Topping Off Sales With Phillips

The auctions results are in. After two weeks of sales, Christie's remains the front-runner, Sotheby's recovered with vigor after a stumble, and Phillips de Pury & Company is a stronger player than ever.

Last night, Phillips sold Richard Prince's "Registered Nurse" for $3.8 million. A Damien Hirst butterfly painting, "Love Affair," sold for $2 million, and an untitled Rudolf Stingel painting fetched $1.7 million.

That kind of good news has confounded the expectations of an art market crash. Yesterday morning Sotheby's broke its own 17-year record for the highest sales total, prompting the Silicon Alley Insider to announce: "Art Market Recovers." The headline might help the two analysts who downgraded Sotheby's stock after a weak Impressionist and Modern sale to re-evaluate the health of a market they feared was vulnerable to the credit crisis. But dealers and buyers recognized that the seven-day art recession was more a figment of fear than anything approaching reality.

The problem lies not in the art market's weakness, but in its diversity. It's misleading to look at the art market as a single entity. It is a true market in the sense that it comprises a myriad of unrelated transactions that take place at approximately the same time. There are many micromarkets in periods, schools, and various artists — even within the body of work of a single artist. The money seems to migrate increasingly from one micromarket to another. What the analysts missed in the weak Sotheby's sale of Impressionist and Modern art is that the market for those works is comparatively thin. Without strong, quality work, an auction can't generate sales. The buyers just move to another sector of the art market — or wait for another sale.

But strong work creates its own problems. When a collector or dealer sets a new record price for a work, expectations rise for the rest of the artist's work. This week, Jean-Michel Basquiat tested new levels. In the spring, his work generated prices between $10 million and $15 million, then four major works came to auction with aggressive estimates ranging from $6 million to $12 million. Two of the paintings sold above the high estimate; two sold near the low estimate. All of them had been on offer privately, so all one can conclude that $10 million isn't a bad benchmark price for a good Basquiat — but it's no guarantee.

With the rapid acceleration of prices in the last year — on top of a general rise of the last three years — the art market has become a victim of its own success. Indeed, it's telling that the previous record sale at Sotheby's was from May 1990, the end of the last art boom. Today, the market is stronger, but the hopes are higher.

Sotheby's sale on Wednesday night saw 55% of the lots sell for more than the high estimate. But many of the records set, such as the $11.2 million for Gerhard Richter's "Düsenjäger," came even though the work was only bid to the low estimate.

Whether contemporary art can maintain its current values, or keep growing at its previous rate, remains to be seen. Christie's Post-War and Contemporary sales in New York this year stayed essentially flat at a total of $477 million in the spring and $470 million this week. Sotheby's evening sale total rose by 24% from $254 million in the spring to $315 million Wednesday night.

Just for comparison's sake, Sotheby's sold $464 million worth of Contemporary art in 2006 at its two main New York sales; Christie's handled $525 million at its competing sales.