There are 3 fundamental foundations of any art market: artists, collectors and distributors such as galleries, art fairs and auction entities. Generally, balanced and mature art markets possess a strong balance in these 3 foundations to create a stabl...
There are 3 fundamental foundations of any art market: artists, collectors and distributors such as galleries, art fairs and auction entities. Generally, balanced and mature art markets possess a strong balance in these 3 foundations to create a stable environment for the industry based on market economic forces. However, the Korean art market is currently in a "serious imbalance" and does not currently exhibit characteristics of being driven by market economic forces.
The most critical and definitive standard of valuation for art is its artistic quality mostly determined by its physical quality, originality and historical innovation. In addition to quality, art pricing is also determined by collectors' tastes, social significance, and physical condition (storage, size, materials, etc). However, the Korean art market's pricing practices are not driven purely by these criteria and lacks objectivity and consistency. The biggest factor driving this situation is the lack of overarching systems and standards for art pricing. To address this situation, the Korean art industry needs a transparent pricing structure driven by an objective market pricing system.
Currently, art pricing in Korea is driven subjectively by the artist, galleries and auction companies due to the lack of a clear system, which, in turn, leads to inefficient and non-transparent pricing practices driven by size based pricing and inconsistent pricing. As a result, it is critical for the Korean art market to quickly adopt clear and transparent standards for valuations based on specific standards such as artists' experience and past work which will allow the industry to readily view and compare how, and to what degrees, these qualities impact prices of specific pieces and artists.
A trustworthy valuation system will not only serve to give a clear view on art pricing, but will also allow collectors to have a clearer view on the financial value of their investments for various purposes such as asset management, insurance and inheritance issues. Needless to say, the adoption of an objective art pricing system is of the utmost importance in the short term and will contribute significantly to the art industry by making it a more attractive investment vehicle.
Such a system will also have numerous other benefits such as a firmer and objective basis for distribution order and forming the foundation for the mitigation of unethical pricing practices in an unclear market. As well, having a transparent pricing structure will allow a clearer allocation of roles and responsibilities of the aforementioned foundations of the art industry. On the external front, such a system will allow the Korean art market to quickly conform to international practices and increase competitiveness for the industry, thus eventually allowing easier and more effective entry for Korean art into global markets. Additionally, a more transparent industry will attract greater foreign investment into the Korean art industry, which will serve to strengthen its continued development. Finally, such a structure will greatly increase the demand and appreciation for art among the greater public and contribute significantly to the industry's growth into the future.
The greatest significance of a transparent and clear pricing system for the Korean art industry is the growth and development it will foster through the attraction of greater attention and investment from numerous sources both domestic and international. In order to encourage such constructive growth and development, the most important factor is the trustworthiness and transparency of prices and the biggest step that can be taken would be the adoption of an industry wide standard and system for art pricing.