Pop Quiz: Some Ethical Questions

ethicalqs

To some artists, having a dealer means that they never again need to concern themselves with the mechanics of selling works to collectors – someone else is in charge of that problem. Other artists, however, find that collectors prefer to buy from them directly, instead of from their dealers, and beat a path to their studios. Frequently, those collectors believe that they can purchase artwork for less money than when a dealer is involved – the price may be halved, these buyers think, because there won’t be a 50 percent gallery commission.

As a rule, artists should never undersell their dealers. However, some artist-dealer issues are less clear-cut, especially when the artist also sells his or her work directly.

For instance, dealers frequently, or even regularly, offer discounts off the stated price — usually, 10 percent — to encourage potential buyers. Is it equally permissible for the artist to offer the same percentage discount when selling their work privately? Considering the fact that dealers generally charge a 50 percent commission for sales of the artwork they are representing, what is wrong with an artist even taking a 50 percent discount for a studio sale?

Artists and their dealers may have opposing views on this. For artists, it is just as viable for the artist to sell work with a discount as the dealer. On the other hand, Gilbert Edelson, administrative vice-president and counsel of the Art Dealers Association of America, said that “a discount by the artist undercuts the dealer, even if the discount and the final price is the same as what the collector would get at the gallery. Collectors talk to each other, ‘Don’t buy from the dealer. You’ll get a better price from the artist’ – this hurts the dealer and eventually the artist after the dealer decides he no longer wants to handle the artist because the artist has become his competitor. Artists should tell people who want to buy their work directly, ‘I don’t sell from my studio. You should go to my dealer.’”

In general, the only time that artists might sell work at a larger discount would be to their dealers – known as a “trade” discount, which may be as large as 40 or 50 percent, in effect the regular gallery price minus the regular dealer commission.

No less thorny is the question of whether or not an artist owes his or her dealer a commission on the sale of a work from that artist’s studio. For instance, a work is exhibited in the dealer’s gallery and then returned to the artist; if someone who may have seen that work on display approaches the artist directly to purchase it, is the dealer owed a commission?

Again, artists and dealers view this issue differently, although there is no unanymity of opinion on either side. Many surveyed artists have said, “If the dealer can’t sell it, I wouldn’t owe him anything,” while sculptor Alice Aycock stated that “I would owe the dealer a commission, but maybe not the full 50 percent. I would try to figure out what the dealer has done and what I’ve done, basing the amount of the commission on that.”

However, George Adams, co-owner of New York City’s Frumkin/Adams Gallery, took the view that the dealer is owed the regularly agreed-upon commission because “the sale would not have been made but for the patronage of the gallery. A gallery provides all kinds of support services as well as a forum for presenting the artist’s work, and the dealer would rightly expect that these costs would be paid for by the commission.”

At times, an artist who is in a long-standing relationship with a gallery or dealer privately sells a work that was never displayed in the gallery, and the commission question arises again.

In this instance, most artists tend to agree with Denver, Colorado artist’s career advisor Sue Viders that “you shouldn’t have to pay a commission on a sale when the dealer had nothing to do with it,” although those artists who receive a regular stipend from their dealers are more likely to feel an obligation to pay the commission.

Dealers themselves, even those who do not pay stipends, consider that some commission may be due them. “The artist’s name and reputation was presumably made by the dealer,” Gilbert Edelson stated. “But for the dealer’s efforts, no one would have tracked down the artist to buy from him or her directly.”

The issue of whether or not to pay the dealer’s commission, of course, only applies to artists who are not in “exclusive” relationships with their dealers – that is, they have not formally agreed to name the dealer as their sole agent for sales. In some instances, artists write into the consignment agreements with their dealers that collectors whom the artist has personally cultivated are an aspect of the market that fall outside the realm of exclusivity.

In general, it is wise for artists to discuss these and other issues with their dealers at the beginning of their relationship – formalizing their agreements in either a letter or formal contract – and as circumstances arise. You don’t want the dealer to find out that something has been taking place behind his back. As an example of this kind of negotiation, it is not uncommon that the artist (who has the final word on the prices for his or her work) allows the gallery to discount works a certain percentage but demands that this discount be deducted entirely from the dealer’s commission.

Some dealers do far more than others for the artists they represent, of course, and some artist-dealer relationships seem more adversarial than mutual. In order to minimize direct competition between the two, for instance, many dealers discourage their artists from selling privately in the same market area. In an ideal and a practical sense, the two should be working toward the same goals; the payment of a commission tests this bond.

By Daniel Grant

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