8/22/2014

Cracks in the Business of Art?


The NY Times takes and interesting looking at the business of art and comes away a bit bearish. The article looks at falling stock prices of both Sotheby's and China's Poly. The article starts out by immediately stating the art market is baffling.

The article discusses a claimed shrinkage of art buyers, as well as slow growth for major international auction houses in addition to the falling stock prices.  Part of the reason is a lack of participation in the middle market by the large houses, which is why many are turning to the internet. This view is no doubt a bit contrarian in nature, but in some respects may be correct as the top auction houses as well as dealers look for growth opportunities.

The NY Times reports
LONDON — Sometimes art can be difficult to understand. Sometimes the art market can be even more baffling.

Back in December, the contemporary dealer David Zwirner said in a New Yorker profile that art was “an industry in its golden age.” His point seemed to have been proven during the June 17 preview of the Art Basel fair in Switzerland, when his gallery sold more than $20 million of artworks by Ad Reinhardt, Jeff Koons, Luc Tuymans and other investment-grade names.

But if these are such gilded times, what do we make of Sotheby’s share price of around $41 as of Friday, down from a high of $53 in January? And of the 48 percent drop in the auction house’s private sales in the first half of this year, according to an Aug. 8 Securities and Exchange Commission filing?

To be sure, part of Sotheby’s stock price weakness might stem from the hostile criticism of management from its biggest outside shareholder, the hedge fund manager Daniel S. Loeb. But aren’t we supposed to be in the middle of an art boom?

And what do we make of shares in China’s state-owned Poly Culture Group Corporation, the world’s third-largest auction house (and a possible suitor for London-based Bonhams, according to the Financial Times), trading at 28.50 Hong Kong dollars, or about $3.70 — well below its initial public offer price of 33 Hong Kong dollars on the Hong Kong stock exchange in May?

“There’s a feeling among financial analysts that the valuations of art-related companies are peaking,” said Fabian Bocart, the director of quantitative research at the Brussels-based art investment advisers Tutela Capital. “These valuations are based on expected volumes at auction. Very expensive items have almost no impact.”

Despite these scratches in the gilding, the auction houses continue to talk about the unstoppable momentum of the globalized art market — or rather, the market for contemporary art, where most of the action is happening.

Christie’s half-year public and private sales of 2.7 billion pounds, or about $4.5 billion, featuring 51 auction results of more than $10 million, was a new high for the company, though Sotheby’s equivalent figure of $3.5 billion — dented by that drop in private transactions — was a fraction lower than last year. Christie’s, in their accompanying half-year press release, talked of a “new era of excitement and engagement about art and for art.” And in a recent article in the Wall Street Journal, the auction house’s contemporary specialist, Brett Gorvy, said he possessed a list of at least 140 collectors capable of spending $50 million or more on artworks.

The presence of 140 billionaires on Christie’s books, if not actively buying, sounds impressive. However, that figure represents just 6.5 percent of the population of 2,170 billionaires living in the world in 2013, according to a report published by the inaugural Wealth-X and UBS Billionaire Census.

“There’s a large contingent capable of buying art at high prices,” said Clayton Press, a partner at the New Jersey-based art advisers Linn Press. “But the number of people actually engaged in it is relatively small, and the competition at the top tends to be for a very narrow range of brand artists. The auction hyperbole doesn’t take into account that the majority of works are sold by dealers.”

Collectors, as a distinct socioeconomic group, continue to do what they do, making their confidential purchases from auctions and galleries, most of which are privately-owned entities that don’t publish financial results. The resulting opacity is a plus for publicity-shy buyers and sellers, but makes it difficult for outsiders to determine whether this is, in financial reality, an industry basking in a golden glow. Christie’s, for example, is owned by the French billionaire François Pinault, and it publishes biannual sales figures without any indication of whether these transactions have made the company a profit or loss.

Multigallery dealerships like Zwirner, Gagosian, Pace, Hauser & Wirth and Emmanuel Perrotin also run expensive operations, but they do get the art first and take a 50 percent cut. Unlike Sotheby’s, Christie’s and Phillips, they aren’t locked in a race to offer the most lucrative possible terms to sellers of big-ticket auction lots, terms that can leave them with a negligible profit, or even a loss. The auction houses enjoy higher rates of commission for works priced in the $5,000 to $5 million range, but these returns are being defrayed by the rising costs of having to hire staff to source and market the art, and to pamper their richest clients.

“Auction houses aren’t scalable businesses. They can’t expand by multiples like dealerships,” said Michael Hutter, a cultural economist who is director of the Cultural Sources of Newness research unit at the WZB Berlin Social Science Center in Germany. “Profits are crumbling at the top of the market. They can’t charge 50 percent, which is partly why they’re turning to online sales.”

But perhaps what is most baffling about this golden age is the lack of a wider sense of involvement and excitement. Market insiders were enthralled when Christie’s “If I Live I’ll See You Tuesday” auction of fashionable contemporaries raised $134.6 million in New York on May 12. Remarkably, this Instagram-promoted selection fetched more than the $127.3 million evening session of the landmark artist-sourced “Beautiful” auction of Damien Hirst works at Sotheby’s, London, back in September 2008, the final blast of the last art market boom. Clients new to Sotheby’s represented 18 percent of the buyers at that sale and 21,000 people attended the view.

Are the minimalist abstracts of American painters like Wade Guyton, Christopher Wool and Alex Israel capturing the global imagination in the way that the more brazenly populist art of Mr. Hirst, Jeff Koons, Banksy and Takashi Murakami did when they were in their commercial pomp in the 1990s and 2000s?

This might just be important if high volumes of profitable sales are what ultimately determine the gold-standard of an art-related company.

“There are definitely fewer art buyers than there were in 2008,” said Mr. Bocart, the research director. “The cards have been redistributed by the financial crisis. Fewer people have more money, and they do spend more, but the base has been diminished. Art needs to be refreshed. We’re waiting for something to happen.”
Source: The NY Times

8/21/2014

Bidsquare


I had recently heard rumors about a group of strong regional auction houses partnering in a new auction platform.  I received an email from Rago Auctions this morning announcing the new platform, called Bidsquare. It appears several auction houses have started their own auction platform and will be moving away from other established platforms such as Invaluable and Liveauctioneers.

Bidsquare initially has six auction houses participating in the new online platform. They include
  • Skinner
  • Rago
  • Pook and Pook
  • Leslie Hindmin
  • Cowans
  • Brunk
The interesting aspect of this for appraisers is that there is a search function for upcoming as well as past auction sales from these six houses. The ability to simultaneously search these six regional auction which typically obtain excellent consignments will make life easier for many appraisers.  The Rago release states there are over 600,000 searchable archived lots from the various auction houses. These six eastern auction houses have a strong following from dealers and collectors and are very strong for middle to high end consignments and auction sales.

All you have to do is complete a quick and simple registration form, and then you have access to the archives.

Rago reported on Bidsquare

The first is Bidsquare. Bidsquare is a new online bidding platform that hosts auctions from established auctioneers of good reputation with great stuff to sell. Rago is proud to be one of the six auction houses that founded Bidsquare and launched it this week. We created it for bidders looking for desirable property that is plentiful and varied and honestly described. We built it to be easy, reliable and secure. You'll find property on Bidsquare that you won't find elsewhere - more and more all the time. There will be live as well as timed auctions from the founding auction houses, as well as other established and reputable auctioneers invited to join us on Bidsquare. You'll find useful and interesting information on the Bidsquare blog and Bidsquare social media. There's also an ever-growing database that already holds 600,000+ records - sales results from all participating auction houses - all freely accessed in one easy, integrated search.
Source: Bidsquare

8/20/2014

Art Fraud on eBay


The Daily Beast has a pretty in depth and damning article on the art wold on eBay.  Fellow appraiser Tony Pernicone, ASA has long been discussing this topic and wrote articles for the Journal of Advanced Appraisal Studies about art fakes listed on online platforms such as eBay.

The Daily Besat article it too long to post in its entirety, so only a section is listed below. Lithographs seem to be one of the more popular misrepresentations (who is surprised at that), as well as the ususal artists, Chagall, Picasso, I highly recommend all appraisers read the full article.

There is a lot of insight in the article as well as cautionary tales, such as one dealer/collector, after being told by Sotheby's his collection of Picasso's were fake resold them through his gallery and eBay and was charged with mail and wire fraud. Take a few minutes and read the article.

The Daily Beast reports
When art enthusiasts go shopping for original Warhols, Picassos, and Basquiats on eBay, they are easy prey for forgers and scam artists.

Henry Stephenson is a self-described art addict. The walls of his Washington, D.C., home are collages of framed paintings, lithographs, and drawings, the culmination of a lifetime collecting art. In his early 30s, he bought his first investment piece from a local gallery: a large Marc Chagall lithograph. “It was one of 50 first editions and signed,” he says. “There was no question of its authenticity.”

In the early 2000s, after splitting with his wife of 20 years, Stephenson began devoting more time to his interest in art. But he wasn’t a habituĂ© of New York’s auction houses, where work by big-name artists was assiduously authenticated and regularly went for staggering prices. Instead, he was bargain hunting, trawling eBay for Picassos, Moreaus, and Dalis.

Stephenson became “hooked on eBay,” collecting a dozen pieces over a five-year period from the same reseller: several small Picasso watercolors at roughly $1,000 a piece, a handful of Moreaus, and a few Dali etchings, many of which were believed to have been missing. “So I’m thinking to myself, ‘I bet this guy has some of those lost pieces,’” says Stephenson.

Today, Stephenson is cooperating with a federal investigation of the eBay reseller whom he purchased these works from. And his story is all too common. Since its inception, experts say, eBay has become a den of art forgery, an unregulated market where ignorant art enthusiasts are easy prey for forgers and scam artists.

It doesn’t take much effort to find big-ticket pieces sold by anonymous users complete with dubious certificates of authenticity, provenances, and other documents to boost the works’ credibility. (I sent a series of messages to an eBay seller in Hungary requesting further information and documentation on “original” Warhols and Basquiats, to no response.)

Despite recent high-profile prosecutions of forgers, experts say that a large number of collectors are still being duped when buying fine art online.

Connecticut gallerist David Crespo found himself in a similar situation when he was charged with mail and wire fraud in 2012 after selling forged work both on eBay and out of his gallery. After Sotheby’s declared 21 “original” Picassos he purchased for less than $50,000 on eBay to be fake, Crespo nevertheless resold them on the open—and less discerning—market.

In late June, John Re was arrested on charges of engaging in an eBay forgery scheme that earned him $1.9 million. Re is accused of starting an eBay forgery operation in 2005, telling private collectors that he’d stumbled on a cache of Jackson Pollock paintings in 1999 while cleaning out an elderly woman’s estate in Long Island, New York. Fifty-eight of the works Re is accused of selling went to the same collector for $519,890, the paintings ranging in price from $1,000 to $60,000; 12 others were allegedly sold to a different collector for $894,500; and three others allegedly to a third collector for $475,000.

“Art fraud is a confidence crime that takes two willing participants. People still believe they’re going to discover all these treasures.”
And in April, a Florida pastor named Kevin Sutherland was convicted of trying to sell fraudulent Damien Hirst paintings. Sutherland had unwittingly purchased the paintings from a forger in California on eBay. But when he took them to Sotheby’s in New York to be appraised and auctioned, the house responded that it couldn’t authenticate the work. (They had contacted Damien Hirst’s camp in London, which declared the paintings fake). He might have been a victim of fraud when initially purchasing the paintings, but Sutherland was later arrested after he attempted to offload the paintings for $175,000 to an undercover detective.

“Art fraud is a confidence crime that takes two willing participants,” says Colette Loll, an expert in art fraud who consults with eBay and has trained federal agents in forgery investigations. “People still believe that there are all these treasures out there and that they’re going to be the ones to discover them,” says Loll. “There’s still this Antiques Roadshow mentality infiltrating the online art marketplace.”

Buyers are purchasing works as one would a scratch ticket, with the idea that they’re going to get lucky. A recent academic study estimated that up to 91 percent of supposed Henry Moore drawings and sculptures sold on eBay were fake. And often, it’s the more sophisticated buyer— the art collector—who thinks they’ve won the lottery when they discover an undervalued art work on the Internet.

But when people smell a good bargain, they abandon their sense of judgment. “All good dealers and collectors look into provenance,” says Loll. “But people still believe there was that one work that showed up in Grandma’s attic that exists without this chain of ownership.”


Stephenson is one of those buyers. “I knew from the get-go that it was a crapshoot,” he says. And while he says that he researched provenances and cross-checked supposed Picassos with an extensive online catalogue of the master’s works before making bids, he often ignored red flags until the works were on his walls. “They were all coming in around the same size, and the certificates of authenticity and provenances were all printed on the same paper with the same old typewriter. It was just too convenient.”

Suspecting that much of the work he bought on eBay was fake, Stephenson attended one of Loll’s lectures on art forgery at the Smithsonian, inviting her to his home to look at some of the works he’d purchased.

They sent two watercolors to the Picasso Administration, the body which authenticates the Spanish painter’s work, which concluded they were fakes. Loll and Stephenson then had the pigments chemically tested and dated on the watercolors, confirming that they were indeed fake. Then they chemically tested a Gustave Moreau painting Stephenson had purchased from the same reseller. They found that it was created with paint produced in 2000.

Stephenson is cooperating with the feds, but, bizarrely, he doesn’t seem to mind that his prized Picassos, Dalis, and Moreaus are all fake.

“I set a price in my head when bidding on a piece, and if it’s not real I don’t really give a damn,” he says. “It would be nice to find [out they are real], but I’m more realistic than that. I’m not looking for that pot of gold at the end of the rainbow.”

But Colette sees a more serious problem with forgery, beyond the distorting effect forgery has on the art market. “We’re distorting the cultural record, we’re distorting the art historical record, we’re affecting the estates and heirs of these artists. It’s a cultural heritage crime.” And when a fraudulent work hits the marketplace, it tends to circulate. In the last 40 years, three different collectors have submitted the same piece of art to the Matisse Foundation for authentication. All three times it was denied.

Loll is working with eBay on an initiative to monitor the site, but says that the company isn’t the only one at fault. “We need more eyes on the site, but we also need to address the consumer demand for artwork that looks real but is priced significantly below market value.” Loll is doing her part to protect our cultural heritage by creating consumer awareness programs to deter consumers from purchasing fakes. “A lack of due diligence and sense of urgency in these online auctions plays right into the hand of these people who create fraud on the Internet,” she says.
Source: The Daily Beast

8/19/2014

Flipping Art


The NY Times just published an interesting article on flipping artwork. The article looks at some interesting repeat sales of works with rising prices, mostly within the contemporary art category. The article looks at some recent examples of resold art, as well as statistics from Beautiful Asset Advisors (Mei Moses Art Indexes) which reveal art has been turned over in the past, and it appears the flipping has actually slowed down since 2008, but is being turned faster than 20 years ago.

Overall some interesting insight into the art market, and art speculation.

The NY Times reports
In one striking example, Jean-Michel Basquiat’s “Warrior” sold three times at auction between 2005 and 2012, the painting’s price soaring during those seven years by 450 percent, to nearly $9 million.

In another, at Christie’s this May, an Alex Israel sky painting drew over $1 million, more than 10 times what paintings from this series fetched when they were created less than two years ago.

Such soaring prices and quick resales, especially of work by emerging artists, have fueled a perception that a new breed of collectors, fond of flipping art as they would a stock, have overtaken the market. In this view, widely held in the art world, work once valued for its lofty, aesthetic appeal has become a mere commodity, just another asset class for hedge-fund millionaires and others to cash in.

But separate statistical analyses conducted for The New York Times by two companies that specialize in evaluating art market data indicate that the hand wringing may be premature.

Yes, for the past few years, postwar and contemporary art has been reselling at auction faster than, say, a decade ago, the data show. But the pace last year was only slightly faster than it was in the mid-1990s, signaling that the reselling may be just the latest iteration of a historical cycle, not a lasting change.

After a few years, during which the pace of reselling accelerated, the data show that owners of postwar and contemporary works are holding onto their artwork longer again. “After all I had read about flipping, when looking at the market itself, it’s really business as usual,” said Fabian Bocart, a founder of Tutela Capital S.A., a consultancy in Brussels that prepared one of the analyses for The Times.

“Reselling art at auction is not a new phenomenon,” he wrote in the report, “or at least, not very different from what has existed since 1995.”

At the request of The Times, Tutela Capital and Beautiful Asset Advisors, a New York company best known for its Mei Moses family of indexes, reviewed art market data from 1995 through 2013 to see if there had been a noticeable shortening in the time owners held onto art. The discussion of the issue has largely focused on the postwar and contemporary markets, where there is the perception that a commodities trading approach has become prevalent. This view has been fueled by a drumbeat of headlines about flipping; the emergence of companies like ArtRank, which give “buy” and “sell” ratings for works; and the high profile of collectors who buy pieces by new artists in bulk and sell them for a handsome profit.

“Many buyers today seem eager to buy the ‘new kid on the block’ — the hot, young, talked-about artist — for a low price and, in a short time, put the work up for sale, anticipating to receive a multiple of what they paid,” said Angela Westwater of the Sperone Westwater gallery.

At Israel Lund’s New York solo debut in June 2013, for example, an untitled yellow-and-gray painting sold for $7,500; this May it sold for $125,000 at Christie’s. Similar examples abound for recently created works by artists like Lucien Smith and Oscar Murillo.

But the data indicate that contemporary works appearing at auction within three years of their creation are not coming to auction faster than in the past, and that such flipping remains very much the exception, not the rule. Though more works come up for sale each year, the percentage of these works was essentially the same last year, less than 2 percent, as in 2007, Tutela Capital found.

Beautiful Asset did another review of the art market, using a different measure, and reached a similar conclusion: While, historically, the percentage of works resold within five years is higher now than it was, say, two decades ago, that percentage has been decreasing since 2008.

“It reached a high right before and after the financial crisis,” said Michael Moses, a founder of Beautiful Asset, “and it has been declining since.”

Beautiful Asset tracks sales at Christie’s and Sotheby’s, which by themselves account for about three-quarters of the value of the auction market worldwide but a smaller amount of the volume. Tutela Capital collects data from more than 2,500 auction houses. Both use the provenances supplied at the time of auction to track prior sales of a work, including those, in the case of Beautiful Asset, that occur at houses where data are not routinely collected.

The analysts’ methodologies were reviewed by two experts, Stephen T. Ziliak, professor of economics at Roosevelt University, and Alan F. Karr, director of the National Institute of Statistical Sciences and a professor of statistics and biostatistics at the University of North Carolina, Chapel Hill. Both experts found the methods sound.

“Ultimately, I think the market is reassuringly stable,” said Thomas Galbraith, the managing director of auctions at Paddle8, an online auction house. He said the scourge of the speculative investor has long haunted the art market.

“If it’s not the hedge funds or venture capitalists, then in the ’80s it was the Japanese,” he said. “And if it wasn’t them, then, at the turn of the century, it was American industrialists. It’s a cycle, it’s repeating, and in a way it’s very reassuring. I don’t think it’s something that we necessarily need to be frightened of, because we’ve seen this story before.”

Some of the fuss over flipping is related to its reputation as a vulgar way to collect art. Old World moneyed families were often embarrassed to be seen selling things, veteran dealers said, and galleries have long frowned on flipping. Wanting to control the market for their artists, dealers prefer to sell to collectors who will hold onto their purchases, worried that, while frequent resales may boost prices initially, they can hurt an artist’s staying power and ultimately devalue artwork.

Artists said that frequent resales of their works can generate creativity-stifling pressure to produce more of the same to feed the market. And the pace can be unsettling, even if prices rise in the short term.

From 2006 to 2007, Peter Doig’s painting “White Canoe” sold twice, drawing about $10 million at auction the second time around, the most paid for one of his works at the time.

“I was very nervous” after the sale, Mr. Doig said in an interview from his home in Trinidad. “I felt that things would change for me, that people would talk about that rather than the work.”

“It made it more difficult to paint for me,” he added. “I became more cynical. I just wondered why I was doing it: ‘Am I doing it to make rich people richer?’ ”

“White Canoe” had initially been sold at auction in 2006 by the prominent art collector Charles Saatchi — one of seven Doig paintings he sold through Sotheby’s that year. Mr. Doig said he was among the artists who had stopped selling to Mr. Saatchi because of his reputation for pumping and then dumping artwork.

“Everybody knows that’s what he does,” Mr. Doig said.

But if Mr. Saatchi is a flipper, he certainly does not embrace the title. In an article he wrote for The Guardian in 2011, he excoriated newcomers who he said had changed the culture of collecting.

“Being an art buyer these days is comprehensively and indisputably vulgar,” he wrote. “It is the sport of the Eurotrashy, hedge-fundy, Hamptonites; of trendy oligarchs and oiligarchs; and of art dealers with masturbatory levels of self-regard.”

The data analyses, however, indicate that, although such collectors may be conspicuous, they are not yet commonplace.

Beautiful Asset found that contemporary and postwar artworks resold at Christie’s and Sotheby’s last year had been held by their owners an average of 11.2 years, the highest level in six years and a reflection of behavior similar to that exhibited in the late 1990s.

Major auction houses said they had not performed calculations to test the flipping thesis but said they believed the prevalence of that buying behavior had been overstated. “The speculative art buyer, or ‘flipper,’ motivated purely by short-term investment potential, is the anomaly in our experience,” Christie’s said in a statement.

One factor that slows collectors who might be interested in flipping art is the size of the fees they pay auction houses to purchase a work. Someone, for example, who has bid $1 million for a painting is typically charged another $205,000 in fees, known as the buyer’s premium. So the art has to be held long enough to appreciate and cover those costs, a situation not unlike that faced by homeowners when calculating whether it makes sense to refinance, given the closing costs.

Mr. Bocart of Tutela Capital said that people alarmed by changes in the art market might be reading too much into the idea that a new breed of collectors is transforming the culture.

“They see bankers and hedge-fund managers coming into the market, and they have a preconceived idea of what they will do,” he said. “But they’re not the rogues or vultures they imagine.”
Source: The NY Times

8/18/2014

The Certificate of Authenticity


The Huffington Post takes a look at the Certificate of Authenticity and what it means, specifically for multiple items and for what are considered different editions.

The Huffington Post reports
You are a good artist and a good salesman, since some buyer likes your work and wants to purchase the cast piece that you have been explaining and touting to him (or her). The remaining question is, are you an ethical person?

A receipt -- or it might be called a Certificate of Authenticity -- should accompany any sale, identifying the name of the artist, title of the artwork, the year in which it was created, the foundry where it was produced, the medium or process used in making it, the physical dimensions of the art, whether or not the piece is part of an edition (and if so, the number of sculpture casts produced as of the date of sale) and whether or not that edition is limited. That is the law governing those who sell art multiples, including sculptures, in California, New York State and in a more limited way Rhode Island. Additionally, the laws in California and New York also require that sellers of sculpture multiples inform buyers if other copies of that object have been or will be cast, the existence and number of artist proofs and if there are other editions or versions of the artwork that have been or might be produced. Marketing and selling a sculpture as unique and then producing an edition of the artwork would be a clear case of fraud.

A number of other states (Arkansas, Georgia, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Oregon and South Carolina) also have statutes governing the sale of art multiples, but those laws only apply to fine art graphic prints. Perhaps, sculptors and their dealers living in the 47 other states can get away with something less than full disclosure. They could, but there are reasons that might not want to.

One reason to limit the number of copies in an edition is to ensure the value of these objects by keeping the supply scarce. "A lot of people don't know, or aren't aware, that most sculptures are made as multiples," said Renee Vara, an art adviser in New York City. Providing information to buyers is less likely to scare them off than to give them confidence when they make a purchase that they are being treated fairly and honestly, she added. An edition of five, plus two artist proofs, for instance, would suggest to prospective buyers that they might own an artwork that only a few others could acquire, elevating the price of each single copy. On the other hand, an edition of 150, or an unlimited or open edition, would indicate to would-be collectors that there is little sense in paying a high price for an artwork that any number of others might buy.

Collectors who purchase a work of art they assumed might be rare and find out isn't would likely not do business with that artist or dealer ever again and might bring a lawsuit depending upon what was said about the object.

A somewhat trickier situation involves different versions of what might seem to be the same sculpture but are not necessarily part of the same edition. "The art multiples laws are actually quite artist-friendly," said Manhattan lawyer John Cahill. "What exactly is an edition is open to question." Artists may create separate limited editions of the same sculpture based on the color of the patina, different sizes, different processes (bronze and resin, for instance), even different numbering of the copies in an edition (for instance, Roman numerals on one and Arabic numerals on another).

The myriad possibilities require artists to keep good records of what they have produced, as well as a good practices requirement to inform their dealers and collectors of what they have done or plan to do. "Artists don't want to irritate the people who can help their careers," Judith Bresler, a New York City art lawyer and co-author of Art Law (Practicing Law Institute), said. "The best way to proceed is to provide full disclosure of the information required by state statute or, in the absence of such a statute, in accordance, insofar as possible, with what is required by New York's statute. If the artist is selling directly to the buyer, the artist discloses this information to the buyer; if the artist is consigning the sculpture multiple to the dealer to sell, then the artist should provide this information to the dealer to pass on to the buyer."
Source: The Huffington Post

8/17/2014

Artspace Sold to Phaidon


Bloomberg is reporting that art and design book publisher Phaidon has purchased Artpace.com, the purchase price was not disclosed. The interesting aspect of the purchase is that it appears the acquisition was in obtaining Artspace's 150,000+ list of art buyers and not so much the Artspace business model or platform. The article states online auction house Auctionata was interested in purchasing Artspace prior to its US launch this fall.

Bloomberg reports on the purchase
Billionaire Leon Black’s publishing company Phaidon acquired Artspace.com, an Internet startup that sells works by contemporary artists, as investors struggle to figure out how to make money from art online.

Phaidon, a publisher of art and design books, agreed to buy Artspace, the companies said today in a statement without disclosing the price. The deal is the latest in a wave of mergers and partnerships shaking up the Internet art market even as profit in the nascent industry remains elusive.

“The new gold rush is online and it has been spreading into the art market,” said Alain Servais, a Belgium-based collector and independent investment banker. “The question is how to monetize the Internet.”

Demand Media Inc. (DMD), a Santa Monica, California-based digital content and media company, last week paid $17 million in cash and stock for Saatchi Art, which offers works by 45,000 artists online. Sotheby’s last month said it’s forming a partnership with EBay Inc. (EBAY) to expand its auctions to the online marketplace’s 149 million buyers. Amazon Art was started by Amazon.com in 2013 to sell fine art from international galleries.

On Aug. 18, a group of six regional U.S. auction houses will start BidSquare, an Internet platform selling art and collectibles. It will feature a free database of more than 600,000 auction results.

Early Upstarts

Auction houses, galleries and Web-only companies sold more than 2.5 billion euros ($3.3 billion) of art online in 2013, or 5 percent of total sales in the global art market, according to a report compiled by Clare McAndrew, founder of Dublin-based consulting firm Arts Economics.

Early upstarts including Artspace, Artsy and Paddle8 have received millions of dollars from investors, including Google Inc. (GOOG) Chairman Eric Schmidt. Now bigger players in the art world are muscling in. Christie’s, the world’s largest auction house by revenue, has allocated $50 million for its digital platform in the past three years.

Companies can make money online by expanding their customer base or by offering more exclusive and expensive artworks, said Clayton Press, who teaches art, commerce and technology at New York University.

Mailing List

Artspace has the base: its mailing list includes 150,000 active art collectors, Catherine Levene, co-founder and chief executive officer of the Internet startup, said.

That number is significant, said New York-based art collector Peter Hort.

“If it’s 150,000 people who are collectors of contemporary art, taste makers, gallerists, critics and curators, that’s impressive,” he said.

Artspace gained access to about half of its list by acquiring the VIP Art Fair in 2013. VIP started selling art online in 2011 with 138 participants from 30 countries, including top international galleries Gagosian, David Zwirner, White Cube and Hauser & Wirth.

VIP’s list had contact information for about 75,000 people, including important clients of galleries, according to Jonas Almgren, a VIP co-founder and investor.

“That list included pretty much all the major high-end collectors at the time, people in the U.S., Russia, Europe, South America and Asia,” said Almgren. “For Artspace the database was the main appeal.”

Purchasing Power

There’s purchasing power behind the lists. NYU’s Press estimates that there are 150,000 to 200,000 collectors globally who spend more than $50,000 year on contemporary art. By comparison, Christie’s has a list of as many as 145 international collectors capable of spending $50 million or more on art, according to Brett Gorvy, Christie’s chairman and international head of postwar and contemporary art.

The auctioneer’s catalogs for the evening sales of postwar and contemporary art go out to 7,000 subscribers, of which at least 5,000 have the financial means to bid between $1 million and $5 million, Gorvy said.

At its most expensive auctions, Sotheby’s has 1,200 to 1,500 people in a salesroom and about 200 people on the phone, William Ruprecht, Sotheby’s chief executive officer, said during an Aug. 8 earnings call with investors. With the EBay pact, Sotheby’s will have access to “as much as 100 million plus people,” he said.

New Buyers

Auctionata, an online-only auctioneer based in Berlin, held merger negotiations with Artspace, but those talks fell apart last week, according to two people familiar with the matter who asked not to be named because the information was private. Auctionata said it has a list of about 100,000 registered clients ahead of its U.S. expansion in October.

The company, which sells art and collectibles ranging from wine to Soviet space memorabilia, planned to use Artspace’s client list to solicit more consignments and attract new buyers, according to a person familiar with the matter.

Auctionata had valued Artspace at just under $5 million, and offered company shares rather than cash, according to the person. Phaidon had offered an all-cash deal, this person said.

Phaidon was founded in 1923 and bought by Black in 2012. Phaidon said today in the statement that the deal will increase its access to global art collectors who are also consumers of its art and design books and multimedia products.

More Art

“It’s the perfect home for Artspace,” said Levene in a telephone interview. The company’s mission “has always been to make great art accessible to a wider audience. It’s exciting to have a partner who shares our vision.”

Levene said she will remain the CEO. Her co-founder and chairman, Christopher Vroom, will leave “to pursue other interests” after assisting with the transition, she said.

Artspace has nine employees, down from 28 in April, Levene said. The nine will stay with the company, she said.

Black, the chairman and chief executive officer of private-equity firm Apollo Global Management LLC (APO), is a trustee of the Metropolitan Museum of Art and the Museum of Modern Art in New York. He is no stranger to investing in digital-art platforms. Last month, ArtBinder Inc., an iPad application serving more than 300 galleries, said it raised $3.17 million from investors including Black.

The biggest challenge for online art companies is not only to lure new clients but convert them into repeat buyers.

“How do you make people decide to buy art? After all, it’s a discretionary purchase,” said Almgren, whose new online venture, Artfinder, allows customers to buy art directly from little-known artists. “We all are breaking new ground. No one can say for certain what will work.”
Source: Bloomberg

The Good, Better, Best Appraiser Workshop

The Gallery at the Potomack Company before an auction
After announcing the new Good, Better, "Best" Appraiser Workshop last week, we are pleased to already have registrations for nearly half of the available seats.

This is exciting to see such a great response from the appraisal community.  Jane and I are working hard, and not only should the new location enhance the program with more room and items to inspect, but we are completely updating the material, course manual and forms.  Also,keep in mind you also get 16 PDCs for attending.

This is a unique workshop, as it has been planned as a discussion based program, not a day of lecture and slides, but actually classroom and instructor interactions along with hands on identification training from the on hand consignments at the Potomack Company. This is a one of a kind program.

Feel free to reach out to Jane or me or CLICK HERE for more information, but dont wait long, as the available seats are limited.


Announcing
The Good, Better, "Best" Appraiser Workshop

Saturday November 8th and Sunday November 9th, 2014
at
THE POTOMAC COMPANY AUCTIONEERS
1120 North Fairfax Street 
in beautiful downtown Alexandria, VA.


Are you aware of the most sustainable income generating markets for appraisers that will guarantee consistent income for the next 10 or 15 years? Are you scheduling jobs back to back and hiring other professionals because you are swamped and need help to keep up?   Are you ready to learn the insider secrets, strategies and what really works in your profession?  Are you knowledgeable in your field but don't know how to do the business and make money?  Are you ready to become a competent and qualified appraiser accumulating status and repeat business with the IRS, CPA's, Trust Officers, Insurance Companies, Financial Planners and Bankers?

Never before has there been a more exciting time like this for appraisers. This workshop is something for you to get excited about!  You won't be disappointed.

This very unique “hands on” workshop teaches the Appraiser how to:

Session One:
Close the Sale and Determine The Scope of Work
Prepare Contracts and Obtain Deposits
Prepare for the On-Site Inspection and Learn How to Deal With Client Challenges
Research Using New Methods and Learn New Technological Techniques
Learn About Valuation Theory.  (Appraisal Foundation's proposed course requirements).
Session Two:
Simulate an Appraisal Inspection
Learn Property Identification and Analysis Techniques
Advance Product Knowledge and Advance Specialty Area Knowledge
Learn How to Use Ultra Violet Light to Detect Restorations
Learn How to Write Property Descriptions and Condition Reports

You will receive sample contracts, forms, glossaries and documents which are used everyday by successful and experienced appraisers and be provided with a CD of all forms and they will also be included in your Course workbook.  You will receive 16 Professional Development Credits and a Certificate of Completion.

Attendees will have the rare opportunity to completely inspect and study the furniture, fine art, sculpture, decorative arts, porcelains, pottery and much more at the Potomac Company Auctioneers.

The workshop is a natural progression after taking the Core Courses because it is designed to get the appraiser into the mainstream appraisal profession fast.  New Appraisers will have the opportunity to simulate an appraisal inspection and gain the confidence and skills needed to act like old pros, while old pros will add new skills needed to expand a practice and advance your qualified status in the appraisal industry.  We teach you how to do the business in the real world and cut through the mustard!

The workshop instructors are Todd Sigety, ISA CAPP and past President of The International Society of Appraisers.  Todd is also the Director of Appraisals for Potomac Company Auctioneers.  Jane Brennom, ISA CAPP past President of The Gulf Coast Chapter and past core course instructor for ISA.

Contact us for pricing and availability. We purposely keep the class sizes small to enhance interaction and discussion during the workshop. Click on the link below to check out who we are, about the workshops, and for further information and registration. Website:   www.appraiserworkshops.com or call us now at 703-836-1020.
Registration information is on the Appraiser Workshops website, just follow the source link.

Source: The Appraiser Workshops