Artists are putting their business caps on and creating a new kind of community - the `artist-led space'. John Windsor meets a group in Deptford, that will exhibiting at this week's Art 97 show

Paul Hedge was in his apron, stirring pasta sauce in his caff in Deptford High Street, when Charles Saatchi, the adman-collector, poked his head round the door. "Is anybody available from the gallery?" he asked.

"That's me," said Hedge.

The Hales Gallery is tucked away in the basement. Hedge, 36, a warehouseman's son who co-founded it after getting a first in fine art at Goldsmiths College before spending 11 years as a postman, knows better than to affront passers- by with art, however hungry they might be. "This is Deptford High Street," he says, "not Cork Street."

Besides an ace caff, he offers ace toilets. They are in the basement, too. Which means that on Wednesdays and Saturdays, traders from the street market outside expose themselves to art three times a day. The visitors' book contains as many plaudits for artworks as for cream-topped desserts and attention to hygiene.

Saatchi, not your average passer-by, and not, as it happened, either hungry or taken short, has bought the work of four of the gallery's artists. But then, it is not your average gallery. Saatchi, as everyone knows, could spot an up-and-coming artist in a haystack, let alone Deptford High Street. So how can we passers-by learn to poke our heads round the right doors and do the same?

Visit Art 97, the ninth annual London Contemporary Art Fair at the Business Design Centre, Islington (Wednesday 15 to Sunday 19 January) and you will find six stands occupied by galleries of the Hales ilk. What distinguishes them from other exhibitors, who are almost all dealers, is that they are what has become known in art-market jargon as "artist-led spaces" - communities of artists who curate their own selling exhibitions, sometimes living and working together.

The six have been invited to exhibit free at Art 97 by the Contemporary Art Society (CAS), which scours the country for promising work to sell at its annual fair and donates some of its finds to museums and art galleries. The CAS, it could be said, has the Saatchi touch. It does our homework for us.

Gill Hedley, its director, will be lecturing at the Fair on how to buy art (Wednesday, Thursday, Saturday, Sunday, at 3pm). Whether you are a shy first-time buyer with a modest income, a company man seeking something inspiring for the foyer, or a rich philistine bent on art investment, you can expect a demystifying introduction to degree shows, commercial galleries, art fairs, art magazines - and the growing phenomenon of artist- led spaces.

There was a time when buying direct from artists meant climbing rickety stairs to a garret and hoping that the genius was awake. Not any more. These days, artists are becoming - jargon again - more "visible". Ms Hedley says, "They can no longer survive by waiting to be discovered, so they are organising themselves, creating their own opportunities. Some of their exhibition spaces are quite substantial." Notably, in former warehouses in the East End of London.

Artists have a particularly good reason for coming out of the garret and getting together: they are dead poor. Research by the National Association of Artists has found that more than a third of them earn less than pounds 5,000 a year and only 14 per cent actually make a living from art alone - they teach art and do other jobs as well.

Of the 11,000 artists in London, 17 per cent are already in artist-led spaces accessible to buyers - according to separate research by Britain's foremost researcher on British artists, Susan Jones, a seasoned debunker of statistical myths of the more-artists-in-Hackney-than-Europe kind.

A well-run artist-led space can now get public funding, especially since the National Lottery began to look kindly on them. Which means that, all of a sudden, public arts bodies have developed a yen to find out how organisations run by artists tick. No fewer than 11 of them, including the Arts Council, the regional arts boards and the Calouste Gulbenkian Foundation, gave money towards Jones' latest research, to be published in the April issue of the visual arts magazine, Artists Newsletter.

Its findings are paradoxical. Artists' communities, it says, have become a valuable commodity, hailed as bringers of cultural vibrancy, social wellbeing and economic stability - positive indicators of an area's quality of life. (Ms Jones does not mention the housing market: but from my vantage point, in Hackney, I can tell you that estate agents rub their hands together every time a newspaper article appears proposing this borough as the equivalent of Paris's Left Bank.)

But it seems that the artists' new-found social status will not automatically make them rich. In spite of the well-meaning concern of art colleges (and perhaps the Inland Revenue) that they should be trained to manage their affairs like small businesses, their chief concern is not making money but maintaining their own lifestyle. That is, they tend to plough back their earnings into paint, canvas and sculptor's stone, while foolishly agreeing to exhibit in public galleries virtually free.

Hedge has discontinued small-business training. The gallery's mentor, an ex-Sandhurst and ex-London Business School man, Andrew Baines, used to help him and his business manager, Paul Maslin, give evening classes in book-keeping, negotiating skills and marketing. "We couldn't have done without Andrew. He gave his services free and we still telephone him for advice."

If you want to know how the Hales Gallery ticks, your best starting point is the Woolpack at London Bridge and the Bird's Nest or the Dog and Bell at Deptford, where Hedge, Maslin and the artists drink in the evenings.

"We talk about art," he says. "Once dealers stop going down the pub with their artists, their galleries are in danger of losing their way. There is more to representing artists than just sitting in a shop with a stack of paintings in the basement."

There are no written contracts, either. "Once a dealer stops wanting to work with an artist, or an artist with a dealer, you might as well say bye-bye, contract or no contract. The financial gains are not worth the emotional agony."

Thirteen artists sell their work through the Hales, six of them exclusively. The gallery takes 38 per cent commission, not the standard 50 per cent. There is an unwritten rule that the six artists tell Hedge if they are negotiating to sell through other galleries, so that he can negotiate a cut.

One or two of his artists telephone him almost daily to discuss their careers - he finds himself cooking lunch with a telephone clamped under his chin. "I think that's really healthy," he says. "It's a bit like managing the careers of pop stars in the Sixties. These days, promotion is nine tenths of what artists need. They may know how to produce art but not how to present it.

"An artist like Keith Wilson, for example, who turns the contents of a room into a sculpture, has a slim chance of selling to the average punter. He needs the flexibility of showing at other galleries. His work is destined for museums and private collectors. We also encourage him to apply for publicly funded projects."

He adds, "There's nothing more depressing than listening to an unsuccessful 40-year-old artist who talks only about his art, not how to get it into the public forum - as if he was just out of college."

He hangs some of his artists' paintings in Savile Row - in Richard James, the tailors, and Atlas, the hairdresser's. "Mutual benefit," says Hedge. "Savile Row may not be associated with art, but it is associated with quality. We've had clients from there make the pilgrimage to Deptford and I've visited their homes to hang work."

And to lure more of them on the pilgrimage - big, sensational installations. "Getting people to Deptford is a feat in itself. You won't do it with small watercolours. We like one-person shows that offer something big and dramatic." This is where the creative, artist-led space scores over West End dealers with accountants at their elbow - the sort who tell you that big installations are unsaleable.

Saatchi bought from the Hales an installation in gold polythene by John Frankland, a foyer passenger lift entitled `You Can't Touch This', now on permanent display in the Saatchi Collection. It cost him pounds 9,000. He also bought several installations of furniture by Keith Wilson. Not, you might think, the most commercial sort of art: nevertheless, one recently sold for pounds 9,000.

From Claude Heath, Saatchi commissioned an installation of four large paintings based on drawings that the artist made by blindfolding himself, feeling his brother's face and making an impression with coloured ballpoint, price pounds 12,000. And from Richard Woods, the gallery's most prolific artist - buyers in America and Europe, forthcoming shows in Milan and Stockholm - he bought three big photograph-based paintings: pounds 3,500 each.

The notorious Jake and Dinos Chapman, whose characteristic work is small figures with penises in funny places, had their first show at the Hales. Leo de Goede, a 38-year-old artist specialising in formal abstracts, has left his native Holland to join the gallery and David Leapman, a John Moores prizewinner last year, has quit a West End gallery to join. "His arrival was a great boost, a recognition of my skills," says Hedge. "David is an older, established artist."

In its first three years, the Hales did not aim to sell. "The important thing was to create an atmosphere," Hedge recalls, "to dismantle the cultural baggage and class snobbery surrounding art. Not in a patronising way. We just wanted to say to local people: this is our shop and this is how we live." They had raised pounds 65,000: pounds 22,000 from Task Force, a forerunner of City Challenge, the rest from local people and parents. The three founder partners contributed pounds 100 a month and the caff turned a profit. Local MP, Joan Ruddock, supported their application to the Department of Trade and Industry to run the business-training course.

The derelict shop had been left to the Shaftesbury Society in a will. Maslin's father is one of the Society's pastors. The basement, a former undertaker's, had not been used since 1936. The black horses' plumes they found there are now in the Reminiscence Centre in Blackheath. For cadavers, there was a zinc refrigerator packed with sawdust, a box of theatrical face make-up and tooth powder. There were also jars of formaldehyde: just the job for contemporary art.

Other artist-led galleries presented at the Fair by the Contemporary Art Society: Cairn Gallery, Nailsworth, Gloucestershire; Catalyst Arts, Belfast; The Agency, London; The Tannery, London; Transmission, Glasgow. See also the Eagle Gallery, London. Opening hours: 11am-8.30pm.

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