According to Artprice, the segment of the art market that has by far performed best from 1990-2005 is photography. Artprice has developed an index that tracks art market segments in much the same way that the Dow or the S&P 500 tracks stock performance. Although their index indicates that art in general has not performed well since 1990 (their index starts at the same time as the art market "crash" of the early 1990s...had they set their starting date at a different time... say 1980 or 1995, their index would tell a more positive story), photography weathered the downturn of the early 1990's better that most other segments and has enjoyed higher appreciation in the recent boom years.
Why? Photography's recent wide acceptance as an art form only partially explains its performance. In fact, its wide acceptance may be a result of its performance. Money talks you know. Why then, does photography appear to weather storms better in down times and outperform other genres in good times? The ever-increasing market data available to collectors coupled with the fact that the nature of the medium is to produce near-exact copies answers the question.
The ability to discern market values and selling prices of objects is a cornerstone of transparent, well-functioning markets, from diamonds to real estate. Real estate appraisers can determine values of properties with a high level of certainty because of the wealth of data available. Consider a certain neighborhood in a particular city. Two houses of similar size and condition and on similar sized lots will nearly always carry very similar values. They have enough highly comparable traits to allow an appraiser to research other houses in that neighborhood that have sold with similar traits and accurately determine a value based on past sales. Location and size matter so much more than the color of the carpet that the nuances between the two houses have little effect on the value...perhaps 10% at most. Now consider two identically-built condominium units on the same floor of a high rise and with the same exposure (i.e. they face the same direction). The certainty that these two homes will be valued identically is very high. At that point they become like commodities - nearly every trait of the two units are identical and thus their value will be identical. Real estate holds its value in a large part because of this reason. Buyers have a high level of confidence in the market because of this comparability. (By now I'm sure you see where I'm going with this.)
In the art market, comparability is much more difficult. Especially in the world of unique objects. Far too many subjective factors come in to play. For this reason, the NYU economists Jianping Mei and Michael Moses in developing their credible art index only use resales of the same work of art over time in evaluating price fluctuations. According to an article written by them in the Journal of Investment Consulting, their indexes are based on a total of just over 7500 cases of resales primarily sold over the last 100 years when market data is most available. This is a sufficient number of examples to develop an overall market index, but is less helpful in determining the predictive value of a particular painting. There are just too few common traits.
Photography tells a different story because for any particular work there are numerous nearly identical copies. Where a painting may sell only once in a century, a photograph (or one if its identical copies) will likely sell many more times. Photographs function more like condominium units in the same building where paintings funtion more like houses in the same city. It is my position, given the huge amount of market data now available and the ability to more accurately discern a photograph's value because of the existence of identical copies, that the photography market will perform more stably than other market segments and over time will perform better.
Further, I believe that the differences in quality between individual works by a photographer are less broad than differences in works by artists in other mediums due to the exacting nature of the medium. The fewer the differences, the more items become like commodities and the better their markets function. This is not to say that photographs are commodities but they function far more like a commodity than a painting.
An example that helps prove my point is Hiroshi Sugimoto's Seascapes. These works are among the best and most predictable performers on the auction market today. Aside from the quality and importance of the work, the works in the series have a high number of common traits with the differences being almost quantifiable much like the differences in the color of a diamond. This allows collectors to have much higher confidence that the piece will hold its value and will perform in sync with other pieces in the series. And this is exactly what makes a market robust.
You may ask why prints are not as good as photographs from a market standpoint. The reason is simple: where a photographer usually sticks to one medium - photography, prints are usually only part of an artist's overall body of work and are thus evaluated within the entire body. Here then, more subjective factors come in to play. Further, prints (with few exceptions) have notoriously been viewed as less desirable to collectors as compared to paintings. Really, if given the choice, would you rather have a great Picasso print or an average Picasso painting? On the other hand, with photographer Philip-Lorca Dicorcia for instance, that choice simply does not exist. When photography is only part of an artist's overall body of work, it tends to then behave more like a print. Jack Pierson is a good example here.
Increased market transparency is playing a large part in the current market boom. Because of photography's ability to generate better comparable values, it possesses a unique trait that allows its market to have greater transparency and predictability, two traits that will likely make it the perennial market leader.