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One could see these designations for galleries (emerging, mid-size, top-tier, mega) as being about resources. Emerging galleries have slim overhead and can move quickly as innovators. Top-tier and mega galleries are usually more entrenched in the system carrying large overhead budgets with staff and real estate to prove it, but in theory it also means that they have the resources to support this, their artists and the financing of ambitious projects. Just like the sandwich generation who are charged with caring for both their children and parents at the same time, the mid-size gallery seems caught in the middle – with proven success, ambition, and financial and support structures that are stable but limited. As first reported in the recent TEFAF Art Market Report 2013 by Clare McAndrew and quoted in Ed Winkleman’s fabulous coverage on this topic, the economic reality for galleries in 2012:

• Dealers with sales under €500,000 in 2012 reported that average turnover fell by 17 percent year-on-year.
• Dealers with sales of between €500,000 and €2 million reported a decline of one percent.
• Those with sales between €2 million and €10 million also had a decline of two percent on average.
• The top end of the market, where dealers generated sales of over €10 million, reported an average increase in turnover of 55 percent.

ºÚÁϲ»´òìÈ checked in with a number of owners and directors of mid-size galleries around the world to see how they are dealing with the squeeze. Read the answers below from:

Loring Randolph, Director at Casey Kaplan, New York

Ernst Hilger, Owner/Founder of Galerie Ernst Hilger, Vienna

Paul Hedge, Managing Director at Hales Gallery, London

Mark Moore, Owner/Director of Mark Moore Gallery, Los Angeles

Edward Winkleman, Co-Owner of Winkleman Gallery, New York

LORING Randolph, DIRECTOR
CASEY KAPLAN, NEW YORK

ºÚÁϲ»´òìÈ: How long have you been in operation?  How has your business model changed since you started?

Loring Randolph: The gallery has been in operation since 1995. Casey started it when he was 24. I started working here in 2006 when we moved to Chelsea. The business model has not changed much in terms of the gallery’s core principles – but as with every gallery and person, tastes and knowledge change and mature as you grow and relationships with the people closest to you in these various stages certainly will have an impact. The infrastructure of the gallery has changed, the artist roster has developed, and we have had to function on a larger scale in terms of square footage and more staff when we moved to Chelsea. As artists mature and become more ambitious, so should their galleries. We have gone from initially introducing artists and hosting their first solo shows to working with artists who participate regularly at International Biennales, achieve mid-career retrospectives at major museums, win a Turner Prize, and continually exhibit at multiple galleries and institutions world-wide.

Starting in 1997 the gallery initiated a nearly annual project of inviting outside guest curators to organize group exhibitions. These projects have become intrinsically linked to our regular programming by introducing different groups of artists, fresh ideas/concepts, and alternative modes of installation to the gallery. Guest curators have included: Laurie Simmons, Liam Gillick, Daniel Birnbaum, Douglas Gordon, Jens Hoffmann, Nathan Carter, Daniel Baumann, Bruce Hainley, Matthew Brannon, plus in 2010 an exhibition organized by José Noé Suro from Ceramica Suro in Guadalajara.

MA: As a gallerist, what do you see as your primary role?

LR: To play an active role in shaping our contemporary culture, and in doing so, provide artists with an income that will allow them to work in whatever capacity they desire to realize their visions.

MA: What are the biggest challenges that you face as a mid-size gallery?

LR: We face issues with our identity as a gallery that does not necessarily fit into the two molds that the New York art world is becoming polarized into – young or blue chip, lower east side or Chelsea. It is not a negative thing, as it provides us with a unique and I think a quite valuable position, but it is a new phenomenon that we have to navigate and understand carefully.

MA: If there was one resource that you could have more of, what would it be and how would it help your business?

LR: For me it would be to have many more intelligent, dedicated, passionate collectors. There is a lot of good work out there, but to have the great fortune to meet people who are well informed and collect art because they fall in love, well – it is more rare than I would like it to be, but it is these people who really support a gallery like ours.

MA: The rise of art fairs has changed the landscape of the art world, making it more of a global marketplace.  How has this focus on the commerce of art affected your relationships with artists, curators and collectors?

LR: Our gallery has been a regular exhibitor at Art Basel since 1999, participating in: Art Galleries, Art Statements, Art Unlimited, and Art Public Projects; Art Basel Miami Beach since its inception, and Frieze London since 2007. Each installment of these three fairs has provided the gallery with a serious platform to better demonstrate its international program, and with each successive year our presentations grow more sophisticated and more ambitious. At Art Basel 44 this past June, the gallery primarily focused its presentation with a selection of major artworks by Liam Gillick, Trisha Donnelly, Giorgio Griffa, Jason Dodge, Diego Perrone, Garth Weiser, Marlo Pascual and Simon Starling – Perrone, Dodge and Donnelly were concurrently participating in the Venice Biennale.

With artists, it can be challenging to have to think and work and produce for every art world fair or event. We are very conscious of not overburdening our artists with requests to produce every time we do an art fair. It is a delicate balance because on the one hand it can be very motivating and wonderful for the artists to realize a new idea and be able to show it in a context where many people will see it from around the world. But on the other hand if you have 4 galleries, doing even just 4 fairs per year, showing a new work on even 2 of these occasions could be too much. We do not want to compromise on the quality of what our artists produce and what we choose to show as a gallery. We don’t want to just have “product” to sell. I would like to think that all galleries strive to operate in this way.

The good thing that these events do generate is more conversations about work, more opportunities for artworks to be seen, for artists to realize projects, and for curators, artists and collectors to be exposed to the work and to meet. It also provides us with some time to meet with our colleagues. We need to see them, and their programs, and we might not travel to say, Glasgow, very often. It is very important for the art world’s interconnectedness to share in these events.

MA: Are you concerned about attrition of your artists to bigger galleries with more resources?  If so what are you doing to prevent this from happening?

LR: No, not concerned about this at all. If an artist wants to move galleries for one reason on another, then they should.

MA: Since some of these collectors are your clients, how do you account for the shift in their spending as much as 55% more at the top end of the market in 2012 as reported by Clare McAndrew in the TEFAF Art Market Report?

LR: Since some of which collectors? Not clear about what pool of people you are referencing. But if it is just about spending more money at the top it is easy, just look at executive pay and the rise in those salaries over the last decade. More money is being made at the very top, so more of it will be spent at the top.

MA: Elizabeth Dee in her discussion with Ed Winkleman and Josh Baer at a panel discussion at Art Basel in May of this year spoke about how she is not interested in growing in a top-down model but rather sees opportunity in growing laterally in a web-like fashion.  How does cooperation and collaboration function in your business?

LR: Cooperation and collaboration is essential for us. We share representation of many of our artists with other galleries and we all have to work together in our artists’ best interest.

MA: A relatively new beast, what do you see as the future of the mega-gallery? 

LR: I can’t predict the future, and to be honest, the future of the mega-gallery doesn’t really interest me that much. It will either be a necessary model or it won’t. I can only say that I hope that the art world remains a place where all types of galleries can survive, but if for some reason if doesn’t and it comes down to sink or swim, Casey swam pretty well in college… you will find us elegantly doing the butterfly...

ERNST HILGER, OWNER/FOUNDER
GALERIE ERNST HILGER, VIENNA

MA: How long have you been in operation?  How has your business model changed since you started?

Ernst Hilger: Since 1971 many times we developed from a print gallery via a modern gallery to a more and more cutting-edge and new ideas gallery, mainly now discovering artists from therefore less viewed areas of the world.

MA: As a gallerist, what do you see as your primary role?

EH: To lead and promote artists to reach an international level of biennales and museum shows.

MA: What are the biggest challenges that you face as a mid-size gallery?

EH: We have 13 employees and almost 20,000 square feet of exhibition spaces.  It is very difficult to maintain a high level and finance all of this.

MA: If there was one resource that you could have more of, what would it be and how would it help your business? 

EH: Successful artists: as they rise they bring more revenue to the gallery of their trust

MA: The rise of art fairs has changed the landscape of the art world, making it more of a global marketplace.  How has this focus on the commerce of art affected your relationships with artists, curators and collectors?

EH: The air is fresher now and you are no longer suppressed by local blind curators and museum people. You can find your partners and artists as well as collectors worldwide. That is very good but a lot more work. Art fairs are important but will less and less be affordable for galleries with works under 10,000. Even though I have been founding fairs or sitting on boards like Art Basel and VIENNAFAIR I think there will soon have to come a more affordable model.

MA: Are you concerned about attrition of your artists to bigger galleries with more resources?  If so what are you doing to prevent this from happening?

EH: Basically that is first of all a sign of successful working that affirms collectors of the decision to work with us.  What I would still like to be granted is continuing access to works otherwise I am just happy for these artists. For instance: we introduced Brian McKee to Mitchell Innes and Nash and immediately said we would not take a commission we just wanted access. I will continue with this. I do not want to control artists all over the world. I just want to further their careers.

MA: Since some of these collectors are your clients, how do you account for the shift in their spending as much as 55% more at the top end of the market in 2012 as reported by Clare McAndrew in the TEFAF Art Market Report?

EH: Most of the changes are in the great insecurity of the financial market and the wish of collectors to make the financial investment aspect stronger when acquiring works of art. I have never been interested in this. I rejoice when my artists attract the bigger and bigger prices, but in the end all I am interested is the quality of work. To this end I have 6 curators worldwide being my scouts.

MA: Elizabeth Dee in her discussion with Ed Winkleman and Josh Baer at a panel discussion at Art Basel in May of this year spoke about how she is not interested in growing in a top-down model but rather sees opportunity in growing laterally in a web-like fashion. How does cooperation and collaboration function in your business?

EH: With our new mostly younger partners the collaboration is fruitful and pleasing. Some longtime friends in the business are good to work with, but most galleries have a policy of no sharing.

MA: A relatively new beast, what do you see as the future of the mega-gallery? 

EH: On the longer run this has no future. It is always the art dealer or gallerist that generates enthusiasm and trust. I do not see the galleries become like banks.  When you look at the large auction houses you see already that they are losing the momentum and the moment investors become art lovers they want a real partner for dialogue and advice, and no longer an investment machine.

PAUL HEDGE, MANAGING DIRECTOR
HALES GALLERY, LONDON

MA: How long have you been in operation? How has your business model changed since you started?

Paul Hedge: Hales Gallery has been in existence for 21 years. We began as one of London’s alternative spaces of the 1990s and successfully launched many artists that are now well known. Initially we funded the gallery by selling food and coffee from our café. Things were very communal and we were in a rough part of South London. We had no backing and very few personal resources to draw upon. In 2004 we moved space to a bigger purpose built gallery in Shoreditch East London and began representing artists and making sales. Our business model has changed significantly on several occasions since 2004 as we have grown. As times have changed, we have adapted. Sometimes to grow and sometimes to protect what we have already built.

MA: As a gallerist, what do you see as your primary role?

PH: I think Hales is unusual (so people tell me) in that we have always had core interests and values that we see as important to our program. We have stuck by these in one form or another and have tried to develop them within the boundaries of the profitable but interesting. The artists we represent instinctively understand this and we work hard to build their careers over specific periods of time.

As time has gone on, there has been an obvious need to make more money to fulfill both the artists’ desires and our own agenda.

MA: What are the biggest challenges that you face as a mid-size gallery?

PH: I see our current position in the same way that small food retailers probably saw the growth and economic power of the supermarkets. There is no doubt that to survive, the mid-sized galleries will have to adapt and become more specialized, but I see no reason for pessimism on this front. We need to find areas of expertise that the Mega–galleries would find it difficult to compete with.

It isn’t surprising that the middle market in the art world has been affected by a recession that has largely affected the middle class collectors. Collectors that bought two or three works a year are still around but in much reduced numbers. I think this part of the market will recover in time but the key thing is what to do in the meantime?

As I see it, there are plenty of collectors that enjoy working with galleries that are able to pay more attention to their particular collecting needs and do not necessarily enjoy the atmosphere in the mega galleries. We make a big effort to be warm and friendly with everybody who takes the trouble to visit us.

Our overall goals as a gallery haven’t really changed. They can be summed up as an ongoing quest to be a respected contemporary gallery showing the best artists we can possibly show (and drawing as much attention to their respective careers as possible) and making a good living for both ourselves and for them. I would like this to be achieved within my lifetime if possible.

MA: If there was one resource that you could have more of, what would it be and how would it help your business?

PH: Whatever resources are available at any given time still have to be managed effectively. I value a slower growth model in favor of stability. What I am trying to say is that we are able as a team, to work within constrictions, and aim to get the best out of any given situation.

MA: The rise of art fairs has changed the landscape of the art world, making it more of a global marketplace. How has this focus on the commerce of art affected your relationships with artists, curators and collectors?

PH: This is the single most important change to the art world landscape in the time that I have been running a gallery.

Personally I do not think there is any effective alternative to embracing the art fair model; even though I think the model is compromised in so many ways from a creative point of view. We apply for and participate in art fairs…….. Ever more fairs!

Many dealers/collectors and artists in my circle agree that art fairs are not the best way of seeing, or appreciating art, and are not the best way of selecting works for building important collections, but they are hugely popular and at least open up more avenues to meeting new collectors.

The down side of art fairs is that the sort of art that is seen at them is increasingly limited by the way in which the galleries participating are selected. Art fairs are also in danger of changing the sort of art that is likely to become popular. They favor artworks that grab the attention and have very immediate appeal.

MA: Are you concerned about attrition of your artists to bigger galleries with more resources?  If so what are you doing to prevent this from happening?

PH: This question assumes that artists are only interested in money, prestige and power. Some of them may very well be but there have certainly been generations of artists that have been interested in rebellion, anger and protest, and yet others that are quieter souls that value the input of a gallery that can give them more time and attention.

During my career, there have certainly been artists that have left my gallery to join galleries that they see at the time as a step up. Some of them have been successful in their choices, some haven’t. I don’t think you can blame artists for making choices that they perceive to be in their interests but I do lament the days where artists said no thank you to the most obvious route, more often.

My personal attitude is to enjoy working with each artist whilst they are working with me and to act each day as if I will represent them for life. There is an art to working hard for an artist but holding no grudges if they move on. I buy their work and that always cheers me up if they go.

To be honest, I’m more worried about other galleries poaching my staff. This can become a massive resource drain, placing the gallery in an ever growing circle of re-training. I put a lot of emphasis on building as much loyalty into our team as I can.

MA: Since some of these collectors are your clients, how do you account for the shift in their spending as much as 55% more at the top end of the market in 2012 as reported by Clare McAndrew in the TEFAF Art Market Report?

PH: When I opened my gallery in 1992, there were 25 serious commercial contemporary art galleries in London. There are now hundreds. Most of them are surviving and I have been very surprised at how few went out of business during the recent recession. There have been some notable casualties but there have equally been many new galleries entering the market. Not all of these galleries are either Mega Galleries or young galleries surviving on meager resources. There are plenty somewhere between these points. I think this serves to illustrate that there is now much more money flowing around the art world in London than there was only a few decades ago. It may very well be that as a proportion of the market, the upper tier is developing more as a percentage but that doesn’t mean to say that there isn’t a lot more to go around generally.

MA: Elizabeth Dee in her discussion with Ed Winkleman and Josh Baer at a panel discussion at Art Basel in June of this year spoke about how she is not interested in growing in a top-down model but rather sees opportunity in growing laterally in a web-like fashion. How does cooperation and collaboration function in your business?

PH: I am not sure that art dealers always have the luxury of being seen in a particular way in an overtly capitalist market place. However web-like we would like to think of our connectivity, we will generally be measured by a market place that uses different criteria to make its judgments.

Personally, I think you have to forget about where you might fit into the perceived hierarchy and just do your thing.

I try and stay friendly with as many people as possible and build up relationships that I hope will be of mutual benefit between the galleries we deal with around the world. I admit to being seduced by the unashamed romanticism of the great Jimmy Cliff in his song “You can get it if you really want…………..but you must try, try, try, try and you’ll succeed at last”!

MA: A relatively new beast, what do you see as the future of the mega-gallery?

I am sure it will be an important part of the art world as long as there are the Mega-Rich.... Until the next  Mega -recession!

Mark Moore, Owner/Director
MARK MOORE GALLERY, LOS ANGELES

MA: How long have you been in operation? How has your business model changed since you started?

Mark Moore: Mark Moore is the Owner/Director of Mark Moore Gallery (Culver City, CA) and President of Contemporary Art Associates, Inc. (Orange, CA). Formerly, Moore was the Owner/Director of The Works Gallery (Long Beach/Costa Mesa, CA), which he founded in 1984. As a graduate of UCI's progressive art program, Moore's focuses his gallery program on international contemporary artists working in the areas of post-modern, minimalist or conceptual practices.

In 1994, The Works Gallery relocated to Los Angeles in order to focus on the international secondary market. It rebranded as the Mark Moore Gallery in Santa Monica, was selected by the Art Market Guide as one of the "Top 35 Galleries in America" (1998). The gallery has participated in a number of major international fairs, including: Art Chicago International Art Fair, Art Cologne, Gramercy International Art Fair, PULSE Art Fairs (Miami, London, and New York), NADA Art Fair Miami, Scope Art Fair (Miami, Los Angeles, and New York), and the Armory Show.  Moore has served on the PULSE Advisory and Selection Committee since 2005.

In January 2011, the gallery moved to Culver City after 20 years in Santa Monica (the last 12 years at the Bergamot Station Art Complex). We are very pleased with the new space. It was in construction for nearly a year and we are very pleased with the finished product. Originally built in 1925, the building is deemed a Historic Building by Culver City's preservation program. Featuring a brick façade, vaulted wood ceilings and an enclosed courtyard, the 3,200 square-foot gallery is located on Washington Boulevard in close proximity to Roberts & Tilton, Blythe Projects and Blum & Poe.

One of the most notable achievements of the Mark Moore Gallery was the orchestration and organization of the 1998 Mark Di Suvero sculpture exhibition. Produced in concert with the Orange County Museum of Art, this was the largest exhibition of outdoor sculpture by Mark Di Suvero in the United States in nearly twenty-five years.

Mark Moore Gallery also pioneered the development of the contemporary art market in Korea over the last twenty-five years, producing inaugural Korean exhibitions for artists such as Ed Ruscha, Christopher Wool, Donald Judd, Carl Andre, John McCracken, Sol Lewitt and Gerhard Richter. In addition, the gallery has done extensive work in the secondary market, mounting exhibitions in Seoul featuring Agnes Martin, Sigmar Polke, Bruce Nauman, Cy Twombly, Robert Ryman, Robert Therrien, Ad Reinhardt, Jasper Johns, Roy Lichtenstein, Robert Irwin and Terry Winters, among others. The organization of exhibitions and the building of major private and public global collections has become a major function of the Mark Moore Gallery.

The Mark Moore Gallery has focused on the development of emerging artists and has gained a solid international reputation as one of the premier sites for new talent. Over the last three decades the Mark Moore Gallery has included or debuted the work of numerous young artists in the early stages of their careers – many of whom have later gone on to tremendous international success. The Mark Moore Gallery currently represents nearly thirty distinguished emerging and mid-career artists.

MA: As a gallerist, what do you see as your primary role?

MM: Our clients look to us to be totally committed to an artist we show before they are willing to commit to them. Work by an artist we are not invested in is a hard sell to collectors who have come to respect our eye and value our opinions on a new artist. Shows by artists that we do not represent have historically not done well for this reason. Our clients want to feel secure that they are acquiring a work by an artist we solidly support and are dedicated to.

Secondly, given that each show in our main gallery costs us $30,000 and each Project Room exhibition in our gallery cost us $10,000 just to produce, we take our job very seriously here at the gallery. This is what the gallery overhead and expenses amount to monthly. This number does not include any additional costs such as framing, fabrication costs, shipping costs, and the costs of crating and storing the work. In short, we start each and every show knowing that we are about $50,000 in the hole and are invested in that exhibition at least that much in net profits just to break even. That translates to needing about $100,000 in net sales – after any discounts – or we lose money. 

The effort to support these exhibitions and artists – done correctly – begins months in advance. First, we do this by promoting the work at art fairs in various cities to build a following for the work and introduce it into new marketplaces. Each one of these fairs costs the gallery another $50,000 for the booth, shipping, staff, travel expenses, and associated costs. These costs are in addition to the costs associated with the show itself. 

Obviously, we have to be in this relationship with artists for the long run in hopes the market grows and prices rise or there is no chance of recouping these funds. We understand this going in when we host a show by an artist whose prices are low in the early stages of their career. We do all this as we solidly believe in the artist and their work. That said, we are not a non-profit venue and we are supported solely by the sales of the art we show. It is for this reason that we need to have a total commitment from our artists before we invest this amount of time and money into promoting their work and building a market for it.

It is our position that the relationship between dealer and artist should be a symbiotic one were each person in it has a role and they fill it. The artist creates the work, the dealers promotes and sells it. When everyone supports each other in these roles, I have found things go quite well and everyone prospers. When either party’s efforts are not fully supported, that is where problems can begin. It is, like any relationship, one that is built on trust and mutual support. Naturally, this is my perspective and I am a dealer, but it is one that I have found to be true in my 30 years in this business and held true for any successful artist/dealer success story I have seen in those years. The dealers can change, but the artists that are successful have dealers solidly behind their efforts, and they are solidly behind those dealers. Ultimately, this makes everyone's life simpler and more prosperous.

MA: What are the biggest challenges that you face as a mid-size gallery?

It is my firm belief that smaller galleries need to stop lamenting what they are not and embrace what they are.

Look at our strengths and why some clients prefer smaller gallery to a "Mega-Gallery" and focus on improving and perfecting those attributes. Not everybody wants to shop in a "department store" for work of fine art. Most people want a personal experience and feel that the owner and the artist know them and understand them and have a relationship with them. This is something that a major gallery simply cannot do for them. As a smaller gallery, focus on your strengths stop trying to be all things to all people. Embrace the differences between your gallery and Corporate Gallery that make you which you are.

MA: The rise of art fairs has changed the landscape of the art world, making it more of a global marketplace. How has this focus on the commerce of art affected your relationships with artists, curators and collectors?

MM: I personally believe we are at tipping point with regard to art fairs. The financial model for success of fairs and the potential benefits no longer pencils out for the small and midsize gallery. It has become the same 150 major name galleries selling work to the same collectors that managed to make it to these fairs (.1% of the 50,000 bodies that attend). There's a certain sense of sameness now about all of these fairs – whether you go to Basel, Miami, London, or New York – it's the same dealers all showing the same artists to the same clients (over and over).

Unless you plan to show seven-figure works of art at these events, it doesn't make any sense – most small to medium-size galleries could sell out their booth and still fall short of the cost of the booth, the travel costs, shipping, staff, and the other associated costs of the fair. Whether you're going to generate sales or to generate new contacts and clients for your gallery, it simply doesn't make sense to pay the overall costs associated with these fairs. One dealer told me the last Art Cologne he did, he figured it cost $3000 per name for the few new prospects he was able to add to his mailing list. He also had zero sales.

In short, if you want to draw comparisons between other business and the art business, here is what we know to be true. Traditional stores went from "Main Street" to the "Malls" to more horizontal sales tools – like the Internet and On-Line vendors – to compliment those other forums for interfacing the customer. The gallery community has done the same moving from solely showing art in galleries, to the art fairs, to new outlets such as Artsy, Paddle 8, and Artnet. The means of interacting with the art buyer continue to evolve.

Why would the art world be any different than any other business model for the next ten years?

MA: Are you concerned about attrition of your artists to bigger galleries with more resources? If so what are you doing to prevent this from happening?

MM: The job of an artist's primary dealer may go far beyond exhibiting his or her work in group and solo shows in a gallery space. The dealer is responsible for placing the work in significant private and museum collections. There is the day-to-day upkeep: ensuring that the artist's new work is photographed, keeping up-to-date biographies and archives of relevant press clips, securing and filling booths at art fairs.

In return, the dealer receives a certain percentage —usually 50 percent — from the sale of each work. When work sells in other establishments — ideally, reputable galleries and institutions in the United States or abroad — some percentage of the profits is also usually shared with the primary dealer.

Because they are not bound by contract, artists can leave dealers at any time. The relationships often follow the arc of romance, with the headiness of first discovery slowly leading to the interdependence that characterizes most marriages. For some dealers a breakup can therefore be as painful as divorce.

Defections seem to be contagious these days. Long-settled artists are suddenly playing the field, ditching their dealers in favor of galleries with bigger spaces, better locations, stronger connections to museums and collectors and — perhaps most important — a star-studded roster of artists.

Not since 2006-2007 has so much Wall Street money flowed steadily into the art market, prompting artists to scamper from gallery to gallery in pursuit of riches and fame. The difference today, many dealers say, is that it's the successful artists — whose work commands dizzying sums— who are defecting. Artists used to leave because they weren't doing well enough. Now they're leaving because they're so successful. They're vulnerable to offers from other dealers.

At the end of the day, an artist/ dealer relationship is like any other relationship. It functions because you both respect and admire each other. If the time comes that your artist has grown so successful that they leave for a major gallery, then all you can do it take solace in the fact that you were a big part in getting them there through you efforts and enjoy the holding of early works that you acquired from them when their prices are much lower. To be frank, I made far more money off the artists I no longer represent than the ones that I do. If all my artists are desirable to other major dealers, I must be doing something right.

MA: Since some of these collectors are your clients, how do you account for the shift in their spending as much as 55% more at the top end of the market in 2012 as reported by Clare McAndrew in the TEFAF Art Market Report?

MM: I don't think this is a SHIFT in spending as much as it is new money, jumping into the market from other markets, looking for greater returns than stocks and bonds. People are working the top end of the art market now like they used to play commodities - with more prestige attached to the objects bought and sold. Much of this money is in blue-chip art is there due to SPECULATION right now.

The numbers for small and medium sized gallery sales remain consistent. I do not think my buyers for young and mid-career artists in the four to five digit range suddenly decided they wanted Basquiats instead for $10,000,000.  The jump in high-end sales has more to do with low returns in bonds than it does with low interest in young artists.

MA: A relatively new beast, what do you see as the future of the mega-gallery? 

MM: These "Beasts" – just as in nature – tend to survive only when "food" is abundant (in this case, high-end collectors seeking trophy works with ready cash, as there is now). The larger predators can only survive as long as they can keep feeding at this same rate. If their fuel supply dries up, they are the first to perish. 

The art work has seasons. Right now we are in a "Summer" of sorts and the ready cash for "Blue-Chip" works is flowing into the accounts of the large "Mega-Dealers." These are among the first galleries, however, to close or shutter locations when "Winter" comes – recessions, wars, world unrest – all impact the art market just as they do other collectables and commodities. The more you consume in terms of capital the more you need in terms of sales to support yourself.

Just as in other business models, during these tighter times, normally it is the personalized "boutique" shops that tend to grow or survive as they have lower overheads, cater to a more realistic and affordable price point, and have solid and personal client relationships. I have been through five such recessions, so far. The larger "Mega-Galleries" in LA usually shutter after one, perhaps two of them based on past history (Pace, Blum Helman, Luhring Augustine, L & M, etc.). The art business is not Starbucks – you don't need a location on every corner. We are not offering coffee for sale.

EDWARD WINKLEMAN, CO-OWNER
WINKLEMAN GALLERY, NEW YORK

MA: How long have you been in operation?

Edward Winkleman: As Winkleman Gallery we've been in operation for 7 years, but we had Plus Ultra for 5 years before that, so a total of 12 years of running a gallery.

MA: How has your business model changed since you started?

EW: Overhead has grown significantly, as has the cost of doing the number of art fairs we feel we need to in order to keep the gallery growing. To that end, we're doing fewer exhibitions that we know have very little chance of leading to sales. We're also being more strategic about what we bring to art fairs.

MA: As a gallerist, what do you see as your primary role?

EW: To find artists our collectors will be interested in supporting, and to support those artists' careers in any way we can.

MA: What are the biggest challenges that you face as a mid-size gallery?

EW: The shift in the price point that collectors are seemingly willing to spend today. They're comfortable buying emerging artists' work at those price points, and at buying blue chip artists' works at those price points, but the middle of the market, with prices between $30,000 and $100,000, seems to be stalling a bit, as collectors aren't sure they want to invest that much in artists who have not yet reached blue-chip status. The biggest challenge is figuring out how to navigate that shift.

MA: If there was one resource that you could have more of, what would it be and how would it help your business?

EW: Money. We have no shortage of energy or ideas. Our artists have no shortage of energy and amazing ideas. We simply don't have the money to realize them all.

MA: The rise of art fairs has changed the landscape of the art world, making it more of a global marketplace. How has this focus on the commerce of art affected your relationships with artists, curators and collectors?

EW: It's systematically eliminating the time we used to have to spend talking about ideas or aesthetics. It's sped everything up. Not only are the fairs frenetic, but when you're spending that much more time preparing for fairs and traveling for them, you naturally have less time to talk about the art, so you take shortcuts...develop quicker ways to accomplish what you used to take your time doing...this is a pity, because it tends to shift your entire focus away from art that may be just as rewarding ultimately, if only people would slow down long enough to consider it.

MA: Are you concerned about attrition of your artists to bigger galleries with more resources? If so what are you doing to prevent this from happening?

EW: We try to be as supportive of our artists as we can. We talk to them about these issues openly and honestly. I'm not sure what else you can do. If they're going to leave, they're going to leave.

MA: Since some of these collectors are your clients, how do you account for the shift in their spending as much as 55% more at the top end of the market in 2012 as reported by Clare McAndrew in the TEFAF Art Market Report?

EW: I suspect they're willing to speculate on the emerging artists (at those price points, why not), but not willing to spend over $20,000 on an artist who hasn't already got major milestones under their belts (such as solo museum show, major biennials, etc.). It's a skittishness about the overall market that began in 2008 and lingers on today.

MA: Elizabeth Dee in her discussion with you and Josh Baer at a panel discussion at Art Basel in May of this year spoke about how she is not interested in growing in a top-down model but rather sees opportunity in growing laterally in a web-like fashion. How does cooperation and collaboration function in your business?

EW: We launched the Moving Image art fair specifically in response to what our colleagues and collectors have told us about video art sales and challenges. We're still evolving the model based on the successes and failures at the fair, as well as working to connect the dots between the collectors, curators, and artists interested in this important medium. This level of open-minded, gallery-centric dialog is part of how we're collaborating with other galleries. We also simply like other dealers and socialize with them a lot. The SEVEN art fair in Miami is another example of how we've cooperated with our colleagues to build a "better mouse trap" if you will.

MA: A relatively new beast, what do you see as the future of the mega-gallery?

EW: Depends on the personalities leading them, quite honestly. I don't see any of them living forever, and I'm not sure the generation behind them are as interested in building empires as they are in having meaningful relationships with their artists and collectors. That's my hope anyway.