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Mega-Rich Invest In Works By Living Artists

RENEE MONTAGNE, HOST:

It's high season for art these days. That's when the mega-rich, artists and galleries gather in places like New York, London and Miami to spend and make fortunes. Recently, on this program, we reported on two Andy Warhol portraits that went for a combined $152 million at an auction in Manhattan. Collectors have also been rushing to snap up pieces by living artists like Jeff Koons and Damien Hirst. In both art auctions and art fairs, it's all part of the boom in the art world fueled by the taste of the 1 percent. Sarah Thornton writes about the secretive world of art buying and selling. Her latest book is "33 Artists In 3 Acts." We ask her why the rich spend so much money on art.

SARAH THORNTON: You don't want to put a gold bar on the wall in your dining room. You can't show it off in the same kind of way. And you can't revolve your holidays around it. You know, a lot of collectors revolve their social schedule around the seasonality of the art world. So they'll be in Miami for Art Basel Miami Beach next week. They'll be in London in February for the auctions there.

MONTAGNE: So it provides a whole of social and conversational aspect for those who can afford this - the super-rich, really - the rich.

THORNTON: The mega-rich. Yeah. The .0001 percent. It's a very high-risk investment, investing in living artists. But that seems to be part of the fun. It's a bit like gambling for some people.

MONTAGNE: So there are two ways to do this. One is the traditional art auction, but increasingly, the art fair is beginning to - it sounds like - dominate. Paint a thumbnail picture for us on the difference between a night at the art auction and a day at the art fair.

THORNTON: Well, they are very different events. The thing about auctions is that is a secondary market or a resale market. So collectors are consigning their works to be resold. Fairs, by contrast, are dominated by the primary market. So that means there's fresh work coming straight out of the studio. And that means that artists actually see some of the profit that takes place at a fair, whereas it would be very rare for them to see any money coming out of an auction. Fairs have a much broader range of goods. Many, many more artists are represented. And also it's not all about price. You can walk around an art fair and not know what anything costs. At an auction, you know, everything's accompanied by the estimate, and prices talk loudly and often drowned out other meanings.

MONTAGNE: Is there that much of a difference, though, between that and an art auction in terms of how transparent everything is that's being done?

THORNTON: Well, fairs are opaque events. You don't know who's buying what, and you often don't know the price. I would say that auctions are also opaque events, but they're theatrical spectacles that are engineered to look like they're transparent when they are not. There are many things that go on in the room, such as chandelier bidding, which is when there are no bids in the room, and the auctioneer pretends like people are bidding. The joke being that, you know, the lighting is making a bid. But often you can't tell if he's looking at a real person with their hand in the air. You know, the auction houses say, oh, everyone knows it's just chandelier bidding. But well, certainly the people on the phone can be duped. And even the people in the room can have a hard time telling if there's a real bid or not.

MONTAGNE: So chandelier bidding runs up the price as if there are bidders. And it's all a bit of sleight-of-hand.

THORNTON: It creates the illusion of demand.

MONTAGNE: Is that legal?

THORNTON: Yes, it is - perfectly legal because the auction houses are not regulated.

MONTAGNE: Huh.

THORNTON: It's astonishing that it is legal. But it is.

MONTAGNE: Well, thank you very much.

THORNTON: Thank you very much.

MONTAGNE: Sarah Thornton is the author of two books - "Seven Days In The Art World" and "33 Artists In 3 Acts." Transcript provided by NPR, Copyright NPR.