art is resold
That isn’t so difficult is it?
But when we ask about the secondary art market, we want to know more than this simplistic definition. As you might expect, these two markets work somewhat differently, and a good collector will have a working understanding of how to navigate both.
The secondary art market includes auction houses, some galleries, art dealers, and even resale websites like Ebay. For auctions, however, there are some exceptions. For instance, Damien Hirst has sold his work directly at auction, making it a primary art market for him.
Generally, people want to buy in the primary market if they can. Why? Because it almost always means you are buying directly from the artist or from a gallery that will hand a portion of the money to the artist. Because you are closer to the source, you usually get a better price, too.
Buying directly from the artist has many benefits. This means less overhead, no gallery retail markup, and you’re directly supporting the artist. But even buying from a gallery offers primary art market benefits, because while you might pay more, a good amount of the sale’s proceeds is still going to the artist.
That all sounds great. It makes sense that people would like to buy on the primary market. And yet, many collectors happily do most of their buying on the secondary market. So what’s going on?
The plot, as is usual for the art world, thickens.
The Benefits of the Secondary Art Market
Some people buy artwork for the sheer pleasure of having great work in their home and office. But for those spending a lot of money on art, they typically have concerns above and beyond if a painting looks good.
A main concern for many art buyers is resale value. Whether they are purchasing artwork as an investment or merely wanting to ensure that they can recuperate the value later on at resale, these buyers want to be more confident in the value of a work and the lasting name recognition of the artists they are buying.
If you think there is a chance you might resell a work of art later on, it’s important that the work will gain or at least retain value over time. And that’s where the secondary art market comes in. Because when you buy from it, you have a lot more information to make an informed decision.
See, when you buy on the secondary art market, you can find work that has a longer history of being bought and sold. That allows you to track the change in value over time. If a painting has consistently sold for more money over its lifetime, that’s good to know.
You also have access to bigger names — most collectors don’t have the connections or resources to buy directly from the superstars of the art world. And if the artist is deceased, then you’ll have a very hard time buying directly from them!
Plus, the secondary art market simply has a lot more work on offer, including almost everything you will ever see in a gallery or at auction.
In short, the secondary art market gives you more work to choose from, and the work you find comes with more data behind it.
But the most direct and practical benefit of the secondary art market remains the breadth of work available, including from artists who are no longer alive. If a collector is interested in work from the past, they will have to buy on the secondary art market.
How the Primary and Secondary Art Markets Interact
A really great collector won’t rely on one market or the other. Instead, they use both for different things, and they can make informed decisions on big art purchases only by taking both into account.
For instance, if an artist is selling their artwork directly, it is likely the best price you can find for it. However, it never hurts to check the secondary art market. You might find that the artist’s pieces are available for much less, it seems strange but it happens.
And as mentioned before, the secondary art market can give you guidance on how an artist’s work fares once it is “out in the wild” for years.
And if you are looking to buy from an artist who doesn’t have much if any work on the secondary market? You can still use it to study how artists with a similar style or recognition are doing.
Both markets are important for the art world, serving their own purposes and carrying their own benefits and drawbacks. But to be effective in one means knowing your way around both.