Many of these folks aren’t necessarily in the “folks with enough cash” category (at least not the ones I know) but rather folks who can live cheaply enough to work paying jobs part-time and spend the rest of their time following more creative pursuits. That used to be easier when Midtown rents were a lot cheaper, but it is still possible now. And because there is more of a market for the goods and services (art and performance) provided by those artisans these days, it means more funky shops. And sure, many of them will open and close over a period o years, as most are the product of a single individual who may have dramatic life changes or move on to bigger, better things, or just reposition within the neighborhood due to good or bad fortune (Olipom/Bows & Arrows is a good example of this.) Sometimes technology or cultural shifts make changes, like the decreased viability of record stores and used bookstores (thanks to digital media and Internet sales) but other trends can shift those stores back (like small stores selling via the Internet in addition to brick & mortar business.)

Gentrification doesn’t necessarily have to mean an economic upheaval in the neighborhood. Midtown is actually a really good example of a community where the effects of gentrification have been slow and gradual, with the exception of the middle part of this decade–and due to the recession, that phase may be over for a while. Especially when the people doing the “gentrifying” are actively interested in being part of a diverse creative community, that fragile stability can be maintained.

It looked to me like the core of what became “Second Saturday” was engineered by the Art Supply store owners, who knew the artists and business. They put up seed money, shmoozed city council and real estate moguls. You could still rent many spaces for 3 or 4 hundred a month, so a few events that made a couple hundred was actually profitable. The downturn for me at least occured when Ron Kerth and a bunch of other NS landowners tried to redevelop North Sacramento, and a bunch of Gallery Owners got enormous chunks of money to hang there inventories in derilict mechanic shops and abandoned store fronts up there. Cafe Montreal moved up there, and died. There were too many incidents with street people, and once the redevelopment money stopped flowing in, the gallery owners went back to their Art Supply stores and Com. College teaching gigs. None of them showed any profit on the books. N Sac looks just as aweful as it did before the revamping.

Now the Art Gallery thing is a cliche; every coffeehouse and bistro hangs art and stays open late, only on Second Saturday. Downtown is mostly dead, Mid-Town is dominated by the Gay scene, and once a month a bunch of bored, and mostly drunk people wander about, buy coffee, food, and pretend to look at art. I don’t think it does much for Art, as you are as likely to see repros from some NY or LA artist as anything local. It is more toys and furniture now.

Anyway, your observation that the galleries are the cornerstone of midtown’s recent gentrification is astute.