On the eve of "Beautiful Inside My Head Forever," Damien Hirst's two-day Sotheby's auction in mid-September, I predicted in the Evening Standard that the sale would tank. Instead, it made almost £112m, way more than the £65m estimate and a world record for an artist. Many lots soared above their estimates, a couple going for three times the low figure. Fragments of Paradise, a huge cabinet lined with neat rows of industrially produced diamonds, fetched £5.2m, against an estimate of £1m-£1.5m. The star lot was The Golden Calf, a bull in a large gold-plated formaldehyde fish tank-a symbol of the worship of a false god. It went for £10m, bang in the middle of the range. The Kingdom-yet another Hirst shark-went for £9.6m, well above the £4m-£6m estimate. This was an incredible, gravity-defying feat. As the sale started, one of America's largest investment banks went bankrupt, and a giant insurance company, AIG, was saved only by nationalisation just as the auction ended. The shares of even solid, boring banks were crashing in London and New York. The art market was sending a confusing message. Could it really be that a dead bull floating in a tank was a safer home for your cash than a deposit at the Halifax?
I watched my predictions being shredded from the outside. Sotheby's had taken a dislike to my cynicism about the top end of the contemporary art market; they banned me from attending the auction as a journalist, citing an Evening Standard article I wrote almost a year ago, called "Who put the 'con' in contemporary art?" I was left to prowl the pavements and the public screening rooms on the lower floors of the auction house, trying to work out how I had got it so wrong. Had the art world taken leave of its senses? My fellow critics all had a thought of the day for me. "You shouldn't speak too soon," said Carol Vogel, who writes about art for the New York Times. "Don't worry Ben, I know sod all about the art market as well," said Bloomberg's contemporary art reporter Scott Reyburn, with great modesty-two days earlier he had advised me that the sale would be a hit.
Dealers smiled victoriously at me. "How did it go so well?" I asked Alberto Mugrabi, a member of one of New York's biggest art collecting clans, who is said to own 10 per cent of the world's important Warhols. "Because Damien is brilliant," he replied, hugging me and then walking off.
Still, my prediction may have been wrong, but it didn't feel reckless to have made it. Hirst and Sotheby's were taking a huge gamble-openly trying to rewrite the rules of the art market. This was, after all, the first ever auction in which a single artist had sold a whole exhibition of new work, bypassing the usual dealer/gallery route. With capitalism crashing about our ears, it seemed a chancy time to test out a new business model.
There are still plenty of questions to be answered about this sale. We don't know who bought this avalanche of butterflies, spin paintings and embalmed animals. And, thanks to the lack of transparency in the art market, we may not know for some time-if ever. The biggest lots were bought by Sotheby's own staff on behalf of phone-bidders, whose identities, as with so many auction sales, remained hidden. They could be Asian or Russian collectors, but they could also be the artist's wife and kids.
It's very important for an auction like this to begin well, and the first lot was bought by Hirst's London gallerist Jay Jopling for £993,250, twice its estimate. On the first evening, Jopling bid for 20 of the 56 lots on offer-an unprecedented intervention by an artist's own dealer. On the second day, he bought The Broken Dream, a severed horse's head with a unicorn's horn in formaldehyde, for £505,250 against a low estimate of £600,000-a rare case of the low estimate not being met. One cannot know if Jopling was bidding for a client, or buying-bidding up-the work himself, in a practice known as supporting the price of your artist at auction.
The English stiff upper lip, inculcated from a young age at Eton, served Jopling well as he raised his hand to bid on the lots. By consigning 223 new works to this auction, Hirst had bypassed his dealers: Jopling's White Cube in London and the Gagosian Gallery in New York, LA and Moscow. These two galleries have represented Hirst for over a decade and spent millions staging his exhibitions. Larry Gagosian's decision not only to stay away from the sale, but to open an exhibition in Moscow-without Hirst's works-at the same time, was widely described as a snub to the artist-yet representatives from Gagosian's gallery were bidding at Sotheby's.
The participation of these dealers in an auction whose mere existence implied their redundancy might appear incomprehensible. But those familiar with the dependencies of the art market have no doubt that the galleries were compelled to support their artist because of their own commercial stakes in him. A document leaked to the Art Newspaper just before the auction, containing an inventory of all the Hirst works offered for sale by White Cube, revealed that the gallery was sitting on an enormous store of over 200 unsold Hirsts, with a value of over £100m. The list did not include Hirst's £50m diamond-encrusted skull For the Love of God, co-owned by Jay Jopling, along with Hirst and his business manager Frank Dunphy.
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Sotheby's went to extraordinary efforts to persuade people to bid in this auction. The editor of one art journal told me that she had heard-admittedly second hand-that the auction house was calling every client on its books to ask them to participate: "Even the ones who collected paintings of cows were being asked to join the auction in the hope they might want the same subject in formaldehyde." A well-placed art insurer told me: "Sotheby's has been able to go around all its friends in the art world calling in favours because it's so important that it all goes well. No one connected to modern and contemporary art wants to see the market turn." Sotheby's even apparently allowed Damien Hirst to avoid paying the auction house's usual seller's fee.
"It's too good to be true," another art market reporter exclaimed. "Auctions never do this well. Everything selling, more or less, and way above the high estimates." But for all the questions, this still seems to me like success on a scale that could not be faked, even if it could be stimulated or massaged.
As the smoke cleared from Hirst's display of financial fireworks, a second critical fallback analysis occurred to me. Was this not the last dance-a desperate last-ditch attempt by the super-rich to save their fortunes from the economic catastrophe that was engulfing us? I felt like I was on the Titanic, the iceberg looming, watching the millionaires dance to the band that played until the end.
But perhaps this is another false negative analysis. "Art is money," a veteran British art dealer told me. One view, popular with dealers and market analysts alike, was that capital was fleeing into art as property and shares collapsed. A similar, though less extreme, phenomenon had been evident in 2001, following the bursting of the dotcom bubble, when shares fell but contemporary art prices continued rising steadily. The snag with this analysis is that art, especially contemporary stuff, has never been a reliable store of value. When the global economy tanked in the early 1990s, the art price global index tanked with it, falling by almost 40 per cent between mid-1991 and the beginning of 1993. The contemporary art index did only slightly better, declining by 33 per cent.
And there's more bad news from history for Hirst's buyers. Despite the incredible rises in value in the last three years, contemporary art has not delivered stunning returns over the long term. The prices paid for contemporary art may have doubled between 2006 and 2007, but between 1991 and 2007, the contemporary art index rose by an average of 5 per cent per year-lower than typical stock market returns (which also have the benefits of greater liquidity and a running income in the form of dividends).
Moreover, the idea of art as an investment is a debasing one. The Artnet database-a subscription service that lists all the prices paid for works of art at auction-may have fuelled the market, but it has also influenced the kind of art that artists make. As Bloomberg's Scott Reyburn suggested to me, a trackable art index needs works of similar kinds to establish value, and this has benefited artists who churn out reams of similar stuff, such as the late conceptual artist Lucio Fontana, who slashed canvases, or Warhol, with his thousands of screenprints. It has also surely encouraged Damien Hirst to produce his endless dot paintings-in 1999, the Guardian reported that there were 300; there must now surely be over 1,000-and spin paintings.
The unique selling point of art is that-no, wrong, not that it's beautiful-it is portable and nobody has to know you own it. Many of the works bought at auction in recent years for tens of millions are sitting unwrapped in large warehouses in a Swiss free port.
This auction was the greatest marketing exercise in the history of art. One can only guess at the amount of money Sotheby's spent on promoting it. It put on mini-shows in the Hamptons and New Delhi. It produced the largest, glossiest auction catalogue in history, as far as I know-fatter than any museum, let alone gallery catalogue I have seen: three volumes, full of double-page fold-out colour illustrations of the work, in thick cardboard sleeves. And it apparently printed 14,000 of the things, many of which it would have given away to collectors.
Hirst put his back, if not his hand (he doesn't make his work himself) into the auction. In the months before, wealthy collectors were invited on tours of his Gloucestershire studio. When I met Alberto Mugrabi earlier this year, he was about to pay just such a call. Another visitor was Roman Abramovich's girlfriend Daria Zhukova, who has just opened her own mammoth art gallery in Moscow. And it can't have done any harm for Hirst to have advised Ukrainian billionaire art collector Victor Pinchuk on the colour scheme for his private jet.
More than anything, the unique and brave gamble of the auction captured the attention of the world's media. Glossy magazines ran profiles, while newspapers covered the story obsessively, with lots of large pictures of Hirst's works. Meanwhile, the global financial crisis-which not even Hirst's all-powerful manager Frank Dunphy could have planned-provided a suitably lurid backdrop.
Then there was the sheer size of the event. Flick through any contemporary art auction catalogue of the last three years and you will typically find around 100 lots by a huge variety of artists, with one or two works from each. Sotheby's thought it could sell more than double that number of works by one artist alone.
Yet it could have been a disaster for Hirst and Dunphy. If the auction had gone badly, Hirst's dealers would have given him the cold shoulder. Collectors would have sold up and his career would have been over. Instead, Sotheby's sold every lot, apparently proving their point that the market for Hirst's art was far wider than his gallerists had thought.
In press interviews leading up to the auction, Hirst said he wanted to make his art available to anyone who wanted to buy it, bypassing the snooty gallery system where dealers give the best works to their most favoured clients. But his claim to have democratised the art market by going straight to auction is disingenuous. In Sotheby's two-day spending orgy, a "vote" cost an average £497,757. Far from being about democracy, this auction revealed the extent to which a new class of the super-rich has emerged-one that has insulated itself against economic catastrophe of any magnitude. Plus, of course, Hirst's own galleries played a leading role in the auction.
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Auctions are an important part of the modern art market. They set new price levels for artists, which in turn drive the prices charged in private sales. Gallerists have benefited from this secondary market when prices for "their" artists have gone up. Indeed, there has been a fascinating spiral at work. Speculators and collectors- "specullectors," as they are now known-have been encouraged to consign works they have very recently bought from galleries to auction, lured by the profits. Art galleries, as the leading German gallerist Monika Sprueth told me, have increased the prices of new work by well-known artists "almost to auction levels," to try to deter the speculators.
It is too early to say what the consequences of Hirst's remarkable coup will be. Many commentators have suggested that other artists will now start to stage one-man auctions. Front-runners, they say, are the Japanese manga-pop artist Takashi Murakami and the great sculptor of American kitsch, Jeff Koons. But I am not sure if there are enough artists in the world who have Hirst's celebrity stature, or his production-line efficiency-both essential for an artist to generate more than the occasional auction show.
Nonetheless, this sale may mark the end of the art world equivalent of the Hollywood studio system—in this case, the system by which artists are dependent on dealers to act as intermediaries between them and the collectors. Not all contemporary artists will in future sell work directly at auction, but all artists, like rock stars and actors, are going to have agents acting in their own interests-as Hirst does with Dunphy.
Fortune favours the brave, they say, and in the end, Hirst pulled it off-however he went about it. Dealers and gallerists, you might think, would have left the auction fuming over Hirst's success, as it was surely a threat to their business. Instead, as they emerged from the evening sale, they greeted me, beaming and acclaiming Hirst for saving the art market, while the the world's financial markets nosedived 3 per cent in a day.
So I think I was the only person who lost out that day. As my friend Virginia, from London's Riflemaker Gallery, walked out of Sotheby's, I saw that a street-sweeper had left his barrow just by the entrance. "Look," I said to her, grabbing the handlebars and pushing the barrow up the road as the brooms wobbled. "This is my new job. I got it so wrong. I'm giving up being an art critic.
