Even in tough times, contemporary art sells

(CBS News )Even if contemporary art seems alien or odd to you, consider this: the market for this art has outperformed the Standard & Poor's list of 500 common stocks since 2003. Morley Safer is back on the art beat, attending the most important contemporary art fair in the world: Art Basel Miami Beach. It's a matter of taste whether the paintings, sculpture, and what-nots are good art, but as a good investment, art is indisputably hotter than ever. In fact, elite art buyers - many from Russia and China -- are so ravenous that the contemporary art market raked in over $5 billion in auction sales last year.

The following script is from "Art Market" which aired on April 1, 2012. Morley Safer is the correspondent. Ruth Streeter, producer.

Almost 20 years ago we broadcast one of the most controversial stories in our 44 years on the air. It was called "Yes...But is it art?" I was accused of being a philistine, someone lacking the aesthetic sensibility to appreciate the challenging nature of some contemporary art -- art like Jeff Koons' floating basketballs or another artist's dripping faucet.

In those 20 years, works that I questioned, worth hundreds of thousands of dollars are now worth hundreds of millions. In fact, contemporary art has become a global commodity, just like oil or soy beans or pork bellies and there seems to be no shortage of people wanting to speculate in it and no shortage of billionaires willing to invest in it -- as a haven for their cash, or love of art, or as a status symbol. And to feed those beasts there are now art fairs, virtually every weekend round the globe. And in contemporary art, none are more important, than the one we went to in December.

To Miami Beach, once a mere escape from the winter blues, now one of the great contemporary art capitals of the world. The region hosts at least 30 art fairs annually, the most important of which is Art Basel. In Miami, the executive jets arrive by the swarm, more even than flit in for the Super Bowl.

Fifty thousand people turn up, dressed up and dressed down. You can't tell the billionaires from the wannabes, the gawkers, from the gawked-at, the exhibitionists from the exhibitions.

They come to celebrate the bonanza that contemporary art has become. The art market sizzles, while the stock market fizzles. This is where big disposable income comes to be disposed.

[Fair guide: They're going to invite us to head inside to say hello.]

Inside you will find an upscale flea market, a shopping mall where prices start at the thousands and end in the stratosphere.

There is very little sense of an aesthetic experience here, not the silence or even the suppressed hush of a gallery or museum. What you hear, or imagine you hear is the cacophony of cash.

[Dealer: This is $750,000...]

This fair seems to be about art as stuff, or stuff as art -- just so much merchandise, without a price tag in sight. There are some timeless gems, maintaining a quiet elegance, but they're shouted off the walls by the kitsch, the cute, the clumsy and the incomprehensible -- from oversized headwear, to art as performance, and of course video art, an artist in the agonizing throes of creation. And then there's the question you've been dying to ask: how much is this stuff worth? Rather how much does it cost?

Dennis Scholl: There's a price for you, and there's a price for me, and there's a price for somebody else.

Dennis Scholl and his wife Debra are longtime collectors, familiar with the unwritten rules of the art bazaar.

Dennis Scholl: It's really what a willing buyer will pay to a willing seller in the art world. So, when you go and look at a piece of art, the price is what you negotiate. There's no fixed price per say. And prices move up and prices move down very quickly in the art world, particularly with young artists.

Morley Safer: And have you made some mistakes? Or have they all been pretty...

Dennis Scholl: Well, we've bought a thousand pieces of art in my life, so we've made plenty, plenty of mistakes in my life. I mean we have, yes, and you know what you do? You just bury them in the backyard and forget about them.

Two hundred sixty-five dealers are invited and they're willing to spend up to $150,000 for the privilege of showing their wares. Am I, are we, such philistine slobs that we wonder about the value of some of this? Is this art that dazzles the eye, or makes us think? Do baby blue translucent bathroom fixtures prick the imagination? Does that toilet seat raise our spirits or is it directing us to the men's room? Or is this the biggest scam since Hans Christian Anderson trotted out the emperor's new clothes.

One thing's for sure: it's no joke. Look at this graph. Contemporary art sales last year totaled about five and a half billion dollars. And that only includes auction prices. Private sales like these art fairs could be worth billions more. Recession? What recession?

[Adam Sheffer: Good. Deal.

Buyer: Perfect.

Adam Sheffer: Cool. Great. I'll bill you.]

Tim Blum: The real fundamental thing is we're here to sell a lot of art.

Tim Blum, a partner in Blum & Poe, a Los Angles gallery renowned for discovering the sharpest of cutting edge art.

Morley Safer: Some of the art that you sell could probably be described as difficult?

Tim Blum: Oh, absolutely. 100 percent. I mean, we kinda specialize in that.

Morley Safer: You have to explain to a potential buyer--

Tim Blum: Yes.

Morley Safer: --why he or she might learn to love this?

Tim Blum: Yeah, often you do. A lot of folks are just buying. It's more like, "We need one of these things because everybody's getting one."

Morley Safer: Status.

Tim Blum: It's a status symbol. It's a speculative op-- mechanism.

Morley Safer: Do you sometimes have to grit your teeth? Even when you're making a sale?

Tim Blum: Yeah. We're very good at that. We're from Hollywood. We're in the acting game. Yeah. It's theater. This is all theater.

And Blum knows all the A-list collectors.

Tim Blum: There's people that are collecting art in a very beautiful, organic, autobiographical way where the art is a part of their lifeline. And then there's pure speculators. And then there's the people that just have so much money, and the art is the next-- is the next thing on the queue.

Morley Safer: You're appealing to the one percent as opposed to the 99 percent. Correct?

Tim Blum: One percent and/or .00000001%.

Eli Broad: We just bought that. Just now. In the last few minutes.

Eli Broad, the one percenter of one percenters, the collector of thousands of art works, builder of his own museum. He's giddy with the thrill of having beaten the pack to a drawing by Kara Walker. A truly gifted young American artist. Collectors like Mr. Broad get first dibs on the really good stuff. He moved on to pick up photographs by Cindy Sherman. He was one of her first collectors.

Eli Broad: I love Cindy and love her work.

He has good reason to love Cindy. He first bought her pictures back in 1982 for $250. Today they go for nearly four million. All of her subject matter is herself, in various guises. Her current retrospective at New York's Museum of Modern Art gives her work even more value.

Morley Safer: What are you looking for?

For dealers the gold standard is selling to a major museum. So When Jennifer Stockman, on the right, president of the board of the Guggenheim Foundation along with a senior curator, Alexandra Munroe, turns up, the waters part.

[Alexandra Munroe: If you go into this concave...

Jennifer Stockman: Let's walk in.]

They, along with the dealer Barbara Gladstone, went ape over this sculpture by Anish Kapoor.

[Barbara Gladstone: Before it's like...

Jennifer Stockman: And then you also don't know...

Alexandra Munroe: And you have no idea of depth.

Jennifer Stockman: I mean it's very strange.]

We moved on to an installation by Haegue Yang, a Korean artist. This tangle of extension cords, asking price: $33,000.

Alexandra Munroe: We already are very committed to this artist so I'm really excited to come and see new work by Haegue. She is a perfect example of a contemporary, peripatetic, global artist. I always find some sadness in her work. Something's unstable, something's unfinished. Something's like never complete. It's always in the process. And I think that's sort of how we live today.

Art-speak, the descriptive language of contemporary art, can seem as opaque as spilled alphabet soup.

Jeffrey Deitch: And the art fair gives you a very good context for this...]

But a language fully understood by Jeffrey Deitch, former dealer, now director of the Los Angeles Museum of Contemporary Art. He could not resist reminding us of our report of 1993 -- and who had the last laugh.

Jeffrey Deitch: In the art world, we remember very well that famous program that you did 20 years ago where you-- it was almost a send up of the contemporary art market.

Morley Safer: We had a little bit of fun with it.

Jeffrey Deitch: But I think in terms of market value, I think the time that we were talking, Jeff Koons was very well-sold at $250,000. And, as you know now, Jeff Koons works have gone for $25 million or more.

And nearby, arguably the most powerful dealer in the art world, the famously reticent Larry Gagosian, owner of 11 galleries round the world. He reluctantly graced us with a few words of wisdom.

Morley Safer: At least say hello.

Larry Gagosian: Hey Morley. You always look so dapper. I love that.

Morley Safer: This place has become one of the places that someone like yourself have to show at?

Larry Gagosian: Yeah, for me it's a place to sell art, to make money. The art fair has become a huge part of our business.

Morley Safer: How have China and Russia changed the art market?

Larry Gagosian: It's been a huge factor, I think the wealth in Russia, the Middle East, Asia has changed it, changed it dramatically.

Just how dramatically, can be seen in this graph. In orange is the contemporary art market's performance compared to the grey which is the S&P stock index. Much of that dramatic rise is a result of those new billionaires from China and Russia, parking their money in art.

[Maria Baibakova: You have to tell me a little more about this Richter...]

Maria Baibakova, age 26, is interested in this dealer's Gerhard Richter, a German artist who is the current rage.

[Maria Baibakova: It's got a lot of wall power...]

She's a Russian oligarch's daughter, who's spending a fortune on contemporary art.

[Dealer: And my painting I'm selling it for $4.8 million and so you're getting a bargain with me today.

Maria Baibakova: That's a real bargain.

Dealer: I think so!]

Certainly a bargain if your daddy's a billionaire and you're playing in a market where the rule is...there are no rules.

Tim Blum: It's the Wild West. This is not a normal retail business. It's an unregulated, utterly bizarre place to conduct business.

Morley Safer: The competition is great, yes?

Tim Blum: Yeah, it's literally a multibillion dollar economy, the art world. So the way the business is run, and the competition between dealers, between artists, is often vicious.

This is where the art trade's carefully constructed mask of Olympian high culture begins to crack, and the underside of a booming, cutthroat commodities market is revealed, one without regulation or oversight, in which price fixing and control of supply, to maintain demand, is both legal and commonplace.

Tim Blum: How does this boom keep sustaining itself against all odds? It's inexplicable. I mean, it really is almost unexplainable. And we don't even-- when we bring it up and wanna-- and start-- and begin to talk about it, we sorta drop the subject. Because it almost feels like you should just let it keep rolling.

Morley Safer: 'Cause it's going against what's happening--

Tim Blum: Yeah. Absolutely.

Morley Safer: Elsewhere in the economy.

Tim Blum: 100 percent.

Meanwhile the prices rise and the band plays on and all's well in this wonderful world. If the music stops, and the bubble bursts -- no big deal, the collectors are bubble-proof. It's only their mad money they're spending anyway. They'll still have the pleasure of their art, easier to look at than pork bellies, or maybe not.