The importance of the new technology in the art market as analyzed in the Bank of America Private Bank survey

THE DIGITAL REVOLUTION HAS DRASTICALLY AFFECTED MANY INDUSTRIES, CHANGING THE WAY WE COMMUNICATE, ACQUIRE AND SELL PRODUCT. ONE OF THE INDUSTRIES THAT HAS, SURPRISINGLY, BEEN IMPACTED LESS THAN ONE WOULD THINK, GIVEN ITS BASICALLY VISUAl NATURE, IS THE ART MARKET AS SEEN IN THE RECENT PIERCINGLY INFORMATIVE AND COMPREHENSIVE BANK OF AMERICA PRIVATE BANK REPORT.

• ART AND TECHNOLOGY
• The art market remains one of the few industries still largely undisrupted by technology. We’re seeing innovation, but it’s still at the fringes. While online transactions are increasing, the growth of online sales has slowed, growing at 9.8% in 2018 versus 12% in 2017.

• Internet-native art companies are trying to help. In June, private equity firm Cove Hill made an investment in online marketplace LiveAuctioneers, aiming to accelerate online sales growth for their auction house partners, while Invaluable has made it easier to source and buy lower value items. Major galleries like Gagosian and David Zwirner launched digital sales channels, but the digital revolution still eludes the art world.
• On the transparency front, Christie’s became the first major auction house to record sales via Blockchain with the sale of the Ebsworth collection in November. At the request of the seller, Christie’s partnered with Blockchain-secured registry Artory to record its transactions. It’s an interesting development, but we’re a long way from Blockchain becoming industry standard.
• The most significant art world technology has been the rise of Instagram. Artists market themselves, museums announce exhibits, dealers initiate sales, and collectors tout their purchases through the platform. In 2017, when the “Untitled” Basquiat sold at Sotheby’s for over $110 million, Yusaku Maezawa posted his photo on Instagram to let the world know of his acquisition. Younger collectors, artists, dealers and auction specialists are increasingly using Instagram to enhance their personal and professional brands. Expect the new status loop to fuel a herd mentality for some artists and more price volatility. So collector beware.

 

• AS AN ASIDE, ARTISTS ARE CREATING WORKS THAT REPRODUCE EFFECTIVELY ON INSTAGRAM IN TERMS OF COLOR, DIMENSIONALITY AND SURFACE WITH THEIR AESTHETIC PRESENCE IN PERSON SOMETIMES TAKING A BACK SEAT.

 

• ART LENDING

  Our art lending business grew by 20% year-over-year, as you all continue to unlock capital from your art to build hotels, buy sports franchises, expand companies and even buy more art, just to name a few. The four most common situations we’re seeing are:

  1. The balance sheet arbitrage: With historically low interest rates, more of you are unlocking capital from your art to redeploy into higher-return areas of your financial life, like private equity.

  2. Working capital line: During the current economic expansion, more of you are using art loans to fund the growth of your privately held companies.

  3. Monetizing a collection: The passage of the 2017 Tax Cuts and Jobs Act eliminated the 1031 Like-Kind Exchange, making it more expensive to sell art. Instead of selling art and dealing with paying the 28% federal tax + 3% health care surtax + state taxes + sales commission, many of you have chosen to leverage your art via an art line to generate liquidity.

  4. Guarantees: We’re seeing more of you using art facilities to back guarantees at auction (but we advise caution).

  We estimate that total U.S. art loan commitments stand at $16 billion. We’re proud to have a significant portion of those loans, and we remain staunchly committed to the space. Given our forecast of continued low interest rates, stratified wealth creation, and expansion of the collector base, we expect continued growth in the space.

  Top five artists we lend against, by value:

  1. Willem de Kooning

  2. Andy Warhol
  3. Constantin Brancusi

  4. Paul Cezanne

  5. Roy Lichtenstein

  AT THE CLOSE OF THE SURVEY, BANK OF AMERICA PRIVATE BANK TARGETS THE OPPORTUNITY ZONES AND THE EFFECT OF CAPITAL GAINS TAX INCREASES AND THE REPEAL OF THE SECTION 1031 LIKE-KIND EXCHANGES PROVISION. THIS IS INVALUABLE INFORMATION FOR ANY ONE INTERESTED IN THE ART MARKET: DEALERS, GALLERISTS, AUCTION SPECIALISTS, AND MOST OF ALL COLLECTORS.

  PLEASE JOIN US!

   

The Art Business Conference, united by our love of art, with founder and director, Louise Hamlin

Louise Hamlin & panelists
Founder and Director
Art Business Conference

THIS YEAR’S ART BUSINESS CONFERENCE, IN ITS FIFTH YEAR IN LONDON AND THIRD IN NEW YORK, IS GROWING IN ATTENDANCE BY LEAPS AND BOUNDS. IN A REVIEW OF THE NY CONFERENCE BY JOURNALIST, TIM SCHNEIDER, IN THE APRIL 20, 2018 ISSUE OF ARTNET NEWS, THE EXPLANATION IS SIMPLE: THE ART BUSINESS CONFERENCE ADDRESSES THE MOST PRESSING IDEOLOGICAL CONCERNS IN OUR CURRENT ART MARKET.

http://www.theartbusinessconference.com/

Earlier this week, a cross-section of art industry professionals converged in Midtown Manhattan to debate some of the market’s most urgent questions. Hailing from around the globe and across sectors, participants in the second annual ART BUSINESS CONFERENCE in New York dissected topics ranging from the practical (how to guard your data against malicious hackers) to the philosophical (how to steward an artist’s legacy). 

We’ve packed the most important themes into an easy-to-digest capsule for anyone not in attendance. And since every good medicine is just the result of chemical reactions, here are the three main ideological collisions on display at the conference—and why they matter so much for where we go next.

TRANSPARENCY VS. OPACITY : The importance for dealers to do away with the secrecy-driven elitism of the traditional art sales process but to think of transparency is a much broader sense for the arts to continue to grow.

PROVINCIALISM VS. PROFESSIONALIZATION: From the challenges of globalization to the escalating scale of exhibitions, to the 21st century courtroom battles, the conference addresses the vast change of the art business from a cottage industry…Art has become too expensive, too complex and too globally mobile to keep handling with handshakes and ad hoc plans.

TECHNOLOGY VS. TRADITION: Technology is coming to the art world, whether the art industry is ready or not. The Art Business Conference should be applauded for giving the subject as much stage time as it did. But it will be the industry’s loss on multiple levels if it runs from the changes instead of meeting them head-on.

https://news.artnet.com/market/art-business-conference-1270700

BEFORE RETURNING TO THE AGENDA AND PANELISTS FEATURED IN THE SECOND HALF OF THE FORTHCOMING LONDON CONFERENCE ON SEPTEMBER 4th, WE REJOIN LOUISE HAMLIN, ITS FOUNDER AND ORGANIZER, TO CONTINUE WITH HER PROFESSIONAL HISTORY AND THAT OF THE CONFERENCES THEMSELVES.

LOUISE, THANK YOU AND WELCOME BACK!

THE ART BUSINESS CONFERENCE IS IN ITS FIFTH YEAR, A ONE-DAY CONFERENCE FOR ART MARKET PROFESSIONALS. HOW WAS IT INITIALLY FORMED AND WHAT INSPIRED THE IDEA?

During my time at The Art Newspaper, I worked with a very large number of businesses across the art market, from galleries and museums, trade associations, art fairs and auction houses to professional service providers including insurers, shippers and web designers.  I saw the need for a forum to bring all these different businesses together in a new learning environment to share knowledge in this unique and special industry. 

As Kevin Lay of Arcis said in his closing remarks, at the most recent NY conference, “we are all united in our love for art”.  A love of art and a desire to bring those working with it together was the inspiration for the conference.

APPROXIMATELY HOW MANY PEOPLE ATTEND AND HOW MUCH WOULD YOU LIKE TO SEE IT GROW?

The conference now has over 630 delegates attending the 2018 conferences, representing over 350 global art organizations. I would love to grow, but physically, I think there is a limit. If we had unlimited space available, would we want to have unlimited places available?  I don’t think so.  It would become too difficult to make the presentations relevant to all and networking could become more challenging. 

Growth in terms of reputation and success:  Yes, of course. I would like to continue to build on the current success to ensure we attract good people to attend and put on presentations which are interesting, informative, educating, challenging, inspiring.

WHAT ARE THE NETWORKING OPPORTUNITIES AND WHAT ARE SOME OF THE STORIES IN WHICH NETWORKING PRODUCED POSITIVE GROWTH RESULTS FOR THOSE WHO ATTEND?

As I have said previously, networking is key to the event and we provide a good number of opportunities to do this throughout the day (networking breakfast, morning coffee, lunch, afternoon tea, and of course evening drinks).  In New York, the conference room is set up so that delegates sit at large round banqueting tables to encourage this.  And at the forthcoming London conference on 4^thSeptember, we will be introducing networking tables over lunchtime. This is a great opportunity to join a discussion around a specific topic, ask experts and meet fellow attendees. We have facilitated a number of connections during the conferences and also post conference – connecting people and businesses is what we love to do.

THE KEYNOTE SPEAKERS ARE VERY DISTINGUISHED IN THEIR AREAS OF EXPERTISE. WHAT ARE THE SUBJECTS THAT THE CONFERENCE FOCUSES ON WHEN CREATING PANELS OF DISCUSSION?

The subjects are diverse but the brief is the same for whatever the subject. I want to secure speakers who are knowledgeable and engaging.   A lot of time and effort is given to putting together panels of people who do not necessarily share the same opinion on a subject but can bring different perspectives and experiences to the debate. There is always a need to be a little creative in putting together an interesting panel group. In terms of the topics, I try to make them timely, whatever is shaping the art market news at the time that is relevant to the buying and selling of art and also consulting widely across the industry to gauge interest in topics.  

WHAT IS THE CURRENT MARKET IN THE U.K. AND THE U.S. AND HOW DO YOU EXPECT TO SEE IT SHIFT AND GROW?

As a humble conference organizer and not an art market economist or journalist, I wouldn’t like to say!

However, in consulting across the market on topics as I do, it is an interesting time. Brexit in the UK and the Trump administration in the US have brought uncertainty to the art market, but as with everything there is always opportunity too!

IN OUR NEXT LRFA BLOG POST, WE WILL RETURN TO THE SPECIFICS OF THE NEXT ART BUSINESS CONFERENCE ON SEPTEMBER 4th IN LONDON. IT WILL BE WELL-ORGANIZED, INFORMATIVE AND PROVIDE A HUGE OPPORTUNITY TO CONNECT WITH OTHER PROFESSIONALS IN A WIDE RANGE OF AREAS OF EXPERTISE.

WELL WORTH ATTENDING!