9/18/2014

Gallery Sells Warhol Without Owners Permission


Here is an interesting case to watch, as reported by the Courthouse News.  A couple left an Andy Warhol Red Shoes painting with a Scottsdale art gallery for them to store/exhibit, but not sell. It appears all parties had agreed to this, although what paperwork was completed is not know or released.

The Gallery, American Fine Art Editions, according to the Courthouse News is being sued by the owners of the painting, who purchased the painting from the gallery for $65,000 in 2005. The gallery has offered to pay the owners the 2005 purchase price, and the owners claim the painting is more valuable.  Sounds like they will need an appraisal.  The gallery has also refused to release to the owners any information on the sale.

The Courthouse News reports
PHOENIX (CN) - A Scottsdale art gallery sold an Andy Warhol "Red Shoes" painting it was storing for a couple despite being told it could not sell the piece, the couple claims in court.

Amy Koler and Stephen Meyer sued American Fine Art Editions, Phillip Koss, Jacqueline Carroll, and Jeff Dippold in Maricopa County Court, alleging conversion and breach of fiduciary duty.

Koler and Meyer say they bought the Warhol from American Fine Art Editions in 2005 for $65,000.

"The piece, known to the plaintiffs as the 'Red Shoes' piece, bore Mr. Warhol's signature on the back and a stamp verifying authenticity from the Andy Warhol Foundation," the complaint states. "The piece was from a collection of works featuring women's shoes sprinkled with diamond dust."

In 2009, Koler and Meyer decided to move to St. Petersburg, Fla. and to keep much of their artwork in a home in Arizona, but sought to store the "Red Shoes" piece.

Koss - American Fine Art's gallery manager - and gallery employee Dippold "suggested that plaintiffs keep the Red Shoes piece at AFAE's gallery and an arrangement by which AFAE would agree to store and insure the piece through AFAE's business insurance in return for plaintiffs' agreement that AFAE could display the piece and use it to help market sales of other similar works. The defendants knew from their discussions with plaintiffs that plaintiffs intended to keep ownership of the piece and not to sell it," according to the complaint.

Koler and Meyer say they spoke with Dippold a number of times over the years, and he failed to mention any plans to sell the piece, and they repeatedly told him they were not interested in selling it.

They travelled to the gallery in Scottsdale this year, and found that the defendants had sold the Warhol.

"Defendant Dippold claimed that the defendants sold the 'Red Shoes' piece 'months ago,' and asked, 'didn't Phil call you?'" the complaint states. "The plaintiffs, understandably upset, expressed their disbelief that the defendants had violated their agreement and had sold the plaintiffs' property without authority and then left the gallery."

Koler says she returned to the gallery the next day to speak with Koss, who despite being in the building, did not meet with her face-to-face but called her from a phone.

Koss and Dippold said the sale had taken place months ago, but refused to show her any documents from the sale, even the price, the complaint claims.

When Koler asked Dippold about the defendants' lack of honesty, he allegedly said, "it's just business."

Dippold offered to pay $65,000 - the amount the plaintiffs paid for the piece, but its value today is far higher, Koler and Meyer say.

They want the "Red Shoes" back, and damages for conversion, breach of contract, breach of fiduciary duty, negligence, fraud and unjust enrichment.

American Fine Art Editions did not respond to a request for comment.

Koler and Meyer and represented are represented by William Richards with Baskin Richards.
Source: Courthouse News

9/16/2014

Skates Art E-Commerce Report


Skates recently published its Art E-Commerce report.  Click HERE to download the full report.  These types of reports are important for appraisers to follow as they keep us infomred on what is happening between the art market and technology, new platforms and sales practices. E-Commerce can change very rapidly, and what is working one year, may become obsolete or out of fashion the next year (or even next month). The report notes that online art trade is one of the fastest growing sectors.

The highlights of the report include

Report Includes:

The World’s Top 3 Online Art Trading Platforms by Volume
  • Top Five Digital Strategies for the Global Art Industry
  • Skate’s Digital Score as of August 1, 2014
  • Top Five Web Strategies for the Global Art Industry
  • Monthly average page views for May-July 2014
  • Best Strategic Moves (June – August 2014)
  • Key Trends
  • Skate’s Top 30 Digital Strategies for Art Businesses
  • Skate’s Top 30 Digital Strategies for the Global Art Industry
  • Use of Digital Platforms
  • Top 30 Digital Strategies for Art Businesses
  • Skate’s Top 30 Stickiest Sites
  • Skate’s Top 30 Facebook Strategies for Art Businesses
  • Skate’s Top 30 Twitter Strategies for Art Businesses
  • The Quest for a Winning Business Model and the ARPU Strategic Dilemma
  • Art Business: Skate’s Highest Rated Digital Strategies and Enterprise Value
  • Product Battle – Securing Quality Consignments
  • Business Model to Watch: Digital “Art Vanity Fair” Operators

Excerpt from the Executive Summary:

Although we continue to refine our methodology, Skate’s ranking of digital strategies in the art industry leaves no room for ambiguity as far as what the winning digital business model is today. The aggregation and electronic distribution of digital intellectual property rights for various creative outputs is currently the best digital strategy in the art industry. This strategy has reaped the rewards of both the largest equity valuation and the biggest audience. Shutterstock and Getty Images rank head and shoulders above all other art industry digital plays on Skate’s Digital Scorecard (for methodology, please see Schedule A). Both firms are richly valued by capital markets, operate truly international, multilingual, state-of-the-art digital products and are growing at a phenomenal rate (42% CAGR for Shutterstock over the last five years).
While image licensing might be the largest and most profitable art digital business today, the online art trade is clearly the fastest growing. Table 1 ranks the world’s largest online art trading businesses by volume and providing evidence that the highest growth rates today are found in this segment of the global art industry.
TABLE 1:
THE WORLD’S TOP 3 ONLINE ART TRADING PLATFORMS2 BY VOLUME3
NAME / $ MILLIONS
GMV, 1H 2014, USD
GMV, 1H 2013, USD
CHANGE, %
Paddle817.4m3.5m399%
Auctionata16.1m8.2m97%
Christies14.4m7.7m87%
Sources: www.skatepress.com, paddle8, Auctionata and Christie’s
All in all the following digital strategies are represented well in our rating: low revenue per client e-commerce (e.g., price data, image licensing and custom art based merchandise and printing), advertising driven media models, listing/aggregation media models, and online auctions and galleries (high revenue per client e-commerce). Not surprisingly, none of the traditional galleries made it into the top 30 digital strategies; the highest rated are Gagosian (#35 under Skate’s Digital Score), Serpentine (#44), Pace (#48) and David Zwirner (#49).
The five top-rated art businesses in terms of digital strategy as measured with Skate’s Digital Score are pure play digital ventures that have no off-line legacy issues to manage. This fact provides telling evidence of how difficult it is to migrate art businesses established in an offline world into an online future. The highest rated business with offline roots is Christie’s, which only ranks 7th in Skate’s Digital Score (see Table 4 for the full rating).
That said, Skate’s Digital Score reflects a digital audience rather than the size of the business or economic efficiency of the business model. Traffic and business size sometimes provide a striking mismatch, harking back to the early days when website proprietors were still learning the right monetization models. And some of the most successful art businesses today might rank relatively low on Skate’s Digital Score but appear high on revenues and trading volume metrics (like paddle8 and Dorotheum).
The digital strategy rankings begin to look very different when art businesses are ranked according to other individual factors, such as Facebook audience, Twitter followers, and the general stickiness of their web presence. These data and trends of using varied digital platforms and strategies are included in Section 5 of this report.
TABLE 2:
TOP FIVE DIGITAL STRATEGIES FOR THE GLOBAL ART INDUSTRY SKATE’S DIGITAL SCORE AS OF AUGUST 1, 20144
#
URL
LOGO
BUSINESS MODEL
SCORE
1shutterstock.comDigital imagery licensing100
2gettyimages.comDigital imagery licensing14.96
3artnet.comArt media and online auction10.06
4society6.comArt e-commerce platform7.83
5liveauctioneers.comAuction aggregation and listing service7.21

9/15/2014

Wildlife Crime


Fellow appraiser Nancy Martin sent me an interesting article from the NY Times magazine blog on wildlife crime, and how it has grown into a $19 billion industry.  With all of the attention focused on ivory at the moment, this article looks into some other areas of black market wildlife.

The below block quote is only a portion of the article, please follow the source link below to read the full article.

The NY Times reports
Wildlife crime has grown to a $19 billion dollar annual global trade, according to a report released last year by the International Fund for Animal Welfare, a conservation nonprofit. The black market in wildlife parts and products is the fourth-largest illegal industry worldwide, behind narcotics, counterfeiting and human trafficking, and it may well outstrip other illicit enterprises in terms of the variety of crimes and the complexities they pose for law enforcement. The wildlife trade encompasses culinary delicacies and Asian medicines, pets and hunting trophies, clothing and jewelry. It takes in commodities such as elephant ivory, rhinoceros horn, bushmeat, the shells of giant tortoises, the pelts of big-game cats. The environmental and social costs of the trade are grave. Wildlife crime is contributing to the erosion of natural resources and the spread of infectious diseases; it is providing robust new revenue streams for criminal syndicates and even terrorists. In a July 2013 executive order enhancing United States government coordination to combat wildlife crime, President Obama deemed the surge in poaching and trafficking an “international crisis” that is “fueling instability and undermining security.”

The Ashland lab occupies a front line in this global struggle. Over the years, its researchers have done groundbreaking work, advancing science while arming law enforcement with crucial crime-fighting tools. Scientists at the lab discovered ways of extracting DNA from the leather in a handbag; they’ve successfully lifted fingerprints from objects that have been submerged in saltwater. In the 1990s, the lab pioneered a method of obtaining genetic information from a single fish egg, an innovation that helped foil caviar smugglers. It developed new techniques in ivory morphology to combat traffickers of elephant tusks. The impact of this work has reverberated far from Ashland. Bureaucratically, the lab is an oddity. It is a United States federal government institution; it’s also the official crime lab for the 180 nations that are parties to the CITES agreement. Effectively, it is the world’s wildlife forensics lab.

FLIGHT RISKS Drawers full of mounted parrot specimens.Credit Richard Barnes
The scope of the lab’s reach is on view in the place where the casework begins: the evidence control area. Each day, the mail is unpacked by the lab’s evidence handlers, and they have seen just about everything: poisoned bald eagles; a panther riddled with bullet wounds; 78 elephant tusks, poached in Africa and seized in Singapore; a rotting python corpse, coiled like a firehose and folded into a cooler. Two shipments in the spring of 2010 brought more than 200 pelicans: victims of the BP oil spill. The lab treated all the pelicans as separate homicide cases, extracting fluid from each bird’s lungs, which was matched by United States Coast Guard investigators to the oil that gushed from a well drilled by BP’s ill-fated Deepwater Horizon rig.

On a recent morning, a cooler arrived bearing the frozen remains of a Mexican gray wolf. The badly decomposed carcass was thawed out and then placed on the slab in the pathology unit, where a necropsy was conducted by Rebecca Kagan, a veterinary pathologist. “It’s been maggot-scavenged, there’s not much left in there,” Kagan said. “But here’s a hole, a bloody hole. And here’s another nice little wound path going all the way through.” X-rays showed trace metal in the wolf’s chest — bullet fragments, in all likelihood — which Kagan dug out to pass along to the criminalistics unit for analysis.

The wolf case was straightforward. But wildlife crime brings novel challenges to the work of forensics. The task of forensic scientists is to examine evidence in an effort to connect victim, crime scene and suspect. A traditional forensic investigation begins with a classic question: Whodunit? At the Ashland lab, the mystery is often more fundamental: What is it? Evidence in wildlife cases frequently appears in states of decay or in unidentified parts. The first step is to make the ID: to determine what exactly the evidence is and if it belongs to a species that is protected by law.
Source: The NY Times  

9/14/2014

LA Art Market Heating Up


Here is some good news for appraisers on the West Coast in general, and those in the LA area in particular. The Financial Times is reporting the Los Angeles art market is quickly expanding and drawing interest from many international gallerists. There have been many reports of pop up galleries and exhibitions in the area, but this FT reports focuses on more galleries looking at LA as a permanent home with local sales and also international appeal. With more galleries, art sales and interest in collecting should rise, and that should be good news for art appraisers.

The Financial Times reports
The buzz around the Los Angeles art scene is growing ever stronger. Hauser Wirth & Schimmel is opening a huge gallery downtown in 2016 while, next spring, the Berlin and London gallery Sprüth Magers will launch its new space at 5900 Wilshire Boulevard in West Hollywood with a show by John Baldessari. This week, meanwhile, the London-based gallery Ibid is inaugurating a warehouse space downtown with a show of the Brazilian-born, Vienna-based abstract painter Christian Rosa.

“We have been thinking about this move for some time,” says Ibid director Magnus Edensvard, “and we had already held pop-up shows in LA. A number of our artists are thinking of moving there, or anyway want to show there. So we are responding to their desires.”

I asked him what is stimulating the current rush to LA, a city known for its artists but, until recently, less for a strong collecting community. “Things are changing there. Indeed, the art schools and the local artists’ community are very strong,” he says. “And while the collector scene is growing as well, I am not relying on them alone – I hope to attract an international audience to the new space.”

The Rosa show opens on September 19 and features 12 large-scale paintings with the artist’s characteristic squiggles, marks and blocks of colour. And Edensvard is busy in London as well: on October 13 he launches Ibid’s new gallery space in Margaret Street with a show of three artists: Michael van den Abeele, Flora Hauser and Maria Taniguchi.
Source: The Financial Times

9/12/2014

BidSquare


A few weeks ago I posted on the roll out of a new online auction platform (click HERE to read the original post and Bidsquare press release), developed by six auction houses (Brunk, Rago, Skinner, Cowans, Leslie Hindmin and Pook and Pook). In addition to the auction platform, the site also archives price data which is available for collectors, and appraisers to use without charge.

There seems to be some unhappiness with the traditional auction platforms, such as LiveAuctioneers based upon fees, collections and customer service.  All of these factors were part of the reasons the six auction houses partnered and developed Bidsquare.

The Huffington Post reports
The worldwide art and collectibles auction trade has become worldwide over the past decade because of greater wealth that has been accumulated by entrepreneurs around the globe and because of the ability of buyers in far-flung locations to participate in sales through online bidding. Christie's, Sotheby's and Heritage Auctions all have created their own in-house online bidding platforms, but most every other auctioneer relies on an outside company, the largest being the Manhattan-based LiveAuctioneers.

With all the good of a globalized art market has come some problems (a higher incidence of successful bidders refusing to pay, particularly in countries with new wealth, such as China and Russia) and criticism of LiveAuctioneers for its unwillingness to pursue slow- and nonpayers. "When the hammer goes down on a sale, LiveAuctioneers demands its three percent commission immediately, and we have to pay them," said Leslie Hindman, who runs an auction house in Chicago, Illinois. "If the person who bid doesn't pay, LiveAuctioneers won't do anything. They won't follow up with that person. They don't give us the names of underbidders, so that we can try to sell the lot to someone else, and we have to petition to get back our three percent, which they are slow to return."

She also noted that LiveAuctioneers' vetting process for online bidders is unsatisfactory - "we turn down 20-30 percent of those who register with LiveAuctioneers, refusing to let those people bid at our auctions" - and that the online platform has "no mechanism for checking if Mr. Wong is the same Mr. Wong who failed to pay another time."

Hindman is not alone in her frustration. As a result, she and five other regional auction houses - Rago in Lambertville, New Jersey, Brunk in Asheville, North Carolina, Cowan's in Cincinnati, Ohio, Pook & Pook in Downingtown, Pennsylvania and Skinner in Marlborough, Massachusetts - joined forces to start their own online bidding platform, BidSquare. Launched on August 18th, 2014, BidSquare aims to solve these problems, as the fees that participating auction houses pay BidSquare will be lower than those charged by LiveAuctioneers ($1,000 per auction or, for smaller auction houses, $650 plus one-and-a-half percent of the sale); auctioneers are to be provided more information on underbidders, and "the auctioneers will be able to communicate what we know about people registering for sales, such as those who haven't paid in the past," Hindman said.

"The six auction houses put our heads together to think about what auction houses want and what bidders want," she said. Among those interests is a free searchable database for prospective buyers, and auctioneers will be permitted to advertise their sales on the site.
Source: The Huffington Post

9/11/2014

Computers vs connoisseurship


Could a computer program tell the difference? Left to right:
‘Portrait of Rembrandt with Overshadowed Eyes’, studio
of Rembrandt (c1629); Self-portrait by Rembrandt (1628-29)
The Financial Times ran an interesting article on computer analysis and identification of art works and paintings. The article is not technical in nature, but indicates that with more technology and more works being cataloged digitally, there is more effort and interest in using computers to analyze and assist in the authentication process.

The key appears to be the amount of useful and correct information that is compiled and can be analyzed.  So the old computer saying, garbage in, garbage out certainly could apply.

The Financial Times reports
It was towards the end of a fruitless day looking at auction catalogues online that a portrait of a fat, uniformed man in a hat flashed up on my screen. “European School, Portrait of a Gentleman, estimate $100-$200,” said the lot description. The picture, I thought, was perhaps late 18th- or early 19th-century, and the subject probably British. Was he some famous admiral?

I’d looked at hundreds of photos that day in my hunt for mis-catalogued paintings – called “sleepers” in the art trade – and by then was feeling too lazy to flip through my mental Rolodex of potentially matching sitters. So I idly copied the photo’s URL and ran an image search on a website called TinEye.com.

A few seconds later, I knew that a portrait of King George III lay waiting to be bought for a song in a minor US auction house. TinEye had matched it with other copies of the painting already online (royal portraits were frequently copied). My then employer, the art dealer Philip Mould, was delighted. I didn’t tell him I cheated.

I was reminded of this shameful episode when I heard of some new research published by computer scientists at Rutgers, the State University of New Jersey. They had developed a program which, they said, revealed how artists were influenced by earlier paintings through recognising (as tineye did) certain aspects of composition and technique. “Will computers,” the news headlines asked, “put art historians out of work?”

The program’s results were patchy, but not unimpressive. Its conclusion that Bellini was influenced by Titian was a little off beam, since it was the other way round (Titian was Bellini’s pupil). But Rubens certainly was influenced by Titian, as the computer argued, making many copies of his works.

I would argue that the Rutgers team began by asking the wrong question. In an episode of the 1960s TV series The Prisoner, Patrick McGoohan is confronted with a “wonder machine” that knows the answer to every question in the world, and will render man redundant. When McGoohan simply asks it “why?”, it explodes. Only humans can really begin to tell us why Bellini painted as he did.

But how Bellini painted is a more straightforward question, and computer science can help us with that. Like any academic discipline, art history is essentially about the accumulation of data, and art historians are coming to realise that computers let us compile, access and analyse information about art in an unprecedented way.

For example, a BBC website called Your Paintings has placed every oil painting in UK public ownership (some 220,000) online. At first, the data set was quite limited – artist, subject, date – but new information is being added all the time. Through the process of “tagging”, where objects within paintings from dogs to jewellery are identified and recorded, volunteers working with Oxford university’s Visual Geometry Group have helped train a computer program to recognise these objects automatically.

The accumulation of such data means we will eventually be able to ask Oxford’s program questions as varied as: “when did earrings first appear in portraits?”, “what was the rate of increase in female sitters in portraits over time?” and, as we introduce more technical information on pigments and media, “over what period did painting in oils replace tempera?”. The answers will give us quantifiable facts previously unavailable to art historians.

But what about the “who” of art: can a computer tell us who painted a picture? The term for this ability is “connoisseurship”, derived from the Latin cognoscere: to get to know or to recognise. Spend enough time getting to know an artist’s style, the theory goes, and soon you will be able to tell whether they painted a picture simply by looking at it.

Some art historians refuse to believe in connoisseurship. Others practise it enthusiastically, but are hopeless. A few get it right most of the time, which is perhaps the best we can hope for. It’s a fairly haphazard cognitive process, relying mainly on a lightbulb moment of recognition, and is of course fallible to all the flaws of human thinking: overconfidence (that you just know it’s a Rembrandt), or jealousy (that someone else spotted it when you didn’t), to name just two.

Surely a computer, not subject to such whims, could do better? If it was fed enough information on every securely identified Rembrandt in the world, and was able to recognise Rembrandt’s trademark brushstrokes, even the way he mixed his paint and ground his pigments, might it then be able to recognise his technique in other, previously unknown works?

Actually, no, and here’s just one reason why not. Pupils in Rembrandt’s studio regularly made skilled copies of his paintings, using exactly the same techniques and the same paints as the master. By every measurable metric these would be identified by a computer as Rembrandts. But a good connoisseur would tell you they were copies.

Great paintings speak to our soul not because they were made with a certain mix of pigments, but because they have been lit by the spark of human genius. Happily for jobbing art historians like me, that individual genius is something no computer can recognise. If anyone says they can, they’re cheating.
Source: The Financial Times

9/10/2014

Record Prices for Art


The Economist published a chart showing the highest recorded price for art selling at auction since 1700. The lenght of times between record is pretty interesting. Sometimes it is only a few years, while other times it is 40 or 50 years.

The Economist reports


Source: The Economist