There is nothing in the art world quite like the Venice Biennale. Here you are, in one of the most beautiful places on the planet, with the vaporetti cruising by the historic palazzos and the gondoliers crooning to the assembled tourists. And here is everyone who is anybody in artistic circles, scrambling for a place at the biggest - and still the most important - of all the art biennales. The Venice Biennale is often called the Olympic Games of the art world, but that comparison doesn't quite catch the unique nature of the event. It's true that there are prizes on offer and that this is a place where new talent emerges and older names have their reputations restored or reinforced.
But there's a frenetic atmosphere of discovery and discussion which makes this festival of contemporary art different from a sporting contest. "It's like a huge art world conference," says Martin Gayford, an art critic for Bloomberg. The significance of the biennale, however, stretches far beyond the narrow confines of the art world. The biennale first opened its doors in 1895 when the Venice city council decided it would be a good idea to make the evening meetings of artists in the city's Caffe Florian into a prestigious international gathering.
Even in this nascent form, the biennale had two qualities which have marked it ever since: it attracted a staggering number of visitors (200,000) and caused a furore when the Italian artist Giacomo Grosso exhibited Supreme Meeting, a painting of a dead man surrounded by female figures, a risqué image that became the most popular painting in the show. Right from the start, too, the biennale became a showcase for important and significant developments in contemporary art. Paintings by Millet and Corot and sculptures by Rodin arrived in 1901, the work of the American artist John Singer Sargent caused a stir in 1903 and by 1910 Renoir and Klimt were battling it out for best in show.
By this time, the biennale had begun to develop into the event it is today, with the creation of pavilions in the Giardini. The first of these was built by Belgium in 1907, quickly followed by the British (a converted tea room), as well as French and German structures. Now, there are 30 permanent mini-galleries in the shady garden area. But this, of course, is nowhere near enough. Over the years, the biennale has expanded over the city. Next year's event, which begins on June 4, is the biggest yet. The exhibitions will be housed all over the city and will be bolstered by what the Italians call "collateral" events, organised by various international institutions.
Indeed, for a first-time visitor to the biennale, the sheer scale of art on display and the multiplicity of organisations hosting exhibitions can be intimidating. Broadly speaking, the biennale falls into three categories. The first is the national exhibitions, chosen either by a nominated body such as the British Council in the UK or an institution (for the United States). These shows, which spill out from the Giardini into disused palazzos, industrial sites, and empty rooms all over the city, can show the work of one chosen artist, or can represent the work emerging from the country.
In 2005, China hosted a pavilion of its rising talent for the first time. In 2007, Mexico made its debut. Artists who have already been nominated for 2009 include the British filmmaker Steve McQueen, whose film, Hunger, about the IRA hunger strikers, triumphed at Cannes, and Bruce Nauman, who will represent the United States. But - and this is where it gets confusing - the art in the national pavilions does not have to be made by people from the country: Ukraine arrived at Venice two years ago with a show featuring British, German and American artists alongside the Ukrainian representatives. Nor does the artist have to be alive: in 2007 Félix Gonzalez-Torres was chosen to represent the US, despite having been dead for 11 years. Admittedly, this was the first time in 20 years that this had happened, but it reveals the way in which anything goes in Venice.
Alongside the national displays are major exhibitions curated by the director of the biennale. Next year's director is Daniel Birnbaum, an internationally respected curator and academic. He has already announced his theme, Making Worlds, and indicated that he wants to show the processes of production as well as the end results. The Venice Biennale director curates a themed show in the central pavilion in the Giardini, but the biggest area under his control is in the Arsenale, the magnificent abandoned dockyard, which provides acres of space for the exploration of new art from all over the world. Its long, rough-hewn galleries become supermarkets of contemporary art at its most cutting edge.
Then there are the collateral events - exhibitions mounted by institutions from around the world - to draw focus to a particular artist or theme. It all adds up to quite something. There are now more than 60 biennales and triennales around the world, but none quite matches Venice. As Gayford says, "It was the first and is still by far the most prominent and most important. It is the major platform for new artists, established figures and national types of art to get an airing."
That reputation has been cemented through the years by the sheer quality and significance of the work on display. It was, for example, the 1964 biennale that gave Robert Rauschenberg its top prize and brought pop art to Europe; in 1993 an exhibition in the Museo Correr, curated by David Sylvester, underlined the international reputation of Francis Bacon. In 2005, the same setting performed a similar function for Lucian Freud.
Often, the gestures and works that attract the most attention can be political: in 1993, Hans Haake broke up the floor of the German Pavilion with a jackhammer, forcing the visitor to "walk on the debris of a nation". In the same year, Ilia Kabokou transformed the Russian pavilion into an abandoned space full of rubbish. In 1990, the Arsenale was the centre of controversy: the Catholic Church was outraged by an American work about Aids and Damien Hirst's pickled cow closed the whole show when formaldehyde started to leak out of its tank. In 2005, Poland exhibited a film which repeated the famous Stanford prison experiment, in which guards became oppressors - only this time around the guards refused to take part.
But it isn't just importance and significance that hangs in the air over the Venice Biennale. It is also the sense of simply being in the right place to pick up on the trends and the artists who are likely to dominate the headlines for years to come. It was in Venice in 2005, for example, that I first came across the work of Candice Breitz, the South African artist who has since made such an impact with her works, celebrating pop stars such as Madonna and Michael Jackson.
That was also the year that Olafur Eliasson created one of the most beautiful pieces I have ever seen: an installation on one of Venice's many islands called Your Black Horizon, in which he placed an artificial beam of light in a darkened room and made a false horizon, so intense it seemed real. It was unforgettable, and made all the more so by being sited in the real, luminous light of such a magical city.
Success at Venice for artists such as these guarantees not only increased visibility, but also inflated prices; although the event is strictly non commercial, when you have got so many powerful art world figures gathered in one place at one time, there's bound to be a certain amount of money-talk going on. In one of the best known examples, the prices commanded by the cowboy pictures of the Canadian artist Richard Prince quadrupled in 2003 once they had been seen at the biennale.
Naturally, there is a lot of second-rate and even indifferent work on display - and sometimes the pure bulk can be overwhelming. But as more and more countries take part, the Venice Biennale continues to allow art lovers, dealers and connoisseurs from all over the world an opportunity to get their eye in, to understand where things are coming from and, more importantly, where they are going to.
Sarah Crompton is arts editor in chief of the Daily Telegraph.