The structure of the art market is a network of social and economic relationships linking art and value. This value can be aesthetic, cultural, monetary, or otherwise. These markets are divided into the primary and secondary markets, and each is defined by a complex web of unique relationships and rituals.
On a social level, the market structure is a network of relationships between artists, dealers, and buyers and collectors. Olav Velthius defines the relationships between these parties as "circuits of commerce" (Velthius, 5). Within these circuits, goods and services are are subject to market and gift exchanges, or a combination of both. Members of these circuits can be motivated to exchange for status or love, among other things (Velthius, 6). These circuits can be further broken down into the opposing "avant-garde" (high art) and "traditional" (commercial art) categories (Velthius, 18).
The value for works of art is assigned rather than intrinsic (Coslor, 209). In order to understand how dealers set prices for works of art, one must understand how both cultural and symbolic values relate to monetary values. The relationship between the artist and dealer is of primary importance. It may resemble more of a family or friendship than a business relationship. Only when this relationship is firmly established will the artist and dealer begin to discuss their economic relationship. This can take three forms. The dealer can employ the artist to produce work, they can purchase work from the artist and resell it, or the artist can consign his work to a dealer and the profits are divided. When deciding how to set prices, dealers have a multitude of factors to take into account, which may include age and reputation of the artist, the technique and size of the artwork, and the affiliation and age of the gallery (Velthius, 8).
Though not all exchanges focus on money. Many in the art world take the "hostile worlds" point of view, which essentially states that money corrupts integrity. These people often place the emphasis on "transcendentlal" or aesthetic values (Coslor, 22). In place of monetary exchanges, a symbolic and ritualized system of gift giving is used. For example, an artist can donate work to a dealer, and a dealer may subsidize an artist (Velthius, 76). This is typical business etiquette of the primary market, which is highly ritualized. The transition of art from the studio to the gallery is also highly symbolic and ritualized. Receptions and celebrations of the artist's career are important to downplay the commercial aspect of the move. Acquisitions are usually followed by toasts, again to transform an act of commerce into an act of celebration or ritual (Velthius, 38). The etiquette of the secondary market is less restrictive and does not make as much of an attempt to mask commerce with ritual.
The architectural strategies of the art gallery reflect this network of relationships and the importance of symbolic value. First, galleries are categorized as either "avant-garde" or "traditional". Avant-garde galleries are concerned with the "transcendental," or nobler aspects of art, and try to convey a sense of austerity. They characteristically have clean, white interiors with little decoration. They are more like museums than shops. It is where receptions and socialization take place, and the space is therefore symbolically appropriate. The facade conveys the same message; it is usually very minimal and space, symbolizing the values of the establishment. Traditional galleries, on the other hand, are more concerned with the business side of art, and their interiors look more like shops. Their facades are often quite transparent, again resembling other commercial spaces.
The "avant garde" gallery is further divided into a front and back room, symbolic of its different relationships to the art market. The front room, white and austere, references the noble side of art and avoids reference to the commercial aspects of the market. The back room is where commerce takes place, and is treated in a more informal way (Velthius, 33).
With the increasing influence of high end designs on commercial shops, I wonder if there will always remain a clear distinction between the avant-garde and traditional galleries. For example, the MOMA design shop, while not exactly a gallery, seems to provide a good example of the blurring between high end design and commercialization.
http://www.momastore.org/museum/moma/StoreCatalogDisplay_-1_10001_10451_