Issue #28  4/1/2001
Thoughts On The Photo Market and Economy

There has been a spate of articles recently focusing on photography collecting and touching upon its investment potential. Recent articles in USA Today and the New York Times have largely been positive, although cautionary as well, but the cover article in the last The Photograph Collector newsletter sounded downright pessimistic. So, as they used to say before Mad Cow Disease and Hoof and Mouth Infection hit, "Where's the beef?"

While I am the first person to say that photography should never be considered strictly as an investment, photographs have largely done well financially over the last 25 years. Most everyone who has bought photographs still enjoys the fact that the very items that give one personal pleasure also have retained and even increased steadily in value. As Swann photo expert Daile Kaplan said to me recently: "Pictures have a lot more appeal than stock certificates."

With the battering stocks have taken lately and the continued strength of the photography market, there is the temptation to look at images as a "safer haven." There is the thought voiced in some quarters that important art and collectibles will hold up better this time around than stocks, with some of the stock money fleeing to more "physical" investments. My own feeling is that notion is probably not completely accurate, reflecting more wishful thinking than historical reality, and reality always has a nasty way of intruding on wishful thoughts. However, most photo prices rarely have gone down with a thud like the stock market has done. It is liquidity that dries up for a time--a not inconsiderable impact, although this lack of liquidity may be mediated in the future due to a broadening of the market for photography (although certainly the market hasn't grown to the "hundreds of thousands" cited by USA Today, EVEN if we count "the flea-market prowlers" that they mention). And so far, so good--as the recent AIPAD Show and Swann auction results attest (see E-Photo Newsletter #26).

The spring auctions--particularly with Sotheby's NY's blockbuster sale for MOMA and Sotheby's London's sale of Paul F. Walter's collection--should continue to show some strength despite stock market ups and downs, although there is a concern that the very large amount of material hitting the auction market (thanks largely to Sotheby's two additional special auctions) this spring and the spread-out auction schedule here and in Europe might impact prices and buy-ins for low to moderate work and might affect the auctions at Swann and Christie's East, which are earlier and have little in the way of "showcase" material. They also conflict with one Paris auction. This may provide some buying opportunities for the patient collector or dealer.

It should be noted that in major economic downturns (a euphemism for the "R" word), auctions do not usually fare as well as the overall photography market itself. The auction totals often go down (even severely) in periods of economic slowdown, but largely as a consequence of a poorer group of items being offered. Buy-ins also increase, but again usually on less unique work. The auction totals reflect more the nervousness of quality consignors (and nervous dealers cutting back on auction purchases for inventories) than actual deterioration in real values. Individual prices on quality items have in the past tended to hold fairly steady, although items that are readily available in quantity have seen even substantial drops in value (the gyrations of Ansel Adams' more readily available but expensive Moonrise to cite just one example).

This latter impact often affects various "indices" (such as The Photographic Comparative Auction Index, a basket of 25 photographs that come up at auction frequently, which is reported in The Photograph Collector newsletter) more negatively than overall market realities, because these indices need to use items that are up at auction frequently, hence more likely to drop in value, even when many of the rarer images are holding fairly steady or even going up in value. In fact, in an article on the financial returns of various collectibles, the accompanying chart in The Photograph Collector indicated that this limited (but more common) group of photographs "only" made an annual nominal return of 13.84% versus a broader survey by Pompe that showed an annual nominal return of 30.2% for the more general group of photographs. The time periods did vary a bit (Pompe 1980-1992 and Photo Collector 1975-1998), but you get the idea. Considering that there were big increases in the late 1970s and 1990s, it would appear that the Pompe group was actually at a disadvantage, making the distinction between the groups all that much stronger.

As my friend and new fellow dealer Bruce Silverstein (see Bruce's further market comments below) pointed out to me recently, an index can be a pretty inaccurate instrument over the short term. For example, if one is using auction results, you must keep in mind that auctions in October have been more susceptible to the effects of stock market dips. When people sat on their hands and watched because the NASDAQ and/or Dow were crashing, some auctions have had disastrous results. While the stock market may have bounced back soon after, the photo market had to wait another six months for the next auction results because the major auctions are only held twice a year (although we are also seeing many more auctions being added, which also complicates the situation for indices even further). That doesn't mean that the market at galleries and through private sales went down in this temporary scenario, just the auction-oriented indices.

Also, it should be noted that the photography market has often lagged the stock market and has tracked closer to the overall economy. Yes, it can be a bit complicated.

I should also note that most collectors do not and should not make decisions about what they collect based solely on the economics involved. You have to love what you collect first. This article looks a little at how the overall photography market economics have worked and may work in the future, and just how your own interests may fare financially--exclusive of your own enjoyment of the works.

In any case, here's my take on how various image types have done financially in the past and may do in the years ahead.