The only people who make money off this shit are people who can afford to drop $100m in a night, the many layers of market middlemen ready to take advantage of gullible rubes who thought that "art always appreciates," and like two guys on Antiques Roadshow that lucked out
Quickly logging on to reiterate in case it isn't already clear: do not, under any circumstances, sink your money into art as an investment. It's one of the most illiquid and temperamental assets you can have.
I have no doubt that Masterworks might return some good results, since you're buying into fairly secure (for now!) blue chip artists. But the money spent on a fractional share of a painting that won't be offered for a decade or more, and might get burned at market because an oligarch buyer decides it doesn't match the drapes on his yacht, is better spent on literally anything else.
Edit: also if you're gonna buy tangible assets like this, buy something that you can actually hang on your wall and look at. The fact that this shit just exists on a fucking spreadsheet is just lmao
It's a known fact that AbEx was partially funded by the feds to combat Social Realism and the Muralists while creating a "homegrown" American art movement that foregrounded the import of individual expression.
E: but to clarify, the statement "modern art is an op" is dumb and wrong and ignores literal centuries of art history
One thing I'll note about this is that art absolutely goes down in value and suffers from the same changes in taste as anything else. Markets get spiked, works get burned, artists aren't as trendy anymore. The really big names will usually pull in big money, but strip away the Sotheby's/Christie's hype machine and works are worth only what someone will pay for, and sometimes that's zero.
Some real formal talents that just got immediately turned into commodities. Like you're never going to really develop your practice when you're painting 16 colourway of Mickey Mouse or whatever because that's what your dealer decided your next show is going to be. Just brutal.
Oh one more thing that might be interesting to know is the "irrevocable bid," which came into existence at auction houses after 2008. Basically a lot will come to market with a little star next to it saying a third party has already put down a particular bid for the work which would guarantee the sale, with an agreement that they'll get a cut of whatever the final hammer price is if someone else ends up winning. In practice, this means that the third party has already bought the work for their price, and the auction is just for show. It's a way for auction houses to secure better inventory from consignors ("we already have a buyer"), and allows buyers to avoid the hassle of bidding, all while putting on the theatre that this is a legit auction. Basically everyone hates it because it obfuscates everything, artificially inflates the market in a super obvious way, and is kinda dumb.
Made a new account because I work in the industry. Aspects of this meme are true but generally it's not this blatant. The blue-chip art market is pretty financialized, and scams between dealers and buyers definitely exist that auction houses are all too happy to facilitate, but it's a bit more complex than this. I also take exception to the punchline that abstract or non-figurative art is a result of grift, because that's just hugely incorrect, but maybe I'll save that for another post.
High level collectors will donate works to museums and institutions and they will usually get a tax write off for that, but generally you have to have had the work in your possession for a few years before it counts, so guys buy things and store them for a few years. Museums and institutions actually generally don't want donations, since they already have their own problems with inventory and generally can't afford the riders that a lot of these donations come with ("I'll give you my collection of 10 paintings if you agree to have them on permanent display with my name on it") so quite often they'll tell you to fuck off. If you buy a work with the aim of a tax write off, generally you've already worked out a deal with the institution and it's probably something of existing historical import that they'll want.
A bigger issue with the contemporary art market is the relationship between dealers, their artists, collectors and auction houses. If you buy the hot new artist from one of the huge galleries - Zwirner, Gagosian - or the next tier or two down, you'll likely sign an agreement to not offer any work at auction for X years, or that you'll buy one and buy another to donate, mostly with the aim of inflated desirability and limiting supply. Often those agreements are informal by design, so new works enter the market come with maximum hype. "Wet" paintings entering at auction is a term you'll hear for any new painting that was recently finished, bought, and reoffered. There's a huge issue with middling new painting ("zombie formalism" and now "zombie figuration") flooding the market and getting outrageous prices on the back of speculation and flipping, but part of this at least can be explained with dumb new money - tech bros, oligarchs, etc. - and bad art advisors.
The most inaccurate thing about the above is an inflated valuation by an appraiser. Appraisal values are based on sales records, and since those are basically public so most of the grift comes from trying to juice the sales market directly.
Anyways. As I was typing this @solaranus also covered some of it, so I'll leave it there. The important thing is that artists usually get the short end of this stick and won't see anything after the initial sale. We're seeing a shift in the secondary market with artists' resale rights being built into contracts or buyers premiums, so that for each resale the artist will get a small percentage cut - but at the moment it's just huge artists like Richter who can get away with adding that, or smaller auction houses, so there's still a ways to go.
holla atcha boy with that link