Now in its 5th edition, and, again under the chairmanship of Georgina Adam, an editor-at-large for The Art Newspaper and contributor to The Financial Times, The Art Business Conference has successfully taken its place in the global calendar of events for those working in or associated with the art market. The appeal of its particular mix of key issues affecting the global art world along with shared insights and practical knowledge has led to not just a second edition of the New York Art Business Conference, but now the launch of one to be held in Shanghai which the Economist has described as “racing to become China’s cultural capital.”
Michael Ellis, MP, Minister for Arts, Heritage and Tourism, emphasised the importance of the £12bn contribution made by the art market to the UK economy. Getting the two currently most dreaded words in the art market quickly out of the way, Brexit, he suggested, offered opportunities for a creative and ambitious nation open to the wider world: while he assured his audience of his concerns that the forthcoming regulations concerning the trade in ivory would achieve a proper balance and that he was working closely with DEFRA to ensure that exemptions would be appropriate.
He saw real scope for further cooperation between the art market and museums, a theme returned to later in the day during the session ‘The Entrepreneurial museum’. Over half of the UK’s population visited a museum in the past year. Britain was the home to three of the world’s most visited museums in the world (According to The Art Newspaper, April, 2018, The British Museum, Tate Modern and the National Gallery).
Picking up on other themes in the conference programme, he referred to the role of the art market in helping to ensure the legitimacy of art with authority and provenance as fundamental. He would be keeping a close eye on the recently launched Court of Arbitration for Art in The Hague. Finally, with a focus on the synergies between the art market and technology, he drew the audience’s attention to two recently published reports, the UK Government’s Culture is Digital which seeks to build on the particular blend of creativity and technology skills as the driving force behind the UK’s strong economic prospects over the long term; and The Art Market 2.0: Blockchain and Financialisation in Visual Arts which examines how the art market could be challenged and shaped by blockchain.
Because It’s Worth It: Valuing Contemporary Art
Specialists in this field (Ralph Taylor, Bonhams, the art dealer Inigo Philbrick, Millicent Wilner of Gagosian and the collector Valeria Napoleone), under the firm but gentle hand of Melanie Gerlis (art market columnist for the Financial Times), sought to bring some coherence and understanding of a market that is generally accepted as highly volatile, and, to the outsider, often confusing. The team also looked at how societal shifts in politics and world geography can also impact on the careers and values of artists’ works.
Ralph Taylor and Inigo Philbrick were in broad agreement that making a market for an artist’s works and trying to establish a consistent trajectory of value involved a number of stages from an artist’s first appearance at, for example, a degree show, through to their later appearance at auction. Prices would take in account that an artist had works in gallery, public and private collections, along with internet sales. A knowledge of the potential audience also helped establish demand. Millicent Wilner saw galleries as able to provide not only important and varying kinds of exposure, but all importantly help with getting works into established collections. It was important though, as Valeria Napoleone emphasised, not to push an artist in a direction which is not sustainable over the longer term.
Melanie Gerlis advised those buying not to buy just for speculation. Valeria said she bought primarily for excellence. Ralph returned to the importance of an artist’s track record, but pointed out that, in the terms of the global market, art is seen as a “safe space” for money with the inevitable result that there is a speculative aspect to the art market. Other factors discussed affecting price were auction house guarantees, where Inigo introduced us to the intriguing new term of “recalibration” when prices failed to match expectations: the importance of galleries in producing not just context but also provenance; and the emphasis given to items by the space accorded to them in catalogues. Of growing importance are prices achieved through online selling where, while there was general agreement that there was no real substitute for actual viewing, substantial prices such as the sale of a Damian Hirst for $1m on Instagram may indicate an increasing trend for buyers to appear comfortable to shell out substantial sums without prior viewing.
In response to the question “was the recent price of $450m for Leonardo da Vinci’s Salvator Mundi justified”, it was pointed out that not only was this a supremely significant cultural icon, but it had led to the foundation of a new gallery. Returning to earth for a moment, Ralph Taylor gave us, perhaps, a more practical rule of thumb for contemporary works, that any exposure on a wall space in London had to be worth at least £3,000! The provinces, presumably, will scale down appropriately?
Provenance & the Blockchain: Issues and Future Visions
Warned at the start by Tom Flynn of the art provenance research agency Flynn & Giovani that understanding blockchain might involve “everything you don’t know about computers allied to everything you don’t know about money”, Tom referred to the fact that the status of provenance in the art market varied widely. It varied not only in different locations but also as to the amount of information presented to buyers, and where lack of provenance can expose both the buyer and the seller to risk potential.
Gareth Fletcher (Sotheby’s Institute of Art) described provenance as establishing another level of trust with the buyer. He saw provenance as more of a diachronic concept and as not necessarily having achieved the level of public respect that we might have expected. In other words the concept was still evolving.
Jess Houlgrave (Codex Protocol – a decentralised title registry for unique assets), saw a need to evaluate risk around an item more effectively and where there might be something in its history that might emerge to affect its value. In this respect, she suggested blockchain has the potential to offer a new use of provenance.
Tom pointed out the considerable changes over the attitude to risk in the art market over the past ten years with a greater focus on risk assessment, due diligence and provenance. Robert Upstone (Robert Upstone Ltd) saw it still as a ‘bumpy landscape’, where the art market has risen and risks are higher.
In response, Jess went into more detail of how blockchain could bring improvements , recording data in an immutable fashion. It provides additional safety in that most databases were held on single servers, whereas the information in blockchain is held at multiple locations. Blockchain only permits the addition of new information and nothing could be removed.
Given that information can be highly subjective, the discussion moved onto issues such as reattribution, reputational credit, and the established authoritative structures in the art market. Would, for example, online facilities replace the traditional catalogue raisonné where verifying institutions and indeed artists themselves could exercise a powerful control over what was included or excluded? Could nascent technologies, such as blockchain, help achieve a more coherent improvement to information-holding and to what extent would such changes require a corresponding behavioural change in the art market, for example the provision of fuller documentation? After all, as one member of the audience observed, “You would never buy a house without doing a survey.”
The Fifth Anti-Money Laundering Directive: What Does This Mean for the Art Trade?
After a brief introduction by Adrian Parkhouse of Farrer & Co, Mathilde Heaton of The Responsible Art Initiative, fleshed out the detail of some of the implications.
AML is now relevant to any businesses selling works of art in transactions valued at €10,000 (£9,000) or more, regardless of the payment method uses. She went on to suggest how the art trade might best protect itself and avoid criminal penalties, reputational risk and possibly expulsion from professional bodies.
The 5th AML expanded the definition of who was involved which was “persons trading or acting as intermediaries in the trading of works of art, including art galleries and auction houses” to included art galleries, auction houses, freeports, dealers, and art advisers as “obliged entities”. Now, it is not just cash payments with which the regulations are concerned, but all methods of payment i.e. credit card, bank transfer, cheque etc.
Those involved in the art trade need to have in place:
- Risk assessment
- Policies and procedures
- Customer due diligence
- Record keeping and reporting any suspicious actings
- Staff training
Mathilde drew attention to two publications issued by RAMI. The first, the Art Transactions Due Diligence Toolkit provides a checklist of the questions that it is useful to ask in the process of due diligence: the other, Guidelines on combatting Money Laundering and Terrorist Financing is to help implement “risk based” anti-money laundering and terrorist financing measures appropriate to the size and nature of their business and to identify “red flags” (indicators of suspicious activity) and take appropriate action in response. While the 5th AML was of European origin, it was really inconceivable that these regulations would not continue as part of the UK’s own approach to anti-money laundering, if for no other reason than trading in Europe would continue.
Note: Implementation of the Directive is on January 20, 2020.
Have We Taken the Commoditisation of Art a Step to Far?
In a pre-prandial bonne bouche, Richard Nicholson of Willis Towers Watson, sent us off to lunch with a few well-chosen sentences asking if art is no longer to be valued on the basis of craftsmanship but by the runs of noughts in the price.
Lunchtime Discussion Tables
A new feature of the conference was the opportunity to join one of a number of discussion tables, each devoted to a different topic and hosted by an expert in the appropriate field. Topics included Fine Art financing: Risk management; Cybercrime; The Commoditisation of art; 5th AMLD; Making tax digital; The Changing nature of communication; Travelling exhibitions; and Emerging markets for contemporary art.
Why Brown is the New Black
Christie’s has been instrumental in shaping opinions and influencing a new appreciation for the decorative arts in recent months. Dirk Boll, president of Christie’s EMERI, discussed current trends and predictions for the future of collecting with Anna Brady of The Art Newspaper. Dirk described the apparent appeal to buyers of acquiring items from Collections where they could share the collector’s interest and enjoy a sense of participating in what was fundamentally the collector’s private experience. Room arrangements have been a very successful approach to selling, particularly online.
The new generation of buyers, with a keen awareness of carbon footprints, are increasingly being drawn to objects such as Victorian furniture, which is not only well made but has no carbon footprint. Dirk predicts evermore internet selling, but the ability of the internet to put in front of a similar buyer items relating to something he bought earlier will have to be carefully considered. In other words, the person who bought a large dining room table is unlikely to want another!
The Entrepreneurial Museum
This session looked at new revenue opportunities in the wake of funding cuts, the growth of travelling exhibitions and how museums are working more closely with the art trade.
Jane Morris, editor-at –large of The Art Newspaper and session moderator reminded us that, following the financial restraints caused by the banking crisis, most national museums nowadays have to raise 50% of their revenue, resulting in a requirement for them to become more entrepreneurial. On the plus side, this requirement has led to greater collaboration between the curatorial and fund raising staff than ten years ago.
Sir Charles Saumarez Smith, Secretary and Chief Executive of the Royal Academy, which has to raise all its own revenue, spoke about some of the changes in attitudes in the light of current challenges. Many, I suspect, will have been cheered up to hear that the RA’s former prohibition on lunch with dealers was no longer the rule, although he identified a remaining tension around dealer invested exhibitions.
Moving to a discussion on the role of branding, other contributors (Louise Stewart and Jessica Litwin of the National Portrait Gallery, Milou Halbesma of the Van Gogh Museum, and Bernadine Bröker Wieder of Vastari), described the experience of their various institutions, ranging from the Van Gogh Museum’s offering of sneakers, which sold out in two hours, to the National Gallery’s exhibition around Michael Jackson. Milou Halbesma emphasised the importance of brands to be inspiring and aim to promote a quality image (they were the very best sneakers!) and where at the Van Gogh Museum they had to overcome the rubbish in the wider market associated with the painter. Sir Charles noted that it was sometimes difficult to translate a brand successfully into the museum shop. He thought the VA and the Tate had achieved this well, but was not yet convinced that the Royal Academy had “cracked” it.
Discussion on the use of travelling exhibitions highlighted the problems of removing key attractions from the walls to send them on tour, but identified an appetite for exhibitions abroad, particularly where, as in Japan, new galleries were springing up but without necessarily much on their walls. In Japan there were newspapers, for example, that were keen to “buy” a travelling exhibition as a valuable promotion of their own product. Ethical considerations relating to sponsorship, though, nowadays, were more likely to arise. The Van Gogh Museum has, for example, relinquished Shell as a major sponsor in the face of public concern about fossil fuels.
Comparative Law: Arbitrate, Mediate or Litigate?
Under the direction of Adrian Parkhouse of Farrer & Co this session explored a series of art law cases and the achievement of solutions through three different routes – arbitration, mediation or litigation.
Richard Edwards QC, a barrister at 3 Verulam Buildings in London, set out the advantages of a public hearing in court now most likely to be heard in the Business and Property Courts, an umbrella term for a number of the specialist jurisdictions of the High Court of England and Wales in operation from 2 October 2017. The name Business and Property Courts (B&PCs) is intended to give the specialist jurisdictions an intelligible, user-friendly name, while preserving the existing brands of the individual courts. A court hearing offers advantages, such as the settlement of questions of title, the involvement of all interested parties (interpleading) and, by virtue of a public hearing, the repair to any reputational damage, and the possibility of appeal not usually available in arbitration or mediation.
Friederike Gräfin von Brühl, a partner in the law firm K&L Gates in Berlin, pleaded the advantages of the Arbitration process for art dispute resolution, amongst which are the parties being able to choose the arbitrator, speed of process, cost management and privacy, which for many might be of considerable importance. The services offered by the new Court of Arbitration for Art in The Hague, referred to earlier by the Minister in his opening address, do not have to be held in The Hague, but can be provided wherever the parties want.
Nicola Wallace, a barrister at 4 Paper Buildings, London, founder of ART ADR Global and a member of the international team which recently launched the above mentioned Court for Art Arbitration in The Hague, made a beguiling case for mediation, in that it encouraged dialogue in place of more confrontation processes. Mediation is designed to unlock the most intractable disputes. Any reservations vanished, as we watched a practical demonstration of the kind of unfairness mediation hoped to overcome.
The Evolving Art Fair
The final session was a panel discussion moderated by Melanie Gerlis which explored how art fairs were evolving in new geographical areas such as Turkey (Kamiar Maleki), Africa (Touria El Glaoui) and India (Jagdip Jagpal). Economics and political climates in some countries created challenges not necessarily experienced by more established fairs. With now over three hundred fairs a year, the panel looked at the issue of saturation but thought that fairs would continue to be a hugely important opportunity for galleries and emerging artists. Fairs could also play an important role in increasing awareness and understanding of the value of art introducing art to local communities where there was not a tradition or experience of art buying. James Green (David Zwirner) spoke about the experience of a gallery that appears at some twenty to thirty fairs a year.
With representatives from over 200 art organisations from all over the world, the Conference was not only again a sell out with 400 attendees, but provided a hugely stimulating and wide ranging agenda. Our knowledge of the art market is regularly helped by the kind of reports produced by Deloitte & ArtTactic, Art Basel and UBS, and others. These reports, similarly associated with conferences, not only help build up a picture of what is going on in the market, but remain extremely useful snapshots of the period they cover. Given the formidable army of international experts it now assembles and with conferences in London, New York and Shanghai, might there not be an opportunity here for The Art Business Conference to produce its own report?
Images by courtesy of The Arts Business Conference.