How the art market works, in one brilliant drawing

New York artist William Powhida produced this drawing on the dynamics of the current art market, entitled “A Guide to the Market Oligopoly System” (click for larger version):

Reuters’ finance blogger Felix Salmon recently bought the drawing, and Salmon now has an indepth analysis of it that’s required reading for anyone interested in contemporary art. Salmon’s description of the pricing tension between commercial galleries and the auction houses is particularly helpful:

[Galleries are] the mechanism through which an artist’s career can be tracked and reduced to a handy dollar figure. Everybody knows that there’s much more art than science to setting the dollar amount, and that’s why they always keep an eye on the auction houses, which are considered more objective. There’s an interesting tension here: galleries and artists love to see new records being set at auction, even as they hate the collectors who take their work to an auction house in the first place.

Here’s more of Powhida’s work and more of Salmon’s writing on the art market.