Disguised in a thick beard, wire-frame glasses and a rather crumpled bucket hat, Banksy sneaked into four of New York's most prestigious museums in March 2005. He hung work on their walls without permission - including a Warholesque painting of Tesco Value cream of tomato soup cans in the Museum of Modern Art and a harlequin beetle accessorised with Airfix weapons at the Natural History Museum. Afterwards, the Street Artist explained himself on graffiti website woostercollective.com: 'I've wandered around a lot of art galleries thinking: "I could have done that," so it seemed only right that I should try. These galleries are just trophy cabinets for a handful of millionaires. The public never has any real say in what art they see.'
This statement is no longer true. Bemusing events have happened since which have unbalanced the status quo of the art establishment as described by Banksy. This month Tate Modern - the world's most popular modern art gallery - hosts 'Street Art', a group exhibition which will turn the building's riverside façade over to be used as a canvas by the artists. The show features work by European Street Artists Blu, JR and Sixeart, São Paulo's Nunca and Os Gemeos and American collective Faile. If recent events are anything to go by, the show will be popular: last weekend's Cans Festival, held in a London railway tunnel, was a huge bank holiday hit. The event featured work by 40 artists and was organised by Banksy, the first show he's overseen since 2005. The crowds at Cans were no surprise - when the genteel Andipa Gallery in Knightsbridge held a Banksy show in March, 2,500 visitors turned up. Queues formed; extra security was hired. At Black Rat Press, a gallery in the more typical Street-Art territory of Hoxton, last month's Nick Walker show saw people camp overnight for the chance to buy one of his prints.The show was a sellout.
The public may still not have much say over what art they see in galleries, but they're certainly getting better at expressing their opinions. Banksy not only received the public nomination for the Turner Prize in 2005, but he was also voted one of the nation's top three art heroes in a YouGov survey last year. In Bristol, the artist's hometown, the city council held a public vote in 2006 on whether Banksy's graffiti on the wall of a local sexual-health clinic should be removed. The public decreed it should stay. Network Rail has since given its cleaners art lessons to ensure they don't erase any of Banksy's work.
Millionaires are now buying the sort of art that Banksy used to smuggle into museums, displaying it alongside other contemporary artworks. Despite the universally negative appraisal by British art critics, who've called Street Art 'a joke' and 'a massive bucket of steaming hype' or simply refused to discuss it, auction houses regularly feature Street Art in contemporary sales, and serious collectors buy it. In February, Bonhams held the world's first dedicated Urban Art auction. While Banksy's monkey stencil Laugh Now fetched the highest price (£228,000), Nick Walker's Moona Lisa - a bottom-baring version of La Joconde - went for 10 times its reserve price, selling for £54,000. Street Artist Adam Neate's The Apprentice, an unnerving naked figure painted on cardboard, went for £43,200. 'Because the auction was the first of its kind,' says Gareth Williams, Urban Art expert at Bonhams, 'we didn't really know how it was going to do, but the reaction was tremendous: the public response, the international press - and how much the work sold for.'
As well as traditional art collectors, actors Angelina Jolie and Brad Pitt have spent £1m on Banksy's work; Christina Aguilera has his lesbian Queen Victoria in her front room in Los Angeles. Damien Hirst spent £500,000 buying the entire show of artist Paul Insect's Pop Art-inspired work last year before it even opened.
While buyers prepared to pay these figures are typical members of the exclusive art market or wealthy celebrities, those selling the work are a whole new breed. Street Art has been popular on, well, the street, for years. Artists whose work first appeared on walls were soon asked to create commercial work for album sleeves, shop walls and clothes designs, and many of the people who grew up with the art went on to buy it as prints or canvases. Pieces bought for £100 five years ago now sell for thousands. Street Art is making new millionaires - of the artists who create it, and those who invested in it.
Many British artists are inspired by the graffiti which has covered New York's streets and trains since the Seventies and soon turned up in Britain's pop culture as well as on its city walls. Nick Walker remembers first seeing 'snippets of graffiti on videos for Malcolm McLaren's "Buffalo Girls" and Blondie's "Rapture" - large-scale letters being outlined'. Graffiti made a brief stir in the Eighties art scene, making enduring stars of Keith Haring and Jean-Michel Basquiat.
Despite its American origins, Street Art is now centred in Britain. The auction houses here have been quick to sell it, and the media has turned it into a running news story. Faile's comic-book inspired stencilwork will appear in the Tate Modern show, but founders Patrick McNeil and Patrick Miller, who talk over each other on speakerphone from their New York studio, say their art world isn't as receptive. 'New York has such a history of this art, but institutions are waiting to see what happens before they open the doors to it. The art is starting to surface in New York Sotheby's and Christie's, but it wouldn't be if it weren't for the excitement [in the UK].'
Street Art is not just spray cans and stencils. Artist Invader uses ceramic tiles to create colourful computer-game avatars in public spaces; JR and Jonathan Yeo are photographers, and while Banksy certainly likes his stencils, installations such as the Portaloo Stonehenge Boghenge at last year's Glastonbury Festival and the painted pachyderm in Live Elephant in the Room from his Barely Legal exhibition held in LA in 2006 (which made his name in the US and netted him $3m in sales) are key to his work. Street Art often depicts goods, fashions and brands, frequently subverting adverts.
'The media and critics lump artists together to define a movement,' explains Adam Neate, a 30-year-old self-taught artist best known for figurative paintings created on found cardboard. 'I'm nothing like Banksy - the only common thread is that we've come from the street, which is where we show our work. When you get to a certain level, you may show in a gallery, but there's not an art-school clique or any group exhibitions that define Street Art like there was with Young British Art. We've come a different route.'
Until now a contemporary artist's typical trajectory consisted of art school followed by gallery shows leading, ideally, to purchase by influential collectors and public institutions with accompanying media adoration and invites to cool parties. But just as MySpace bands rocked the music industry, blogs scooped the newspapers and YouTube proved far more entertaining than TV, Street Art appears to be the art world's first taste of internet-fuelled people power.
'I get thousands of hits a day on the website,' says Paul Jones, director of London gallery Elms Lesters. 'If one of my artists makes 60 works a year and yet thousands of people are searching for his art on the internet, the price is going to go up.' The popularity of sites such as woostercollective.com and graffiti.org means that almost as soon as work's gone up on the street, it's available to a worldwide audience; picturesonwalls.com offers prints and canvases for sale. 'You can paint a wall in Australia,' says Neate, 'and in a matter of hours it's on all the forums and blogs - if you're Banksy, it gets on the news. What Street Art does more than any previous movement is to use the media as a medium.'
Availability and visibility have been huge factors in Street Art's rise. Banksy has played an unprecedented role in the reporting of current affairs. His art's been shown in the media in connection with Palestine, animal rights, the Iraq war and most recently, the London Mayoral elections. Sir John Sorrell, chair of the Design Council for six years until 2000 and founder of the Sorrell Foundation, which inspires creativity in young people, has bought Street Art for five years now (he stresses that it's a modest and inexpensive collection), but he's long been interested in the crossover between youth culture, creativity and the art world. 'In the summer, I was in New York. An artist called WK Interact was up [meaning his stencil images were sprayed on the city's walls] all over New York.
He was also on the walls of the Elms Lesters gallery [in London], with canvases on sale for £25,000, yet you could still see his work for free on the street. That's the thing with these artists - they really do want people to see their work, and to see it for free.'
Whatever the artists' intentions, serious collectors can't get enough of their work and are prepared to pay silly prices. At February's Red auction at Sotheby's New York in support of Bono's Red charity initiative, Banksy's art was a star attraction, even though he was jostling for attention with Jeff Koons and Andreas Gursky. 'That was the first time Banksy had been sold at auction in New York,' says James Sevier, contemporary art specialist at Sotheby's, 'but Banksy got one of the highest prices of the night. There's demand for Street Art, and the prices reflect that.' In fact, virtually every time Banksy's work appears at auction he breaks his price record - and now artists such as Adam Neate and Nick Walker are doing the same.
Walker is a 39-year-old contemporary of Banksy's from Bristol, whose recurring motif is a bowler-hatted and suited vandal stencilled on walls and now canvases. He was in Los Angeles for the opening of his show at the Carmichael Gallery when the Bonhams Urban Art auction price of Moona Lisa saw him christened 'the new Banksy'. 'I didn't realise Banksy was old and needed a new version,' he says of the title. He doesn't know who bought the work, 'but they must have really wanted it'.
Of the queues for his Black Rat Press show after the auction, he says: 'It was nuts, overwhelming. It's so hard to respond to people camping out to buy a print of my images.'
Whether those queuing are genuine Street-Art fans or people simply hoping to make a profit from the bullish market is impossible to say (a number of works from the show have since been sold on eBay). But the real Street-Art fans who bought early simply because they liked the work are now being unexpectedly rewarded for their taste. Brian MacShane is a cheery 42-year-old Australian who moved to London from Sydney in 2002. He must be the only Australian alive who became an avid surfer after he emigrated to Britain, but it's now his favourite activity. He started collecting Street Art six years ago. 'I was out shopping and stumbled across Santa's Ghetto [an annual pop-up gallery normally held in London which sells affordable art]. I was hit by Banksy's artwork; it had resonance with me. It was a social statement that he communicated in a clear and crisp way. I had a bit of money because it was Christmas and the prints were around £59 then, so I bought. My flatmate and I both got into Urban Art - it wasn't unusual for us to swap Banksys as Christmas presents.'
MacShane's collection includes Banksy, Faile, Paul Insect, the cinema-artwork and slogan-inspired Shepard Fairey and Pure Evil's cartoon bunnies and pop-culture stencils, and he's sold some early purchases. 'The works' value has gone up many thousand per cent - I'd prefer not to put a figure on it. I don't come from a wealthy family, but my liking for Urban Art has allowed me to do things I wouldn't otherwise have been able to. I've started my own skate and surf clothing brand, Four Holes, and I've been able to inject money into it.'
Galleries specialising in Street Art are also on the rise - and art-world outsiders run the most prominent ones. As well as Black Rat Press, there's StolenSpace in Brick Lane, which is run by the artist D*Face, whose best-known work is a series of customised bank notes. The most high profile is Soho's Laz Inc, which represents Banksy, Paul Insect and Mode 2, an influential figure since the early years of Street Art who makes comic-book inspired art. Last year, the crowd at a Laz Inc auction included Dennis Hopper, Angelina Jolie and Ashley Olsen, as well as well-heeled hedge funders and art fans. It's owned by Steve Lazarides, who, like Banksy, comes from Bristol. He used to be picture editor at style magazine Sleazenation
One gallery has championed the movement for years. The oldest Street-Art gallery is Elms Lesters, situated in a scenic painting studio tucked in an alley off Charing Cross Road. It used to be one of the only places where you could see a Street-Art show, and many artists working today visited it. It's run by Paul Jones, an enthusiastic man with a long grey beard who wore a 'head boy' badge on his lapel when he showed me around. He took over Elms Lesters about 25 years ago. 'We still paint scenery - we've done backdrops for Led Zeppelin and Paul McCartney here - but I started selling Pop-Art prints by Bridget Riley and Richard Hamilton. It was in a period when no one wanted it, so in the end I sold them to a friend for half the price I paid because I was sick of looking at them.' He tried Brazilian and Portuguese art next, with even less success, and looked for something else. 'I needed someone to work on an advert backdrop and a graffiti artist was recommended. I liked what he did so I started showing Street Art about 16 years ago. I didn't make a single sale for years. I always thought it would be big, but it's been so long coming I wasn't sure I'd still be here when it happened.'
Jones compares Street Art's wide appeal and simple intent to that of the Pop Art that failed him so miserably as a business investment. 'That's why someone like Banksy is great - the stencil's right for this age. When Andy Warhol did silkscreen, it was right for then: it fitted with the music and the mood of the time. The stencil: it's fast, it's the speed of now, it's the speed of music and TV channel hopping.'
It's refreshing to hear someone explain Street Art beyond monetary or cultural terms, because few will. Ben Lewis, an art critic who's currently filming a documentary about the contemporary art market called Brave New Art World, says: 'People buy Street Art and they like looking at it. That doesn't make it good quality.'
Though he cheerfully describes much of the Street-Art movement as 'wank', he does admit that Banksy and a few others may stand the test of time. 'Banksy's work is interesting because there are lots of ways that meaning is accreted to it. He'd done these pieces in difficult places - there's a political story, a celebrity story and a youth culture story, and he's capitalised on that by producing work that consumers can buy. '
Commerciality and creativity have never made cosy bedfellows, but when Street Art is defined by its origins on the street, and so many artists made their names with audacious free displays and anti-establishment ideas, it's hard to imagine that it will be unaffected by the shift to galleries and private collections.
Adam Neate has left thousands of artworks, painted on found bits of cardboard, for others to find. 'I thought painting had to evolve with all the new media coming in. It sounds hippyish, but I wanted to get painting out there, so I left it on the streets. It became an addiction.' Those works now turn up in auctions for thousands. 'My concept was that art is art and should be thought of without commercial value. The irony is, human nature is such that when people find out it's worth something, they make a commodity of it anyway. It's a weird one. I try not to think about it too much.'
Elms Lesters' Jones says that many new artists are simply jumping on the Street-Art bandwagon. 'These people turn up with silly names and work that's obviously copied from better artists. I don't blame them, but there are only ever going to be about 20 names who are top-table of this movement.'
Banksy may also have spraypainted himself into a corner with the art establishment. It's hard not to see the Cans Festival as a spoiler to Tate Modern's exhibition - especially as it was held at a location 10 minutes' walk away from the Tate. The event celebrated Street Art outside the stictures of the gallery system. But although in addition to Cans, Banksy has also created work featuring collectors bidding on a picture at auction called 'Morons' and decorated the steps of Tate Britain with a stencilled 'Mind the Crap' prior to the 2001 Turner Prize, his work is already in many major art collections - he's even donated work to a number of British galleries in a series of stunts similar to those carried out in New York's museums. A major gallery show seems inevitable. Sotheby's James Sevier says: 'If you look at the upcoming Tate Modern show, Banksy's notable by his omission. Maybe he was asked, maybe he wasn't [Tate Modern says he wasn't], but to participate in that show would go against what he believes in.'
Faile's Patrick and Patrick are the only artists to participate in both the Cans Festival and Tate Modern's show, and they have few qualms about Street Art's changing status. 'At least it's no longer undermined as something on the street, something without value. Money fuels interest - it's an injection in the butt that fires people up and makes them realise they should pay attention.'
Sitting in Tate Britain's café among visitors in the final days of the Camden Town Group exhibition, 'Street Art' show curator Cedar Lewinsohn believes an establishment show for the ultimate anti-establishment art is still an important step. 'This work is affecting culture - advertising, fashion, design. There's been a parasitic relationship with it for so long. It's fantastic that a massive institution is crediting the work.'
Street Art breakthroughs
'Space girl and Bird' by Banksy
Part of a series of works commissioned by the band Blur for their Think Tank album, this spraypaint on steel work broke Banksy's previous auction record when it sold for £288,000 at Bonhams last year. Banksy has remained anonymous despite huge media attention.
'The Apprentice' by Adam Neate
One of the top sellers at February's Bonhams Urban Art sale (fetching £43,200), this painting was important for showing the scope of work which falls under the umbrella term Street Art. Adam Neate cites Picasso as well as Eighties graffiti writers as an influence. His work has been sold for £75,000 to private clients.
'Keep it spotless' by Banksy
This collaboration with Damien Hirst sold for £950,300 at the Sotheby's Red auction in New York this year. Banksy's three works in the sale sold for a total of £1.5m - further proof of his international reputation.
'Untitled' by Swoon
Swoon is one of the few Street Artists to be accepted by the American art world. Moma bought three of her wheat-pasted cutout works from a 2005 show at the prestigious Deitch Projects gallery in New York. Swoon shows at Deitch again later this year.
'Her Royal Hideousness' by D*Face
D*Face is another artist whose profile rose after his works exceeded reserve prices at the Bonhams Urban Art auction. His work - including a series of bank notes - subverts traditional British imagery. He co-founded the StolenSpace gallery, which promotes street artists.
· 'Street Art' is at Tate Modern, London SE1 from 23 May to 25 August (020 7887 8888; tate.org.uk)