This article originally appeared on Slate.
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I recently went to a gallery and saw pieces of broken glass selling for $1,000 per shard. Why?
Answer by Michelle Gaugy, art gallery owner, author, art consultant:
Money is a medium of exchange. We exchange it for something we either need or want. We have to give it up in amounts based on “values” that are set by a multitude of factors. Although there are those who assert that art may have “intrinsic value,” I'm not certain there is anything in this world today that is priced at its “intrinsic value.” What would that be? Construction materials plus some preset labor cost plus an agreed-upon “fair” profit margin? I don't believe even our food is priced like that these days. If Chile can raise the price on cherries in the winter, you'd better believe they will.
Everything I can think of is priced based on supply and demand. And that is also true of art. With art that was created by dead guys (not so many dead gals), scarcity is a real factor. There aren't too many Vermeers running around, so this dramatically affects pricing. He won't be making any more.
When it comes to living artists, other factors become involved. Presumably, the demand is not limited, although some artists only create (or say they only create, or their dealers say they only create) a limited number of works. However, any specific artwork is unique. And artists and dealers do other things in an effort to create value—the perception that the art has present, or future potential, value. They facilitate getting the artist's work written up by magazines, put into museums, or placed into well-known collections. This gives the artist's work third-party blessings—kind of like having your significant other approved by the family before he proposes, or the vintage car signed off by five mechanics before you write the check. It doesn't really mean the significant other won't leave you or the car won't break down two blocks later, but you feel reassured.
And art is like other items. Paintings are priced—and valued—in relationship to each other, within an extremely large and niched marketplace. It's like food or cars. Oranges aren't affected by the pricing of steaks, nor are Fords affected by the pricing of Mercedes, except in very large scale. Same thing with art. Those questionable thousand-dollar glass shards that prompted your question are priced relative to other similarly silly kinds of contemporary “artworks” (and the marketplace between dealers and collectors of those kinds of works), but are completely unaffected by the pricing of a Van Gogh masterpiece or a contemporary landscape. Each are bought, sold, and priced within individual marketplaces.
The other thing to remember when you see price tags on artworks, those numbers are ask—they aren't necessarily get.