Risky Business: What They Don't Teach You In Art School Part I

I recommend this writing which is found on the always entertaining and frank artblog run by gallerist Ed Winkleman. This post reveals the mysteries of the artist/dealer 50/50 sales split and tries to answer the question, What Is It That Galleries Do Anyway?, which is just a super question to ask when you consider that a gallery really is a business and not a public service or retail space and that most dealers really aren't interested in the non-buying, off-the-street hoodlum hoi polloi (such as myself) that drifts in and out of their $25,000/month tony exhibition halls, pestering the young staff with so-called in-depth questions (my 'interest' is a shallow cover for often unsuccessful flirting BTW). These annoyances surely account for the fact that galleries are only open 5 days a week (not including Sunday) typically with the awkward, non-working-class friendly hours of 10-6 pm and are closed for holiday for upwards of a month...

Anyway, here are some snippets:

Many folks outside the gallery system will look at that split and be amazed, I'm sure. The artist is the creative genius, the artist spent years in art school, the artist is the one putting it all on the line for the public to take pot shots at their vision. In other professions, like acting, managers only get 15% and agents only get 10%. Why on earth does the gallery take 50% of the money? The short answer is because it costs that much to promote the artist's work. The longer answer is, well...

All in all, I feel the artists who get it the best are also the artists who take the time to understand the business realities of the relationship. Many artists will complain about the split wholly unaware that at the point they're doing so, the gallery has spent more money promoting the artist than they've taken in through sales. In other words, the gallery has yet to recoup its investment.

Also:

I took a small survey of young(ish) galleries with bare bone staffs and predominantly emerging artists in their stable in New York. They reported that it costs between $6,000 to $12,000 per exhibition for the overhead/rent alone (these are all galleries with relatively modest spaces). This is before the gallerist takes a salary, let alone sees any profit for the business. That means, that with the 50/50 split, those galleries must sell between $12,000 and $24,000 of artwork per exhibition before they even break even. Before they can pay themselves anything. Before they can expand the business and reinvest in more resources to promote their artists. For many (if not most) emerging artists out there, I suspect, that means the gallery took a loss on your first exhibition. Sometimes a hefty one.

Furthermore:

...it happens all the time that after 5 years, after an investment of $50,000 or more, an artist will leave a gallery, or stop making art, or a whole range of things that make that investment disappear. It's risk like this that, to my mind, justifies the 50/50 split. At least initially.

We artistical-types are flakey that way.

But, I'm not really being snarky here, you should absolutely go to the blog and read the full writing as well as the insightful discussions on the comment board. Go!