Robert Hughes’ once stated “Apart from drugs, art is the biggest unregulated market in the world”. I, however prove to disagree with this statement, for two reasons. In fact, there is regulation in the art world, such as external regulation (imposed by different legal authorities)and internal regulation (initiatives taken by the market players themselves). On top of that, new technologies and buyers’ pressure on the market players tend to strengthen the transparency of the market.
One should bear in mind that as a “legal” market, the art market must comply with all the rules that apply to businesses and markets. Contrary to what Mr. Hughes argues, it cannot be challenged that the art market is increasingly regulated (even though it has no international regulatory body.)
In that regard, Anna M. Dempster claims that “It would be misleading to talk about this being the last surviving “unregulated markets”.
Like other market-experts such as Mr Pierre Valentin, she also quotes many examples of “directly applicable regulation”. Moreover, some regulation specific to the art market is even gaining ground. For instance, the fifth European AML directive stipulates that any art transaction worth more than €10,000 requires the seller to register the purchaser’s identity, address etc... In a market where secrecy is usually sought, this is a game-changer that goes against the idea of an unregulated market.
One should also take into account the importance of internal regulation. Self-regulation is fuelled by the absolute necessity to keep a clean reputation, to preserve the trust of buyers and business partners. This idea is bolstered by the concrete application of internal regulation, through Codes of Ethics. For instance, the purpose of the “Code of Ethics for Art Galleries”, written by French“Comité professionnel des Galeries d’Art”, is to “specify the rights and obligations of art galleries and dealers.” As explained, “it defines the professional relations with artists and an artist’s successors in title, presents relations with buyers and sellers, and relations between confreres.”
Last, new technologies and buyers’ pressure on the market players tend to strengthen the transparency of the market, which leads to an implicit regulation. On the one hand,technology disseminates information easily, namely with databases such as Artnet or Artprice. Plus, when buying artworks online, 87% of the buyers affirm that one of the most important factors is price transparency. Such a demand for transparency is particularly true for people who see art as an asset class, as highlighted by the Deloitte Art Report 2019. As players of the top-end of the market, they have the power to influence the behaviour of other players towards more transparency.
The above mentioned regulations of the art market must however overcome two main challenges. First, more than half of the art transactions are private and handshake deals are still frequent : the tradition of secrecy remains deeply rooted. Second, one main question remains:how to strengthen the regulation of the market without jeopardizing it and without endangering the less resilient players ?
Copyright for the images : © Michelle Thompson, and Artsy.