I agree with Deepak on the point that it is beyond sad that the artist does not benefit at all. While the galleries and the rest of the trade are instrumental to the marketing and promotion (that leads to the higher prices), the system needs to evolve so that the artist shares in the price appreciation.

My one other concern is the "frenzy" element that seems to have entered the market, where people must have the pieces at any price. I wonder how long that can last. Doesn't this seem awfully similar to the tech bubble?

My hope is that the collectors who are buying works in order to hold them for the long-term will weather the short-term ups and downs enjoy the works in their homes :)

I have mixed feelings about Indian art going global. I've long expected this boom but now feel that our little secret has slipped out to the world.

I admire my good friend Deepak Talwar for his sage opinions and for what he has done to promote Contemporary Indian Art in the New York art market specifically, and the World market generally. One defining characteristic to his good work is the wide definition he employs to the genre.

Mr. Talwar's article raises many important points, one of which seems contradictory. Let’s deal with that first. It seems to me that there is little justification for an artist to benefit directly from the resale of his work. To think that the producer of a product (in this case art) should benefit ad infinitum from subsequent resale events is populist folly. The contradiction is embedded in the fact that the very free market architecture that produces prices (sometimes from ephemeral demand overhang) is what he would seek to change for the benefit of the artist. The free market, though not perfect, is best left alone. The Art market is no different. To be sure, when an artist is “discovered” and his work fetches record prices at auction, there are knock on benefits to the remainder of his production. Sometimes unreasonably so.

The more important point Mr. Talwar makes is that the extraordinary popular delusions and the madness of crowds as evidenced in the Art market – not only Indian -- is likely to dilute good art with bad. When the buying process is devoid of aesthetic considerations, which is the core definition of the Art market itself, purchasing becomes conspicuous consumption, the inevitable consequence of which is bad art running out the good. This is precisely the time when guardians of the regime, e.g. Mr. Talwar, acquire overlooked works that are more likely to stand the test of time but that currently reside in the penumbra of the auction spotlight; the works of Paramjit Singh come to mind. Mr. Talwar is not likely to accept the title but his dissenting voice now echoes across the landscape that is Contemporary Indian Art and has therefore become part of the institution.

deepak - right on the money - here's some more

Many years ago, I was at the [old] Christie’s showroom on Park Avenue in New York and found myself strongly drawn to a painting by Jeff Koons, somewhat below his peak at that time, but still one of the stars of the global art scene. The painting had several basketballs bouncing around and somehow it reminded me exactly of a painting I owned by a little known Indian artist called Abbas Batliwala. Not how it looked, but how it made me feel – the resemblance in sensitivity was uncanny.

I asked the price.

It was $ 360,000. I gulped. I had bought the Abbas Batliwala painting for Rs. 14,000 a few months before that, and, being in the foreign exchange business, I knew immediately that this price did not represent the ruling exchange rate.

It was amazing. To me, the paintings were the same – in fact, identical – certainly in terms of feeling, sense, value, if you will. But the prices were just so far apart. And I hadn’t even been drinking.

I thought about this incident again a few weeks ago, when I heard that a Tyeb Mehta painting had sold at Christie’s (again) for $ 1.6 million. And the media blared, “Taali bajao. Indian art has arrived at the million dollar club.”

But, wait, I say. Is it Indian art that has arrived? Or is it just Tyeb, and Husain (of course) and a few others? Does the fact that someone in New York forked over 1.6 Big Ones (or, in the local idiom, 7 big ones) for the painting confirm that this is the “value” of Tyeb Mehta painting? Or is that just the market price at this point in time? And, if it is “just” the market price at this time, who is to say whether it is the right price and whether it will go up or down in the future. Market prices, as we all know, can get quite extreme at various points in time.

Underlining this, I recall a market seminar recently where one of the speakers asked the audience if anyone knew the all-time peak value of Infosys. No one had a clue. On the other hand, when he asked them if they knew the all-time high price, many hands went up – and most of them knew the correct answer. Clearly, most people look at the stock market from a price – and not a value – perspective. Just as clearly, most people also lose money in the stock market. There are exceptions, of course – most notably, Mr. Warren Buffett, who pioneered the concept of “value investing”. Buy on value, not on price, is the commandment.

But value investing doesn’t quite hold in art because most people don’t buy art as an investment. They buy art because they love it. ART IS NEVER AN INVESTMENT. Art is about love, about joy, about beauty. Investment is about making money. But money has NOTHING whatsoever to do with love, with joy, with beauty.

Value in art is totally subjective – recall my story about Jeff Koons and Abbas Batliwala. No doubt, the guy who bought the Tyeb painting for $ 1.6 million, sees it as value for money. Obviously, he could afford it, and it brought him more pleasure than alternative ways of spending $ 1.6 million. On the other side, let’s celebrate the good fortune of whoever was able to sell the Tyeb painting – it wasn’t Tyeb, by the way. But, let’s not get carried away with this art as an investment thing.

In any case, the Indian art market, such as it is, is showing what I would call some classic “chanawala” – no insult intended – signs of value being swamped by price movements. Value is a complicated word, and, with prices moving up by 300 to 400% in a few years, who the hell cares about value. In fact, as in the equity market, few in the art world even know what value is.

Let’s look at some of the chanawala events. First off, the media buzz about the art market has reached hysterical proportions with several articles on the art market in the press each day – at the same time, there are few, if any, art reviews or criticism to be found anywhere. As a result of the buzz, dozens of people who have never bought art before are trying to set up art galleries because they believe they can make a lot of money. While I’m all for making money, people seem to believe you can make money in art without knowing anything about it. The loudest case in point may well be Mr. Srivastava, who made news some months ago, when he did a deal with the Master – Mr. M.F. Husain – buying 100 paintings for 100 cr, acknowledging all the while, at least according to press reports, that he knew nothing about [the value of] art. It would be like Narayan Murthy investing Infosys’ surpluses in a chain of dance bars!

And now, completing the cycle, we have art funds. Step right up!

WHERE IS THE ARTIST IN THE GAME?
This is a desperate whisper against all the cacophony about contemporary Indian art going global and breaking the million dollar ceiling. First of all, it does not mean global just because the auction was held in New York. The buyer was an Indian no matter whether or not living in India. No mainstream American collector is buying contemporary Indian art yet and those who bought so far or buying now are not mainstream American collectors. So obviously, INDIAN investors, art dealers and collectors are at play here. Why else they are traveling long distance year after year just to attend the auction when most bids are placed on telephone? And the game is of boosting the value of their investment rather than that of art work. Whether or not the game of price fixing was played (which both major auction houses already have history of), the sacrificial goat in this game is the artist. Except for some big shot high demand artists, the majority of artists are ignored, taken advantage of and even destroyed by the players of this game.
Here is a living example: I am an Indian artist living in New York whose works are in many important collections including museums and institutions in the United States, the Netherlands and India. My works have been also auctioned successfully at these very auction houses in the early years when auctioning of contemporary Indian art first began. Over 300 of my works were acquired in the eighties and the nineties by a collector who happened to be an American. He passed away in automobile accident in 1999 without fulfilling his dream of creating a living museum of contemporary Indian art. Then happened what he feared most when alive. His son gave a very small portion of his collection to a museum and sold off the major part via auction houses in New York. An art gallery showing Indian art in New York bought the major portion of the collection at wholesale prices including majority of my art works. The collector was known for bargaining with artists and I was not paid good prices; but I used to sell my art works to him as a friend and also because he was buying so many paintings from me that his business was paying my bills. But the gallery that bought the collection had to pay even less than what I was paid initially by the collector. So the gallery would profit even if they sell my works for less than their market value.
This gallery in question, let’s call it “Gallery A”, is not the one which represents me as an artist. There is another gallery in New York, call it “Gallery B”, that is supposed to be representing me. I am using the term “supposed to be representing me” because it has not shown my work after a solo show in 1998 but my name is still on their gallery artists’ list. Obviously they are now more interested in selling high demand artists whom they have signed up as gallery artists. Now “Gallery A” recently held an exhibition of my works they own and priced works at half the market price for my work. The market price of my works in New York is what “Gallery B” priced and sold several works for during my 1998 solo with them. By pricing my works 50% below market, “Gallery A” was still pricing them about eight times more than what they had paid for my works. So it was a great deal for them. When I asked them to remain even with my market price and with my prices at “Gallery B”, one of the co-owner of “Gallery A” gave me an analogy of selling a certain brand of fax machines saying that the price for a product is based on its production cost and demand. OK, my work is not in demand after my patron’s death and “Gallery A” got them for peanuts. So it was still profitable many times over for them. What they did in the process, which looked on surface like they were giving me a solo show at their gallery and promoting my work, was actually destroy my career. How? Few people who still buy my work saw unevenness in the pricing of my art works. They found a bargain at “Gallery A” compared to the price of my work at “Gallery B” or at my studio. Thus I lost my livelihood. I was doing ok as an artist before.
Things have gotten so worse that I had to seek public assistance from the State of New York in order to survive. What they make me go through, in accordance with welfare reform, for ridiculously little assistance they give to me and my child is another horror story altogether which has no right place here for description. But I have to say that it has robbed me of my painting time as I have to do odd jobs for them in exchange for public assistance. As a result, several of my art projects are waiting without being completed due to lack of time and financial means since five to six years. A nightmare for a lifelong artist…
I am not revealing names as neither I am seeking charity for me nor revenge for others involved. I couldn’t agree more with Deepak Talwar and my point here is this: are they still playing games with artists’ lives for profit? Even in our age when we claim to be more cultured? Haven’t we learnt anything from history where artists have starved because they could not sell during their lifetime and then they are made heroes for profit by auction houses and investors a century after their death?
- A concerned and struggling artist

I am an art lover as per Deepak Talwars defination and I dont think art can be an investment. I still try to reason sometimes as to what it is so good about it and what is it about it that draws me to it, but anyways, I just happen to reach this blog while searching for Indian artists in Tr-state area, and seemed like an interesting exchange of thoughts happening.
As an art lover, I would hate if the artist isnt given fare share but I would guess shortage of artists art, location of gallery, the state of gallery, the process, the rent, the makeup ;makes it difficult for the art dealer to give fair share. I would contradict myself for making such a statement as I hate to see when promises are broken and games are played when the artist is putting his skill,his mind on something with least expectation where as on the other hand someone is making money out of it and ignoring the intent of artist;as a buyer I would want his justified share to reach him PERIOD.

Several arguments have been overlooked.
It is important to remember that the gallery/auction system has always been corrupt.
I do not only mean the fact that artists have never shared in resale value, which they certainly ought to, but I refer to the well-known fact that many dealers have failed to pay their artists. In regular business this is called fraud and people go to jail for it. Not in the gallery business.
And these vaunted "collectors" need to be re-evaluated, too. Many buy not because they understand or appreciate the work, but because their friends have bought that particular artist, or they recognize that a particular artist is "hot". We are not talking about intellectuals or connoisseurs; collectors are often buying art with the exact same motives with which they buy cars or houses e.g., status.
So when you decry the vulgarity of art funds, you might want to avoid idealizing a system that is badly in need of reform, and also evaluate the positives that would come with an increase of money into the system: democracy and transparency. Funds have the ability to buy directly from artists and to buy lower priced artists from galleries;both of these strategies would democratize the buying trends as any smart investor knows you don't buy at the top of the market i.e., you don't buy the high-priced art stars. Secondly, the funds - as actual business entities that must report to the S.E.C. and are open to public audits, would not be so willing to cheat artists as are so many galleries. And what's wrong with transparency and democracy? Why not let the artists win for once?