What Ultimately Drives the Value of a Work of Art?

Fine art investment is at a record high. Is it time for reflection?

The vast majority of all art being sold today will have no significant market value by the end of this century. And, inevitably, prices at the top of the market will shift dramatically. Fashion has long driven price. At the end of the 19th century record sales for Bouguereau, who died in 1905, and Meissonier, 1815-1891, far exceeded all other contemporary artists including Cezanne, Klimt and a young Pablo Picasso - among many others.

Art has long been an alternative investment - ever since auctions began in the Netherlands and England in the 17th century - and generally not a very good one. Transaction cost are high and insurance is costly. Most art declines in value as its creator comes to be overlooked, ignored and eventually forgotten. Once-popular artists are frequently reduced to 'genre'. Thrift stores abound with their work. How many artists have been studying, working and exhibiting during the 19th and 20th centuries? Millions? Yet how few are remembered.

What determines the value of any work of art? 1.) Who is the artist? 2.) What is importance of the work in the context of that artist's overall oeuvre? (This frequently involves movement, period and date.) 3.) Condition. 4.) Provenance. 5.) What is its place in art history - WHAT INFLUENCE DID ITS CREATOR HAVE ON GENERATIONS OF ARTISTS WHO SUCCEED HIM?

Today much art is traded as a commodity. Tens of millions of dollars are being invested in artists who are "hot" today. A stock market parallel might be drawn between contemporary art and 'new issues'. Ultimately, not unlike 'large-cap' stocks, art must establish enduring value. Like any investment, demand must exceed supply in order for prices to continue to rise. Artists' values increase as their works absorbed by museums, are exposed to a broad public and are never return to the market. (Museums frequently 'deaccession' lesser art to refocus their collections.). Ultimately artists' prices are most driven by the test of time, and history simply can't be accelerated.

Who, in 1929, could have imagined that a great Edvard Munch selling at a fraction of the price of a major Anders Zorn would someday see that ratio reversed? Zorn is hardly a forgotten artist, a record $3 million+ was recently paid for a canvas, whereas an iconic Munch has exceeded $100 million. Both are Scandinavian painters. Zorn is long- respected as magnificent technician. However, it is Munch whose influence on expressionism has impacted artists for more than a century.

Fine art invokes thought and evokes feeling. Great art has the capacity to change lives. Art is a wonderful investment for collectors whose who can disregard momentary market value while their lives are enriched by its presence. As for speculators, caveat emptor.

Art consultant Aldis Browne is presently building ArtForTheUSA.com – a royalty-free online exchange between artists and political candidates who share their convictions. Artists worldwide are invited to post their images.