In recent art world news, one may think that the digital revolution has provided some “much-needed transparency” to the art market with the sale of artwork now being bought online as regularly as books and music.  However, according to last year’s Hiscox Online Art Trade Report (publication of the 2018 edition is forthcoming in April), it is estimated that online platforms accounted for about $3.75 billion of sales in 2016 (up 15% from 2015), which represents just an 8.4 percent share (up from 7.4% in 2015) of the overall art market.

Despite the low overall art market share for online platforms, the art world’s digital sector has seen new developments.  In particular, just last week it was announced that online auction house Paddle8 had merged with Swiss tech company The Native, and would develop an auction that accepts virtual currency (i.e., bitcoin).  Also, last week Sotheby’s announced that it had acquired Thread Genius, an artificial intelligence (AI) startup company specializing in developing identification software by using algorithms to identify objects and suggest images of similar objects.

While the music and publishing industries have been transformed by retailing via an online platform, this has not been the case for the art market, which has been slower to move in such direction.  Some in the art world have made the well taken point that artwork is unique and much more expensive than mass-produced books and music.  A high price tag of six figures and up has the effect of deterring digital impulse purchases.  Indeed, online art sales tend to be dominated by artwork priced below $5,000.

Prices remain a major hurdle for the expansion of the digital art trade, not just because they are often so high, but because of their lack of availability.  Consumers looking to buy, say, a shirt online can browse numerous fashion websites where thousands of items are clearly labeled and priced.  But all too often, prices on art dealers’ websites—and in their galleries and booths at fairs—are ‘on application,’ a process that can be both laborious and forbidding.”

Unsurprisingly, from the perspective of the consumer, dedicated online-only art auctions having transparent price structures benefit from a definite edge over dealer transactions in the digital space.  Since last May, in an effort to aid transparency, Christie’s website has included results from its online-only art auctions, which had an average lot price of $7,305 (up from $6,047 in 2016).  This information is not provided by competitors such as Sotheby’s and Paddle8.

Although results achieved for resold artworks can be accessed via subscription websites such as Artnet and Artprice, the “primary market” prices charged by galleries for new artworks by contemporary artists remain private with “many dealers regarding them as trade secrets available only to insiders.”

A new app started in 2016 named Magnus seeks to disrupt the art market and make it more transparent.  In use, the smartphone user simply aims their device at a particular artwork in a gallery or fair and visual recognition technology rapidly provides auction and dealer prices for the specific artist.  In such way, it is said that Magnus works for art as Shazam, the mainstream song-identifying app, works for music.  The new app’s database stores about 10 million prices, which are compiled through crowdsourcing, and 10 percent of which are from the primary market.  The app is said to be especially strong at art fairs with estimates that it identified around 80 percent of the prices at events such as Art Basel.

It will be interesting to see how the art market engages the next generation of art collectors and buyers.  The recent developments in the digital space described above seem like a solid start.

 

 

As recently reported by the International New York Times, prominent art dealer Larry Gagosian of the Gagosian Gallery and the royal family of Qatar’s agent, Pelham Europe, Ltd. (run by Guy Bennett), each claim that they purchased Pablo Picasso’s work of a 1931 plaster bust of his French muse/mistress Marie-Thérèse Walter, which is currently featured in the Museum of Modern Art’s (“MoMA”) Picasso Sculpture exhibition running through February 7, 2016.  In each case, Picasso’s daughter Maya Widmaier-Picasso was the seller.

The sculpture is considered a significant work from a highly creative time in Picasso’s life in which the “evolution of a new erotic style of curves and exaggerated forms” were inspired by his muse/mistress Walter.

Earlier this week, the Gagosian Gallery filed a lawsuit in federal court in Manhattan against Pelham Europe, Ltd. claiming that Gagosian purchased the bust in May 2015 for about $106 million from Widmaier-Picasso, and in turn sold it to a non-disclosed New York art collector who is expecting to receive the bust after the close of MoMA’s “Picasso Sculpture” exhibition in early February.

However, in its court documents, Pelham Europe, Ltd. claims that it secured an agreement with Widmaier-Picasso to purchase the bust in November 2014 for about $42 million.

The conflict reveals the

stubbornly elusive nature of an increasingly competitive art market, in which deals are made behind closed doors and ownership can be ambiguous.”

The case is reportedly complicated by the nature of Picasso’s family, which includes a number of family members (i.e., wives, muses, children and grandchildren) who have fought over the famed artist’s valuable works, and on a number of occasions sold off the works, throughout the years.

According to Artnet, Picasso’s total fine art sales in 2015 were over $652 million and surpassed Andy Warhol for the year.

In the recently filed suit, the Gagosian Gallery is requesting a judge to “quiet” any challenges or claims to its title of the bust and declare it the rightful owner.

Experts remark that this dispute between a dealer and a collector “casts a shadow over a prized piece of art history.”

For further background on the dispute, click here.

[The suit is Gagosian Gallery, Inc. v. Pelham Europe, Ltd., Case No. 1:2016cv00214, U.S. District Court, Southern District of New York (Manhattan)].

As recently reported by Artnet, there has been quite a bit of speculation surrounding the buyer’s identity of Austrian artist Gustav Klimt’s painting entitled Portrait of Gertrud Loew-Felsövanyi (1902) sold at Sotheby’s London back in June for $39 million.  Recent credible reports confirm that the buyer is British billionaire businessman Joe Lewis, who came into his fortune by way of foreign exchange market (forex) trading in the early 1990s.  Lewis’ art collection is estimated to be worth around $1 billion and includes works by Picasso, Matisse, Lucian Freud, sculptor Henry Moore, and, of course, Klimt.  Lewis is known to have a preference for Austrian modernism.

According to Artnet, the provenance of the Nazi-looted Klimt painting was determined just recently before the Sotheby’s London auction in which the painting was returned to the subject’s granddaughter.  Shortly thereafter, it was decided by the Felsövanyi family along with the Klimt Foundation to consign the artwork to Sotheby’s and share the profits.

The recent sale of the Klimt artwork has reignited a long debate back in Austria as critics of current restitution practices expressed their concern that “restituted masterpieces all too often disappear from public view as they go to private hands.”  Artnet notes that because public institutions are unable to raise the necessary funds to acquire expensive important artworks, these masterpieces often tend to find their way into either freeports or the art collections of the very affluent.

The painting will be on loan to the Neue Galerie in New York for an exhibition scheduled for next year entitled Women of Vienna’s Golden Age 1900-1918, which will run from September 2016 to January 2017.  The Neue Galerie is a museum dedicated to early twentieth-century German and Austrian art and design.

Although the Klimt painting will be on display for a short time in New York later next year, the Austrian media predicts that the chances of it becoming permanently publicly accessible are “slim.”

As recently reported by Skate’s earlier this week, four art auction houses with online art trading platforms, namely, Auctionata, Paddle8, Christie’s, and artnet.com AG, generated a combined $144 million in gross merchandise volume (“GMV”) in 2014, which represents on average a doubling of the volume of global online trade compared to 2013.

Berlin-based Auctionata came out on top with 2014 results that provided for an increase in online auction trade volume over that originally anticipated.  Auctionata captured $41 million in GMV sold, which represents a 148% increase in dollar terms to 2013.  These results catapult Auctionata into the top position as the leading global online art trading platform followed by Paddle8, Christie’s, and artnet.com AG.

Paddle8 and artnet.com AG have yet to publish their results, however, Skate’s closely tracks each firm’s online auctions and expects Paddle8 to report about $37-40 million GMV and notes that artnet.com AG is unlikely to exceed $30 million GMV for 2014.

Christie’s experienced a 60% growth compared to 2013 for its online-only sales in 2014 generating $35.1 million GMV.  For further information on Christie’s results, click here.

It will be interesting to see if these top four players for 2014 remain in their respective positions for 2015.  Indeed, the online art trading platform is quickly establishing itself as the way to collect and sell art in the 21st century.