Secondary market galleries: Surviving between auction houses and platforms

01What "secondary market" actually means for a gallery

The distinction between primary and secondary market is not merely academic — it determines the entire economic structure of a gallery. The primary market refers to the first commercialization of a work, generally by the gallery representing the artist. The secondary market concerns all subsequent resales: a Richter canvas changing collections for the third time, a Basquiat from the 1980s offered by an heir, a Louise Bourgeois edition acquired in the 1990s and brought back to market.

For a gallery, operating in the secondary market implies a fundamentally different economic model. There is no artist to accompany, no studio to visit, no long-term relationship to build. The added value lies in the ability to source rare works, establish their provenance, position them with the right buyers, and do so with a sufficient margin to cover carrying risks — since the gallery often purchases the work before reselling it, sometimes tying up considerable capital for months.

According to the Art Basel & UBS Art Market Report 2023, the secondary market now represents approximately 50% of the global art market, compared to 30% in the 1990s. This progression reflects both the maturation of the market and the multiplication of available resale channels — which is precisely the problem for specialized galleries.

02The asymmetric competition of auction houses

Sotheby's, Christie's and Phillips are no longer simply auction houses. They have become direct competitors to secondary galleries on their own ground. Private sales — without auction, negotiated directly between buyer and seller through the house as intermediary — already represented close to one billion dollars at Sotheby's in 2022. Christie's has developed Christie's Private Sales as a structured offering, with dedicated specialists by category, operating exactly as a high-end gallery would.

This hybrid model creates a resource asymmetry that is difficult for an independent gallery to compensate. Auction houses possess client databases built over decades, teams of conservation and authentication experts, exhibition spaces in the world's most strategic cities — New Bond Street in London, York Avenue in New York, Alexandra House in Hong Kong — and above all an institutional legitimacy that few galleries can match.

The sale of the Macklowe collection at Sotheby's in 2021-2022 — 922 million dollars, including a Rothko at 82.5 million — illustrates the ability of the major houses to transform an estate or a divorce into a global cultural event, generating considerable organic publicity. A secondary gallery offering the same works at the same moment would have had neither the audience nor the amplification to achieve such results.

03Digital platforms: democratization or disintermediation?

specialist online platforms, founded in 2009, today claims 1.5 million active users and partnerships with nearly 3,000 galleries worldwide. Its model rests on a commission taken from each transaction, a marketplace logic that accommodates the long tail perfectly: 50% of sales on the platform involve works priced below 10,000 dollars, a segment traditionally unprofitable for secondary galleries positioned at higher price points.

But the real disruption comes from elsewhere. By offering real-time price comparison tools — backed by Artprice and market data platforms databases — these platforms have made transparent a market that derived its value precisely from its opacity. When a potential buyer can consult in thirty seconds the sales history of an artist over ten years, a gallery's ability to justify a price becomes considerably more constrained.

1stDibs, acquired by Etsy in 2022 for 1.6 billion dollars, targets a different segment: high net worth individuals who simultaneously purchase art, design and luxury objects. The platform offers augmented reality visualization tools allowing users to simulate how a work would integrate into an interior — a feature that few secondary galleries can replicate without substantial technological investment.

Faced with these well-capitalized players, the independent secondary gallery must articulate a value proposition that neither auction houses nor platforms can reproduce: the human relationship, curatorial expertise, and the ability to build a narrative around a work that reaches beyond its purely commercial value.

04The survival strategies that actually work

Thematic specialization remains one of the most effective responses to competitive pressure. A gallery that has mastered a precise segment — European kinetic art of the 1960s-1970s, CoBrA, Japanese conceptual photography — can offer expertise that neither Christie's nor specialist online platforms can match within that perimeter. TEFAF Maastricht, where 70% of transactions involve the secondary market, illustrates the viability of this positioning: specialized galleries there regularly obtain prices that generalists would not have been able to defend.

Building a proprietary inventory is another strategy, riskier but potentially more profitable. Gagosian buys and resells major works on its own account — a Cy Twombly canvas acquired privately, resold with a significant margin to a collector within the network. This model requires substantial liquidity and a risk tolerance that few independent structures can afford, but it generates margins incomparably superior to those of simple intermediation.

Hauser & Wirth has developed a different approach, combining the representation of living artists with active management of the secondary market for their own artists. The gallery has accompanied the career of Louise Bourgeois for decades, and its expertise on this body of work allows it to advise collectors on their secondary acquisitions while maintaining a consistency of prices favorable to the entire ecosystem. This is a form of price stewardship that reinforces the gallery's position as a reference player.

05The question of resale royalties and their practical implications

In Europe, the artist's resale right — governed by Directive 2001/84/EC and transposed into French law in 2006 — imposes a levy on each resale of a work by a living artist or one who has been dead for fewer than 70 years, provided the sale price exceeds 750 euros and the transaction involves a market professional. The rate ranges from 4% for works under 50,000 euros to 0.25% for the portion above 500,000 euros, with a ceiling of 12,500 euros per transaction.

For a secondary gallery operating primarily in twentieth-century art, this levy is a non-negotiable cost item. It is collected by the ADAGP in France and redistributed to rights holders. But beyond its direct financial impact, it creates a competitive asymmetry with players based outside the EU: a New York or Hong Kong gallery selling the same works to European buyers is not subject to this charge, which can constitute a marginal but real pricing advantage in a market where negotiations often turn on a few percentage points.

Anti-money laundering regulation is an even heavier constraint. The 5th European Anti-Money Laundering Directive, which came into force in 2020, imposes on art market participants due diligence obligations regarding client identity and the origin of funds for any transaction exceeding 10,000 euros. For a secondary gallery whose transactions regularly exceed this threshold, this means rigorous KYC (Know Your Customer) procedures, demanding documentary archiving, and potentially compliance costs that weigh more heavily on smaller structures than on larger ones.

06Price transparency: the thorny question of valuation

One of the structural characteristics of the secondary market is the absence of standardized public pricing for works sold through galleries. Unlike auctions — where results are public and indexed by Artprice, market data platforms or MutualArt — private gallery sales remain opaque. This opacity has historically been a source of comfortable margins, but it is increasingly difficult to defend against better-informed buyers.

The Bouvier affair, which came to light in 2015, exposed the possible excesses of this opacity. Yves Bouvier, an art dealer and freeport manager, had overcharged works to Dmitri Rybolovlev over several years — a Modigliani purchased for 93 million and resold for 118 million to the Russian collector, a margin of which the latter was entirely unaware. The complaint filed by Rybolovlev triggered an international legal proceeding and, more structurally, an awareness within the profession of the need for greater transparency around commissions.

The secondary galleries that manage to hold their own today are often those that anticipated this expectation of transparency by adopting proactive communication about their valuation methods — without necessarily disclosing their margins, but by clearly explaining on what basis a price is established: sales history, condition, rarity on the market, context of the original collection.

07What freeports and offshore storage reveal about the market

The Luxembourg Freeport, the Geneva Freeport, the Singapore Freeport: these bonded warehouses where billions of euros' worth of works are stored sheltered from VAT and import duties are among the most revealing symptoms of the financialization of the secondary market. A work can reside there for decades, changing hands several times without ever physically leaving the building — and without the transaction being made public.

For secondary galleries that do not have access to these structures — reserved for large-scale players — this represents a double disadvantage. They cannot offer their clients the same tax optimizations, and they do not see these works pass through, works whose very existence on the market escapes them. The paradox is that the secondary market is simultaneously one of the most technically accessible — anyone can, in theory, buy and resell a work — and one of the most opaque in its actual workings.

The question that ultimately imposes itself is not whether secondary galleries can survive alongside auction houses and platforms. They are surviving — some are thriving. The question is what they choose to be: simple intermediaries in an increasingly disintermediated market, or fully-fledged participants in a culture of the work that reaches beyond its speculative value alone. The galleries that have clearly answered this question are precisely those whose disappearance no one is predicting.