Paris, 17 April 2014,
In art, a quantitative approach is often given bad press. Those who pursue analyses based on value are often accused of relegating the importance of art works themselves – reducing them to mere financial assets. A number of dealers pretend to ignore the industry’s financial side, placing a stronger emphasis on the aesthetic or emotional aspect of their work. The reality of the market, however, means that financial considerations remain – and are increasingly – a vital component of the art world.
Art has often sought to avoid an association with finance and has, in part, succeeded. A work of art – even one considered to have little financial worth – is capable of attaining a very personal value which a treasury bond will never reach. Yet, in the context of an increasingly liquid market affected by ongoing inflation, information is key; thus, the importance of accurate data sources becomes increasingly important.
In the 1990s, a number of data specialists used the development of the internet to create accessible online data tools. Amongst the most established today are: Artprice, Artnet, Art Analystics, the Blouin Art Sales Indew, Artfacts (formerly Gordon’s), Mutual Art, and ArtTactic, which publishes an annual art market report, in association with Deloitte and Hiscox. Also prominent is the report published by TEFAF, produced by Art Economics.
New amongst these services is Art Rank (formerly Sell you Later) – another data provider to have understood the potential value of accessible databases and market analyses, produced using tools which lie beyond the technical capacities of most art market participants. Along with the internet, businesses such as these provide a significant means of sourcing information for members of the art market.
By establishing globally accessible information tools (which, admittedly, sometimes charge a fee), bodies such as these are making the cost of art work a significant and visible factor.
A diverse sector
These now-established services, including Artprice, Artnet, ArtTactic, Artfacts, Art Analytics, or the TEFAF annual report, publish – with varying degrees of detail – classifications based on publicly-released auction results, and data compiled via exhibitions. These results are manipulated to establish a number of different pieces of data, which range from geographical spread, to buyers’ profiles.
Artfacts offers users information on how artists are exhibited, listing the museums and institutions which have held the greatest number of exhibitions of an artist’s work, and giving details about the artists exhibited alongside one another in group shows. ArtTactic offers both results and more developed analyses, as well as talks, seminars, and a collectors database.
These established bodies, however – which have become prominent sources for the art market – are being challenged by the recently established ArtRank. Established in 2012 as Sell you Later, ArtRank was developed using an algorithm for an emerging art fund. The service analyses individual artist’s markets, classifying them according to three categories: “Buy Now”, “Sell Now” and “Liquidate”.
At its launch, responses to ArtRank were strong, with many shocked to see art presented in a structure resembling a stock market. Despite this, the site’s visibility increased – largely thanks to wide media exposure — which saw the project feature in articles in The New York Times, The Financial Times and Artspace.
Speaking to AMA, Carlos A. Rivera, the 26-year old founder of the platform stated: “The form of intrinsic analysis ArtRank provides is not provided anywhere else, yet is the only form of research acceptable in high levels of finance. Without question, such art data becomes of critical importance as the market grows”.
English site ArtTactic similarly offers a data analysis service, although it bases its results on qualitative, rather than quantitative analyses, gathered during panel interviews with several hundred experts. Results obtained using this method contribute to the Hiscox report, or the annual Outlook focus on Contemporary artists. Adding to its existing activities, the site has recently launched the ArtTactic Forecaster, a site which allows users to guess the value of art works already presented at auction.
What differentiates ArtRank?
What separates ArtRank from its competitors is its ability to predict art market data – using a method which continues to leave many perplexed. Founded by Carlos A.Rivera — a former art dealer and gallery owner who had, at one time, wished to remain anonymous — ArtRank does not use investment advisors, but instead gives predictions based on results provided by its algorithm.
To establish data, the site analysed the CVs of around 20,000 artists, establishing key details, before reducing their sample and, finally, calculating the career trajectories of each. According to site Gallerist NY, they then remarkably used Instagram to observe the works which avant-garde collectors, including Dean Valentine and Anita Zabludowicz, were hanging on their walls.
The methodology seemed so strange that many questioned whether the project was in fact a joke. Although a number of art professionals are in fact signed up to the site, few are convinced by the platform.
Jacob Past, CEO of Artnet, gave AMA his opinion: “I think it is an interesting concept, but not very helpful in its present form. I don’t trust the underlying data, and I would question the lack of transparency of the methodology. It is also too simplistic to be genuinely valuable; for example, economic success is the main criteria, but there are other factors that are equally, if not more, important in the mid to long term outlook”.
A service for finance or art professionals?
These collections of data seem much more appealing to investors, wishing to diversify their portfolio with a prestigious (and hopefully reliable) investment, than to amateur art enthusiasts – however wealthy the latter may be.
In 2012, Artnet launched the “Artnet Indices” – a series of art indices which, according to the company, allows users to follow the evolution of an artist’s market price, with a rigour comparable to that of the stock exchange. The project aims to increase the transparency of the art market by providing users with more exact means of estimating the value of art investments.
The Artnet Indices offer precise, quantitative analyses of the art market, allowing users to follow the performance of artists including Andy Warhol, Damien Hirst, Gerhard Richter and Yves Klein – just as one might follow the activities of a business on Fortune 500.
These Indices are conceived by compiling the results of public sales, comparing certain factors of a number of works, including: genre, period, subject, medium, size, and visual similarities to other pieces.
Artnet CEO Jacob Past told AMA : “Our Price Database and Analytics Reports are used by a wide variety of professionals, in the art world and in the financial community. These resources are used by both serious collectors and more casual art enthusiasts who are interested in finding out more about the market. Recently, we have seen increased interest from financial advisors looking for new ways to leverage their clients’ assets and balance their investment portfolios following the recession”.
This desire – to provide data which is amongst the very best in terms of speculative assets analyses – was the guiding principle behind the creation Art Analytics, a service which has been offered for two years by A&F Markets – Art Media Agency’s parent company. Using methods of analysis borrowed from statistical, economic and financial analyses, Art Analytics offers valuations substantiated by structured explanations, provided by a company whose overarching ethos is to remain neutral and totally independent of transactions.
Whilst some members of the art industry remain uncomfortable when confronted by a maze of graphs, rankings and diagrams referring to the art market – which will never lose their cold, mathematical character – for others, it is no longer ‘taboo’ to consider art as something approaching a traditional financial asset. The overwhelming intention of data providers, however, tends to gravitate towards a desire for increased transparency in a market often viewed as being inaccessibly opaque.
False transparency?
The majority of those who participate in the art market agree that it is one which still lacks transparency. But does an increase in data necessarily mean an increase in clarity?
Transparency has become one of the most frequently-used words by those participating in this ‘information market’. Thierry Ehrmann, founder of the site Artprice, has made ‘transparency’ his mission, repeatedly stating his desire to finally clarify an opaque market. Artprice – established as the world’s leading source of information on the art market – boasts a vast selection of data. The company offers over 27 indexes, with auction results for over 500,000 artists, as well as a vast library of auction results and articles published in the press. This profusion of information is intended to reassure collectors and investors, but is not without criticism.
Carlos A. Rivera, the founder of ArtRank, explained the reasoning behind such criticism, explaining to AMA : “The history of art data is troubling. Until ArtRank, the most common data analysis was of auction record trajectory. The ease of manipulating these results is a dream for those who manipulate markets, but only does a disservice to all others.”
Use for art market professionals
One thing, however, is certain. The views of traditional art dealers, gallerists and experts has evolved. Whilst it was entirely normal to mistrust, or totally reject these tools 20 years ago, the growth of the art market, and increasingly strong associations with the financial world, have pushed many to reconsider their initial position.
As Jacob Past explained: “We are now in our 25th year of business, and perceptions about the art market and the role of transparency have changed significantly during this time. Initially, we were met with resistance. The advantages of price transparency were not obvious for many market participants, and galleries and auction houses were hesitant to share information with us. Over time though, most stakeholders have come to realise that the art market can only grow to its full potential if it is transparent, and many of the businesses that were initially sceptical of our mission are now our biggest clients and supporters”.
Ralph Taylor, Director of Contemporary Art at Bonhams, UK, explained the role which data plays in his professional life: “It forms part of our expertise, I would describe it as an instrument. A knowledge of the history of art is primordial but, for ten years now, it \[data\]has been a part of the process. We’re also aware that collectors have access to these figures and understand them”.
The development of data tools has revolutionised the shape of the art market. Whilst a number of gallerists and art lovers remain wary of such technology, the distinction between art and its market is, increasingly, becoming less defined. Offering little to reassure investors, today’s economy had resulted in an art market with a continual influx of new capital, resulting in a market which is varied, though not necessarily conflicted. The CEO of Artnet explained: “Collectors are still buying art because they love art, but they also recognise the importance of understanding the market around their assets. People are more comfortable now with the idea that art can be bought and sold – online now as well – and that the resulting prices are an important subject of analysis”.