Exploring the Emergence of Contemporary Art Galleries in Istanbul: The Effectuation Perspective
The annual sales volume in global art market from 2007 to 2016 was around $60 billion on average (McAndrew 2017). With respect to Turkey’s 0.9 percent share in world trade, the country’s art market can be roughly estimated to be around $500 million. In terms of contemporary art, which refers to works by artists born after 1945, the global auction revenues reached above $1 billion in recent years (Artprice 2014). Given that there are 1.6 times more sales in dealers than in auctions (Pownall 2017), the world contemporary art market can be estimated over $2.5 billion. In 2011, the auction revenue from contemporary art in Turkey reached $7.5 million (Artprice 2012). Although this figure seemed relatively low in percentage, Turkey became one of the top ten global marketplaces for contemporary art in that year, which encouraged many to set foot on the supply side. In the following five years, the number of galleries increased over 50 percent, which also created a rush among early career artists. However, the questions remained open whether the challenges of finding new clients or manageability of operational costs were properly addressed by these ventures. This study explores the dynamics behind the proliferation of contemporary art galleries in this context.
At first glance, the growth rate of contemporary art sales looks highly appealing. The auction turnover in this segment rose by 1,800 percent in 15 years. On the other hand, the market is very concentrated. Almost 85 percent of sales is realized only in three countries, namely United States, China, and the UK. The highest selling 100 contemporary artists generate around 70 percent of world auction revenue among 49,000 listed artists in the auctions (Artprice 2015). Furthermore, considering 300,000 businesses involved in art dealing around the world, 5,000 of them account up to 80 percent of total sales by value (McAndrew 2017). This inclination in the market poses a threat for smaller dealers.
Two core functions of an art gallery are (a) building trust through specialist knowledge and credibility in the market and (b) taking the risk by launching artists in early-stage and share their successes as they grow in the long run. However, when the market becomes centered, more established galleries can pick the seasoned artists from smaller galleries, which have actually borne the cost of developing an artist. If smaller galleries cannot collect decent returns, the market does not function properly. Moreover, increasing costs such as rents, exhibiting at international fairs, and other commercial expenses would escalate pressure on many galleries. Further, young artists generally lack enough financial resources to support their productions or even their living, which makes it more difficult for galleries to discover talent. In the same manner, a recent survey reports the top four business concerns of art dealers as; finding new clients, sourcing new works, costs of attending art fairs, and making acceptable profits at the year-end (Pownall 2017). Another study highlights 30 percent of all art galleries run at a loss (Resch 2016a). With regard to these macro conditions in the world art market, the following section will briefly explain the peculiarities of the Turkish setting.
Brief Chronology of Contemporary Art in Turkey
Painting in the form of modern art in Turkey can be traced back to the middle of 19th century. Starting from 1839, Tanzimat (meaning reorganization) reforms in the Ottoman Empire pursued the transformation of the traditional state system to a modern one. As a matter of fact, the new provisions were under the influence of European ideas. The state used art as one of the anchors for this Westernization project and a small elite sponsored artists and their productions for a long time. The state-led modernization of Turkey took a different scheme after the foundation of the Republic in 1923. However, art was still under the patronage of the state. During the 1950s and 1960s, there were only singular examples of avant-garde who traveled Europe (particularly France) and created conceptual art. With respect to movements around the world in the 1970s, critical stance arose and further artistic investigations in visual form emerged. In the 1980s, Turkey started a transition to a freer market and the growing capital generated a new elite. Through the fundamental changes in the country, the art scene became more significant. To name a few developments in this decade, serial collective exhibitions were organized, innovative techniques such as photography and video were applied to the artistic inquiry, banks and several rich people improved their art collections, and Istanbul Biennial was established. In the 1990s, drastic shifts in world political map encouraged multicultural encounters in many aspects. Turkey was one of the non-Western contexts to be discovered, especially in terms of art voice. This period was marked by growing international exchange of contemporary art and the emergence of curators in the country (Demir 2013; Madra 2015).
Since the beginning of the 2000s, Turkey has been undergoing another reconstruction era in which political and sociocultural tendencies have become crystallized. Stability, security, and economic progress have been the major concerns of the society. Indeed, income per capita increased almost threefold in 10 years and a class of newly affluent was consequently born. Among others, the market started seeking high culture as well, while Istanbul Biennial, Istanbul Modern; the first private contemporary art museum in Turkey, and Contemporary Istanbul; an internationally renowned art fair were attached to the city’s identity, being the country’s capital of culture (Kahraman 2014). The number of Istanbul Biennial visitors increased more than tenfold in 10 years with 545,000 in 2015 compared to 51,000 in 2005. Istanbul Modern Museum is visited by an average of 1,500 visitors every day. The trend of attraction for Contemporary Istanbul fair was also increased since its inception in 2006 (Table 6.1). Furthermore, the growing number of art faculties, creations of young artists, the establishment of new museums and supporting institutions, the proliferation of galleries, intense activities of auction houses, and relatively fast buying/collecting decisions were the prominent features of the art scene. The market witnessed historically high sales volumes in this period. For example, the average annual auctions sales in seasons from 2011 to 2013 were over $8 million (Artprice 2011; 2012; 2013; 2014).
Table 6.1 Contemporary Istanbul statistics in brief
|
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Number of galleries |
49 |
73 |
56 |
73 |
80 |
90 |
102 |
95 |
108 |
102 |
Number of artists |
150 |
379 |
238 |
307 |
420 |
526 |
612 |
748 |
520 |
790 |
Number of visitors (1,000) |
37.5 |
42 |
48 |
52 |
53 |
62 |
68 |
72 |
77 |
84 |
Sold/exhibited works (%) |
74 |
61 |
56 |
68 |
83 |
75 |
66 |
67 |
72 |
64 |
Sources: Istanbul Art News, 2014 and Contemporary Istanbul, 2015.
Nevertheless, the recent contraction status suggests that it could be due to a speculative wave in the market and many productions and prices were actually inflated, particularly from 2009 to 2012. At the time being, there seems to be a consensus among stakeholders that the 2010s is the adjustment term for the contemporary art market in Turkey, especially in the sense of artist-gallery-collector relationships.
Art Galleries in Istanbul
It is known that the first privately owned art gallery in Istanbul was established in 1947 (Baraz 2013). The art scene was in its infancy and there were very few attempts in art dealing during the following two decades. The 1970s and 80s were more fruitful due to strengthened artistic works and accumulated wealth after liberalization policies. A handful of respected galleries were opened in this period. Especially banks and newly rich class started building up their art collections through galleries and auction houses (Kahraman 2014). In the 1990s, the market for modern art saturated and new interest rose in contemporary art, which naturally led to more variety. The contemporary art scene gained momentum in the 2000s in respect to increasing numbers of young artists, curators, galleries, institutions, publications, collectors, and art lovers in general.
As of May 2017, there were at least 45 for-profit contemporary art galleries in Istanbul. Over 85 percent of them were located within the 2-km radius of Taksim Square. Notably, the figure of newer galleries is significant as shown in Table 6.2.1
At the time being, contemporary art galleries in Istanbul face several difficulties: (1) The business turns into a profession characterized by art fairs and auctions. Specialty knowledge is being replaced with financial and social capital; (2) participating in international art fairs are costly and incentives from the public budget for this effort are very limited; (3) 18 percent VAT rate on sold items is perceived high, considering the cultural aspect of the business; (4) the number of avid collectors is low. There are buyers who act as investors, asking high discounts from galleries; (5) many collectors lost confidence in the market due to earlier opportunistic pricing policy and now follow the trend of buying works from more established galleries abroad; (6) too many organized auctions have the possibility to harm the exchanges through galleries; (7) there are too few critics who would expertly appraise the value of art works; (8) rents are increasing due to gentrification in the city. Depending on the location, size, exhibitions, and number of staff, the operational costs of a modest gallery varies between $10,000 and $30,000 per month; (9) the competition between galleries gets more intense as online sale platforms are launched and works of foreign famous artists are imported to the market; and (10) galleries are being physically upgraded, which require substantial financial resources. Small white cube business model is not likely to survive in the middle run. Between 2014 and 2016, at least eight galleries were closed down.
Table 6.2 Number of contemporary art galleries in Istanbul
Period founded |
Galleries |
Share (%) |
2001 and earlier |
11 |
24 |
2002–06 |
4 |
9 |
2007–11 |
14 |
31 |
2012–16 |
16 |
36 |
Total |
45 |
100 |
Despite these challenges, it is evident that new galleries keep opening up in Istanbul and the underlying factors are worth examining. The following section will elaborate this phenomenon on the effectuation logic.
Effectual Reasoning and the Establishment of More Art Galleries
Sarasvathy’s (2001; 2008) effectuation theory distinguishes two types of new venture creation processes as causation and effectuation. She contrasts these distinct logics in terms of choice sets and describes it this way: “…choosing between means to create a particular effect, versus choosing between many possible effects using a particular set of means” (Sarasvathy 2001, p. 245). One of her simplified examples on the processes is requiring an artist to paint a particular person’s portrait (causation) in contrast to giving the artist a blank canvas together with some paints and let the artist paint whatever he or she decides (effectuation). In the context of entrepreneurship, although the ultimate aim is to be successful, the flow between means and ends is different in this dichotomy. However, the theory proposes that, for a given set of action, it is neither practical nor possible to use algorithms and calculate expected returns when environmental uncertainty prevails. Therefore, instead of analyzing alternatives to make the rational choice as causal models suggest, the entrepreneur takes a step based on the affordability of the trial while strengthening the connections within the network to hedge the experiment (Chandler et al. 2011). Noticeably, use of this theory is encouraged in the relevant literature (e.g., Perry, Chandler, and Markova 2012; Read and Sarasvathy 2005; Read, Song, and Smit 2009).
Effectual reasoning consists of five heuristic principles (SfEA 2017):
• Bird-in-hand (starting with the available means): Before creating a new venture, entrepreneurs look into who they are, what they know, and whom they know at first, then build up possibilities on these means.
• Affordable loss (focusing on the downside risk): Entrepreneurs limit risk by contemplating how much they can afford in case of failure throughout the steps of the undertaking.
• Lemonade (leveraging contingencies): Entrepreneurs recognize all critical incidents as opportunities that can be exploited, instead of trying to avoid unexpected changes.
• Patchwork quilt (forming partnerships): In early stages of the venture, entrepreneurs pursue forming alliances and obtain pre-commitments from key stakeholders to reduce uncertainty.
• Pilot-in-the-plane (control vs. predict the future): Entrepreneurs do not assume that the future is uncontrollable; rather they are aware that their actions can actually shape it.
After this brief description of the effectual logic, its principles will be associated with the increase of contemporary art galleries in the next part.
The Research and Findings
Istanbul Art News is a content-rich art magazine and has published 11 issues a year since August 2013. It is in B3 paper size (13.9 · 19.7 in.) having 90 to 100 pages in each issue and includes supplements for the art market, literature, and architecture. All 43 issues until May 2017 are reviewed for this study and relevant scripts from news and articles on galleries and interviews with the owners, especially the newcomers, are retrieved for content analysis. The following inferences are based on this secondary data.
• Starting with the available means principle: These entrepreneurs were already art lovers. They have always followed art and developed a taste. Many of them were educated in an area related to art. Some of them wanted to become an artist and some of them were collectors themselves. There were also many of them who used to work for a gallery and later opened their own at some point. Thus, entrepreneurs were obviously aware that they wanted to be in this scene and somehow building up connections in the community. Furthermore, the timing for the venture was generally related to the moment they found the right location/space.
• Focusing on the downside risk principle: It is well-known fact that attending art fairs abroad is costly because it requires consistency and operational sense, it takes lots of time and effort. However, galleries have to be in the international arena to introduce their artists and grow their client base. Instead of making this significant investment with a dubious rate of return, many of them prefer organizing common exhibits/projects with foreign galleries. Several galleries acknowledge this way as less costly and more to the point. Another economical endeavor is to open a project space. Generally, galleries organize one exhibit per month. However, there might be more young artists or collections deserving to be displayed. What several galleries do is to rent a smaller place in alternative locations and give rookies a chance. In this way, the main showroom would not be occupied for more risky projects.
• Leveraging contingencies principle: Many galleries went out of business in recent years after the speculative wave in the market ended and purchases contracted. However, the entrepreneurs who understand the gallery business is not a short-term prospect and requires maintenance of enduring relationships with artists and collectors in order to make modest amount of money in the middle run persisted and opened their galleries. Meanwhile, a new type of competition arose: online art shops. Since these platforms do not have physical places, they save huge costs and are able to set lower markups on items. Nevertheless, avid galleries reacted to this by launching their own online shops.
• Forming partnerships principle: Creating alliances is a typical inter-organizational activity in many business fields. One of the particular examples for galleries is to collaborate with international museums. Once a represented art takes part in established museum collections, it turns into a significant reference for the gallery. Another noteworthy initiation is the Contemporary Art Galleries Solidarity in Istanbul. These mostly young 15 galleries have come together to act jointly against speculators in the art market, to gain bargaining power in response to increasing art fair attendance fees, and so on.
• Control versus predict the future principle: One of the biggest obstacles in the Istanbul market is the small number of noble collectors. Thus, galleries target young people, aged between 25 and 40, and encourage them to spend even a little money on art, hoping to convert them into collectors of the future. Galleries also offer limited edition art, which appeals to art lovers with lower budgets, aiming to expand the total market. Several galleries go into publishing to establish eminence and enjoy some media power. In addition, there are some entrepreneurs, who opened branches in London or Berlin to export local art and show presence in world’s focal spots of contemporary art.
All these features are assumed to illustrate that effectuation is an applicable lens to explain the proliferation of contemporary art galleries in Istanbul.
Conclusion
Contemporary art in Turkey has begun developing in the 1970s and 80s. In the 1990s, general public interest in contemporary art has increased, and was accompanied with international exposure. The 2000s was the period when institutions have spread and the market has started to deepen. Although a downward trend in sales volumes is acknowledged in recent years; the number of contemporary art galleries has kept rising significantly in Istanbul. The purpose of this study was to clarify the underlying factors relating to this observation. Based on anecdotal evidence, it is interpreted that entrepreneurs are most likely using effectual reasoning to create their ventures (contemporary art galleries) even under presumably adverse circumstances.
In constantly transforming exchange structures and processes, art galleries would hardly survive in their conventional business model. After an extensive research, Resch (2016b) makes several suggestions in terms of art gallery management. As a matter of fact, many galleries begin with small steps in the undertaking due to capital constraints. However, it is pointed out that, it is not quite sustainable. Galleries should adopt state-of-the-art business making rules. First of all, functions such as marketing, public relations, legal, and general management should be professionalized. Alliances should be formed heavily with institutions rather than with competitors. Additional features should be launched as in online platforms or publishing. Extra moneymaking options should be integrated, for example, thematic gift shops or patisseries (Resch 2016b). Finally, it truly requires aspiration, persistence, and doing things right to become a successful contemporary art gallery.
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1 The list is compiled from various sources and does not include galleries belonging to institutions such as museums and foundations.