Art Business Conference 2017

The fourth edition of this conference appears now well established in the calendar of events for those interested in the global art market was held in London 6 September. The aim of the conference is to bring art market professionals together to discuss the key issues affecting the global art world and to share insights and practical knowledge. Its success has been marked not only by its strong international appeal with over 380 attendees representing more than 200 art organisations from across the UK, Europe, India and the US.  Indeed, fathered by popular demand, it has already had issue in the form of a US edition, held 4 April in New York.


The Art & Antiques Crime Unit

The opening address was given by Richard Ellis of the Art Management Group and a former Metropolitan Police Officer on the need for the re-instatement of the Art and Antiques Crime Unit today particularly at a time when art related burglary and crime was increasing throughout Europe. In addition, the art market was increasingly being used as a way of funding terrorism. The Unit had been temporally closed earlier this year and its officers re-assigned to the Grenfell Tower disaster.  He expressed a growing concern that the Unit would not re-open. The effective investigation of crimes relating to the burglary of art and antiques, international cultural property theft, fraud and money laundering are all directly impacted by the lack of a dedicated police unit.  In contrast to the UK situation, the US had trained 400 officers since 2007 and the FBI has 16 special agents on its art crime team.
 
Since Richard Ellis’s  address the Mayor of London has confirmed the Met’s Art and Antiques Unit will re-form.


The Art Market in India

The opening panel explored how the use of digital media, one of the most increasingly influential mediums for conveying both information and art, is shaping the landscape and evolution of cultural consumption in India, one of the world’s fastest growing economies.  India, for example is expected to overtake the US as the second largest smartphone market next year. With one of the largest and youngest populations in the world, those working in the cultural sector are increasingly turning to digital media to connect to and develop their audiences. It was pointed out that Amazon is now more interested in knowing its clients mobile than email numbers, as the mobile is now where business is being transacted. 


UK Private Museums & Foundations

If the eyes of those attending were being opened by dazzling statistics of growth and emerging markets in India (Why are we so fixated on China?), the next session on New Business Models: UK Private Museums and Foundations continued the challenge, albeit more closely to home. This session, with examples from the Jupiter Artland Foundation and the Auckland Castle Trust, explored the challenges of creating successful models that support regeneration within the local community, attract international recognition, harness new technologies and seek to create an enduring legacy. In planning such enterprises, James Carleton of Farrer & Co, which was also a lead sponsor of the conference, emphasised the importance of getting the right balance between private and public benefit and that post death deals were likely to be more beneficial than life time giving.  He also warned that the recent changes to Non-Dom regulations would be likely to affect philanthropic donations to museums and similar cultural initiatives.

 

GDPR

While on the subject of regulation, Conference, was given a timely reminder by another partner from Farrer & Co, Ian de Freitas, on the impact of the General Data Protection Regulation on galleries and auction houses.  GDPR, which is due to take effect in May 2018, will fundamentally change the way that organisations are to treat personal data. Ian outlined the main impacts this far-reaching legislation will have on the art market and explained the steps necessary to achieve compliance. We need to remind ourselves that personal data is “on loan” and that we need to know where all such data is to meet any inquiries.  The greatest change is such data needs to be held by the owner of that data “opting in” as distinct from “opting out.” Poor management of personal data becomes an increasing risk with fines of up to 4% of annual global turnover or €20m, whichever is the higher. 
 

Art Work Packaging & Conservation

The post-lunch slot had no difficulty in keeping attendees wide wake with a session looking at the real costs of artwork packing and conservation.  Recent years have seen an ongoing trend in the commercial art market towards using standardised, non-tailored art packaging to protect and prepare art works for transit.  While this may at first seem a perfectly appropriate and cost effective solution, it all too frequently leads to significant art work damage and thus high conservation costs, let alone a potential fall in the value of the art work affected.  To this may added, insurance claims and reputational loss to the parties involved. The session looked at how to properly prepare artworks for transit and storage on the basis of a range of solutions tailored to different budget needs and how insurers respond to transit damage claims. Some idea of the number of art works whizzing round the globe was given by just one statistic, an estimate that the current 270 world wide art fairs was probably generating a traffic of 270,000 individual items.  Nor do good intentions and bubble wrap mix well!
 

Brexit

Preceded by sessions looking at new models for online sales, and the galleries in the light of spiralling overheads and related topic of managing reputation in the digital age, the Conference’s undoubted hotspot was the session on Brexit and the challenging question does Brexit present an opportunity for the British Art Industry? The session involved four speakers who were members of the Professional Advisors to the International Art Market (PAIAM), Anders Petterson of ArtTactic, Pierre Valentin of Constantine Canon, Craig Davies of Rawlinson & Hunter and Wendy Philips of Sotheby’s. 

All four had been closely involved with an initiative earlier in the year to inform the Government on how certain issues relevant to the British art industry might be affected by Brexit.  PAIAM had identified several legislative issues affecting the British art community which may benefit from reform, with a view to enhancing creativity, commerce and international trade once the UK has left the European Union. These issues include the Artist’s Resale Right, consumer protection, anti-money-laundering issues, taxation, custom controls and the export of cultural property.  PAIAM has prepared a series of memoranda intended as technical guidance notes. 

Anders Petterson reminded Conference that the UK remained the second largest art market globally, its £9.2bn by value representing 21% of the global total. It supported some 7,580 businesses in Britain and employed some 42,000 people. It was responsible for £3.3bn in ancillary services.  It is estimated that this expenditure directly supports a conservatively estimated 94,710 further jobs in the economy.

But we should be aware that the competitive landscape was changing. Between 2006 and 2016, while global sales values have advanced by 4%, sales in the UK have fallen by 18%.

Pierre Valentine outlined the ten topics identified by PAIAM offering an opportunity to improve the competitiveness of the British art market on the world stage, provided Government marked informed legislative decisions and continued to offer appropriate incentives.  

By way of example, he drew attention to the issues around Import & Export VAT.  Currently, goods can travel throughout the EU without excessive time and cost involved in otherwise clearing local Customs regimes. Brexit without access to the Single Market would, without any specific full or limited agreement about free circulation, significantly increase costs to the road haulage industry and those clients engaging transport agents.  These additional costs could arise in a variety of ways but the main areas would seem to be (i) the payment of import VAT in the EU country of destination and (ii) the extra transit costs (drivers’ waiting times will soar; more paperwork and checking required at every stage of the transit supply chain, etc.) Currently customs clearances can take up to two hours while vehicles wait at the UK border. Without an increase in customs clearance staff and the expansion of border infrastructure, there will be a considerable increase in waiting time and deterioration in service. 

On another vexed issue, that of Artist’s Resale Rights, he believed the UK would retain this as this reflected a growing global trend. 
Craig Davies described “potential advantages” relating to changes in the current VAT margin scheme. However he also raised concerns that experts are predicting delays in excess of two hours when moving goods across the border. Davies said: “This obviously has a wider impact than just the art world and has a significant cost impact.” Wendy Philips, head of tax and heritage at Sotheby's, stressed the need to provide business with certainty where at present no one knew where the end of the road was. Transitional arrangements will help but are not clear.  She emphasised the importance of industry lobbying. 

Conference provided for the first time an interactive voting system via delegates’ smartphones which, after some trial and error, asked for a vote whether the UK leaving both the single market and the customs union would have a positive or negative impact. More than 80% of the audience viewed such a scenario as having a negative impact on the art market.


Setting the Global Standard

The last session heard representatives from BSI, ImacQ and LAPADA set out how the UK art market, with its unrivalled expertise, now has a global set of standards for better business and consumer confidence – twin goals that would address many of the challenges professionals face today on the international stage.  The British Standards Institution (BSI) in its role representing the UK outlined how other industries have responded to the call and what the benefits are of developing consensus industry standards for best practice.  It offers an opportunity for the Art industry to shape and share industry best practices through consensus standards, codes of practice and guidance, using the formal international standards system to encourage the adoption of those standards worldwide, on business issues that will build confidence and trade.

If the author of this article had not been disenfranchised by his stubborn loyalty to an ancient Blackberry, he would have been prepared to vote that this year’s Conference was even more successful than ever. 

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