Issue #84  1/17/2005
What Is Going On Out There?

We set a record at I Photo Central last month with 91,256 visits and 2.2 million hits to the website, although this November's results came in a very close second. We are proud that the site has become the most consulted for photography collecting on the Internet, and that the activity trend is decidedly up. Take a spin yourself at http://www.iphotocentral.com .

That bodes well for the entire market, which looks like it is picking up over the last several months. Record auction prices and increased purchases reported by many photo galleries and dealers over the fall signal that the flat market may be finally over--at least in the U.S.

Of course, we have seen false starts before, but this one is definitely stronger than the previous fall's results, which tended to flatten at the beginning of 2004. The upcoming Photo LA and New York AIPAD shows will give an indication of how steady and strong the market may be for this year.

For us and other U.S. dealers with strong offshore connections, sales from abroad have not just picked up, but have now become a serious portion of the business. That is not surprising considering the weakness in the dollar, which has been as high earlier this year as $1.36+/euro and $1.93+/pound sterling (and even higher on the actual "street" price that you really get in real exchange). Just today the dollar hit a five-year low against the yen.

At the recent Paris Photo show, as noted below, American exhibitors were actually the bargain dealers at the show and did very well indeed, while many European galleries reported only mediocre or flat business. This will be a challenge to European sources, whose prices are now considerably higher on European material compared to American sources. I am selling back to Europeans at euro rates that are the same as what I purchased those items for nearly five or six years ago. My entire margin to Europeans has become a factor of the currency exchange rate increase. Or, from another perspective, I would have been financially better off (and more cash fluid) buying euros five years ago than photographs.

What does that mean for the market? First it sets up definite challenges to European galleries, who have recently increased prices on European material at what might be precisely the wrong moment--although some of those prices will undoubtedly stick even if some U.S. buyers prove reluctant. The U.S. market also looks poised to increase its share of the offshore market dramatically, as our low dollar prices look increasingly enticing to foreign buyers in Europe, Asia and virtually everywhere, as the dollar slips ever lower. If predictions of $1.50+/euro come through this year, expect steep competition at photography auctions and galleries in the U.S. from Europeans and Japanese buyers; of course, if the dollar rallies based on likely hefty interest rate hikes here, then this trend may be more moderate. If you are a European, the same euro now buys nearly twice as much in dollar as just five years ago. If you are a U.S. citizen, your dollar buys only half as much in Europe or London.

On the other hand, dealers who have been used to buying in Europe and selling in the U.S. will find it virtually impossible to replace inventory at prices that will be saleable in the U.S. unless the market adjusts to nearly a doubling or tripling or more in the price of some items due to currency and European pricing pressures. I saw a $40,000 Doisneau being offered by what I normally consider a very reasonably priced French dealer. Virtually all the 20th-century European material being offered by Europeans at Paris Photo or at the three auctions held about the same time (Christie's and Sotheby's London and Artcurial Paris) either sold or was priced at 30-100% higher prices than just six months ago. And some of it did sell! More on this later.

There also seems to be the biggest discrepancy between the auctions and photo dealers that I have seen in my 29 years of photography buying and selling. The auctions are now selling at a premium of as much as 20-40% over dealer prices, which is the total reverse of what was the case just five years ago. Dealers buying at auction today are largely making purchases for clients, who seem willing to overpay at auction instead of getting the benefits of buying from quality dealers (time to pay, guarantees, credit card purchases without financial penalty, sales tax savings in some cases, true expertise and long term advice, and, yes, often better prices). Of course, there are exceptions to this, which unfairly mark all dealers as untrustworthy for some clients. But does a group that had two of its major members (Sotheby's and Christie's) found guilty of anti-trust violations which involved cheating their clients inspire real trust too? It is just as unfair to brand all dealers with the same brush. Most auction house experts and most photo dealers are honest, caring and fairly knowledgeable. But I feel most auction house policies put them at a distinct disadvantage when it comes to backing up the photographs that they sell. For more on this read my article on The Insider's Guide to Buying Photographs, which you can see at: http://www.iphotocentral.com/collecting/article_view.php/7/5/1 .

I remarked recently to a dealer at Photo New York that I felt his vintage Callahan's were a bit overpriced. He sheepishly agreed, but told me that he had overpaid for them a bit. Then came the Sotheby's sale that week with prices that were 20% OVER this dealer's prices. And the dealer's photographs were in my estimation clearly better prints. Of course, he sold out after the auction.

A lot of dealers are talking privately of their frustration, but I think the auctions have simply just done a better job at marketing and wooing clients. The material can often be in horrid condition; there are no guarantees about virtually anything, condition reports included; you have to pay immediately or be charged interest and storage fees; you often pay for something that is available down the street at a local gallery for as little as half as much; and try to return something that was improperly catalogued, and you are often made out to be a con artist or worse (at least at some houses; some admittedly are more customer-oriented than others). So what exactly is the attraction of auctions for photography collectors?

Meanwhile the Contemporary Photography at auction in New York went more than a little crazy, starting with "Veronica's Revenge" (an apt title somehow) at Phillips and continuing at contemporary art sales at Christie's and Sotheby's New York. Five and even many six-figure prices shattered records for a whole army of photographers, some with little to nothing to recommend them, in my humble opinion. New Wall Street money (now that stocks have recovered a bit), greed and the greedy encouragement of art dealers (who have taken over this part of the photo market) had clients clawing to pay troubling amounts for startling (and/or boring) imagery. If Peter Galassi at the New York Museum of Modern Art wasn't being targeted by unscrupulous dealers before, he better duck and hide after these auctions. His placement of several photo artists in the contemporary art portion of the new museum was said to trigger the huge run-up in those artists' prices during the last auctions. While certainly not Galassi's fault in any way, "collectors" are often replacing actual connoisseurship with curator stamps of approval--a rather sad commentary on what passes today for culture.

The word was that Contemporary Photography was a "hot investment". To me that sounds an awful lot like the "kiss of death". Certainly many of the photographers in the sales are important and worthy of collecting, but much of this material is pure schlock and at prices that will make some of these "smart" buyers feel rather dumb in several years. And, despite low "editions", there is a flood of material on the market.

I recently went to look at houses a few weeks ago. The prices were 30% higher for about 30% less space than three years ago. When I complained, the agent said "There is only so much real estate, and once it's gone, it's gone." I remember real estate agents telling me the same cliché in 1988 just before the bubble burst.

Now all of this does not mean that there are not values in the photography marketplace, even in contemporary work. But it certainly means that one should beware of overpaying just to be the first one on the block to own a Whozamacallit original. And using the Warren Buffet and other value investors' mode of operating, such as finding quality material that is NOT the "hottest" part of the market, is just commonsense--commonsense that seems to be in rather short supply at the moment.

There is also an obverse to this concept that I see in a lot of older collectors, who can't wrap their minds around the idea that prices do go up in time for important work--and sometime quite substantially. I remember experienced daguerreian collector Matt Isenburg's comments to Sotheby's Denise Bethel just before the Feigenbaum auction of Southworth and Hawes daguerreotypes, "Well, you really stuck your neck out this time." He was clearly proven quite wrong.

So the trick is to find material that has not been overpriced in this market. For example, high-end European 19th-century and mid-20th-century material has virtually disappeared from the market, but, when available, prices have remained relatively reasonable over the last several years, despite pressures to the contrary. Of course, you might actually have to learn something besides a name to buy in this area, but isn't that what makes photography collecting so interesting?

And perhaps we should put all of this in perspective. With over 162,000 people dead and well over a million homeless due to a single act of nature, maybe we should take some of those useless dollars and overvalued euros and pounds and send some of them to aid our fellow human beings. In case you do want to help, here are some of the websites to make your donations:

American Red Cross International Response Fund http://www.redcross.org/donate/donation-form.asp .

AmeriCares South Asia Earthquake Relief Fund http://www.americares.org/donate/?id=South%20Asia%20Earthquake%20Relief%20Fund .

Direct Relief International International Assistance Fund http://www.directrelief.org/sections/support_us/d_donate_now.html .

Médecins Sans Frontières International Tsunami Emergency Appeal http://www.msf.org/donations/index.cfm .

Oxfam Asian Earthquake & Tsunami Fund http://www.oxfamamerica.org/whatwedo/emergencies/asian_floods_2004 .

Sarvodaya Relief Fund for Tsunami Tragedy http://www.sarvodaya.org/ .

Save the Children Asia Earthquake/Tsunami Relief Fund http://savethechildren.org/radio_asia_earthquake.asp .

UNICEF South Asia Tsunami Relief Efforts http://www.unicefusa.org/site/pp.asp?c=duLRI8O0H&b=279540 .