Art & Finance Report 2017

5th edition
REFUGEE ASTRONAUT II © YINKA SHONIBARE MBE (2016), PHOTOGRAPHER: STEPHEN WHITE
 Art & Finance Report 2017 | Section 5 - Art and technology

Section 5

Art and
technology

DAVID (AFTER MICHELANGELO) © YINKA SHONIBARE MBE (2016), PHOTOGRAPHER: MARK BLOWER
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Art & Finance Report 2017 | Section 5 - Art and technology

HIGHLIGHTS • Auction and dealer markets

converging online: Increasing
• Technology is increasingly playing
competition is already forcing online ar t
a key role in the evolution of the
platforms to embrace new strategies to
art market: Ar t-technology star tups
expand their business and diversify their
(Ar tTechs) are building new digital
income streams. Among the auction
business models aimed at enabling and
aggregators, Invaluable has ventured
suppor ting traditional ar t businesses,
into the galler y and dealer space by
rather than replacing them. Technological
allowing visitors to buy directly from
innovations are aimed at increasing trust
and transparency, but also suppor ting
a platform predominantly targeting
data-driven valuation methodology,
galleries, has held several online auctions
building social capital, and transforming
in par tnership with Phillips and Heritage
the backbone of the ar t market
over the last 12 months, and it raised
ecosystem.

• Online art sales continue to grow: expand its auction business.

Despite a challenging year for the global
• Improved data and analytics
ar t market in 2016, with global auction
infrastructure in the art market:
sales falling by 19 percent 97 in 2016, the
A number of existing and new players
online ar t market continued to show
are pushing for fur ther developments,
resilience and fur ther growth. According
new data, and new analytical tools for
to the “Hiscox Online Ar t Trade Repor t
the ar t market, and we are star ting
2017,” online ar t market sales reached an
to see the emergence of a new and
improved industr y as it relates to data
percent from 2015. This gave the online
and analytics. This is an impor tant
ar t market an estimated 8.4 percent
development and it could contribute
share of the overall ar t market, up from
toward improving the transparency,
7.4 percent in 2015.
valuation accuracy, and risk management
• Traditional art businesses responding of ar t-related wealth.
to the online challenge: The lion’s share
• Blockchain could revolutionize the
of online ar t market growth between
art industry: The ar t industr y is one
2011 and 2014 was recorded by online-
of the world’s most opaque business
sectors, with a multitude of middlemen
between the creator and the consumers
market advantages. However, growth has
picked up among the traditional auction
ar t industr y by resolving questions of
houses in the last two years. Sotheby’s
provenance, and improving transparency,
expanded its online business (online
copyright, and ownership issues. Seeing
bidding and online-only auctions) to
the potential, ar t star tups are already
building real-world applications based on
in 2016, and Christie’s increased its
blockchain.
online activities (bidding and online-only

97 Source: “TEFAF Art Market Report 2017”

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The lion’s share of

online art market
growth between
2011 and 2014 was
recorded by online-
only platforms,

venture capital funding

advantages.

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EXPERT
OPINION

A digital art world

The intersection
of art, wealth,
and technology
Phillip Ashley Klein
U.S. Ar t & Finance
Coordinator
Deloit te Consulting guard and slow to change, technology is quickly
LLP
taking a front seat in its evolution. Today’s consumers
Kevin Ye
Consult ant
Deloit te Consulting transparency, and the industry is looking to technology
LLP to deliver that experience. From art-technology startups
(ArtTechs) to traditional incumbents, players are starting
to look toward digital business models as a way to win
in the contemporary art world.

In a series of recent discussions with Transparent valuat ion met hodologies

industr y luminaries, they provided their are increasing t ransact ion comfort and
perspectives on the intersection of ar t, invest ment opportunit ies
wealth and technology. From auction Traditionally, valuation has been considered
houses to star tups to wealth managers, more of an ar t than a science. While
historical data points and comparatives are
aspects of the industr y expressed their
thoughts: how is technology evolving in the experience of professional appraisers
the ar t market? What technologies are
changing how ar t is viewed, purchased, how they drive an ar twork’s value) are
not always obvious or made clear to ar t
collectors, and this can create friction and

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A handful of industr y pioneers are seeking institutions to better evaluate and monitor
to improve the valuation process through their risk pools, driving increased loan The development of
a more structured and transparent volume on more favorable terms.
methodology. Christopher E. Vroom, more quantitative,
CEO of CollectorIQ, Inc. is one of those The establishment and adoption of these
spearheading the charge. He explains that valuation methods can also open the transparent
“by aggregating nearly 100 million distinct
increasing exposure to ar t market methods for
ar t sales, we’re able to assess the value economics and ser ving as a barometer for
impact of a wide range of selling choices investment choices. Although ar t indices valuations has a
such as auction house or location, time currently exist, they are not without their
of year and the like while assessing the criticisms; they are often limited by the positive impact for
contribution to value of both primar y qualit y and availabilit y of data.
and secondar y object characteristics.
Ultimately, structuring data is the key to Real-time algorithmic valuations could
understanding value." The immediate goal enable a more sophisticated, accurate, particularly wealth
is not necessarily to create a pin-per fect
algorithm-based valuation, as this challenge of investors. These same algorithms could managers.
may be too great given the subjective also potentially drive the development of
nature of ar t and the social capital element ar t exchange traded funds (ETFs), which
that drives the underlying value. However, Collective—a social ar t-recognition
through which investors can gain exposure platform and marketing tool for ar t
components and weighting that determine to market economics.
value could instill more trust in the process, social media is the best way to target the
bringing increased comfor t to buyers and Social media as a builder of social middle market, and a lot of the focus is
sellers alike. capit al and plat form for art indust r y now shifting toward these buyers. “Middle
professionals market transactions might not have
The development of more quantitative, headliner prices, but the sheer scale and
transparent methods for valuations has of ar t, ser ving as both subject matter quantit y of this market is star ting to have a
and marketing channel. With exhibits lot of appeal for sellers,” said Campbell.
par ticularly wealth managers. A key such as Rain Room98 and 99
Perhaps the most popular platform
obstacle that high-net-wor th clients face is drawing massive crowds seeking that currently used is Instagram, often viewed
per fect photo to post online, the social as the social media of choice for the ar t
repor ting that enables an investment- media “friendliness” of a piece can make communit y.
oriented evaluation. Ar t collectors are
more commonly seeking the same level of and per formance of an ar tist, galler y, or
sophistication from their auction house museum.
as from their investment bank. As pricing
becomes more transparent and high-net-
wor th consumers get more comfor table created, social media is also ser ving as a
with transactions, demand for ar t-related low cost distribution channel for ar tists.
wealth management ser vices should In many ways, it is disintermediating
grow. As it relates to ar t-secured lending the ar tist-galler y paradigm by allowing
these creatives to showcase their work
methodologies could remove human bias / directly to millions of potential buyers.
Joshua Campbell, a Sotheby's Institute of
Ar t alumnus and co-founder of Canvas

98 Rain Room is an immersive environment piece created by Hannes Koch and Florian Ortkrass of Random International in 2012
99 Infinity Mirrors refers to a number of Yayoi Kusama’s infinity mirror installations that have been made available to the public throughout the course of her artistic career
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While it may be surprising to those who directly connecting high quality shippers
with customers, ARTA is now turning to
would suggest a slow or reluctant adoption APIs that can connect seller and buyer
of social media (due to their t ypical systems directly, bypassing the manual
demographic), current obser vations pen-and-paper processes that are t ypically
required to complete a transaction.
number of active ar t collectors using the
app on a consistent basis. Technology is also star ting to address
the challenges of provenance, tracking,
Dan Desmond, of Morgan Stanley’s Blue and securit y, all of which are major
risks and concerns. For example, the
this development and its impor tance for idea of a unique, reliable, and tamper-
proof tracker for ar twork can have
professionals who are looking to be
well informed on what is happening in collection management, enhanced
contemporar y ar t. To truly develop deep securit y monitoring, improved provenance
and meaningful relationships with ar t accuracy, and monitored condition
collectors, it is not enough to merely management. With technology like this,
institutions and buyers can eliminate many
data of ar t, but to share an interest in the steps that are currently being used to
work itself and the communit y of ar tists, establish provenance and authenticit y, and
curators, scholars, and dealers that are
the core of the communit y. Social media
can provide a convenient and valuable the shipping and storage process.

a window into shows happening all over the to this problem, including Steven and
world. Anne Halliwell (founders of ID4Ar ts and
managing directors of the Ar t collectors
Technology is t ransforming Fund), who believe that technology using
“t he backbone” of t he art ecosyst em RFID transponders could be the solution.
From collection management to securit y to These developments will also likely
transpor tation, these ancillar y ser vices act have impor tant implications for wealth
as the backbone of the industr y, ensuring management ser vices as the issues of
ar t is exactly where it needs to be, when provenance, tracking, and securit y are
it needs to be there, and arriving in the solved.
same condition in which it left. While these
ser vices are acknowledged as crucial, how The next front ier in t rust and
they are evolving through technology can t ransparency: primar y market dat a
frequently be overshadowed by more high- It is widely regarded that one of the most
impactful industr y developments has been
Adam Fields, CEO of ARTA, highlights that data transparency. While negotiating power
and access to ar t have traditionally been
as antiquated and resistant to change, reser ved for insiders, improved access and
logistics and other ancillar y ser vices that analysis of data has made it easier for a
variet y of stakeholders to venture into the
be considered even more old-fashioned. ar t world. Secondar y market data is readily
For example, electronic payment
processing and currency conversion,
capabilities that are taken for granted in drastically as a result, giving ar t collectors
most other industries, can be considered
relatively new developments that many ar t
shippers and ser vice-providers are star ting
to adopt. Having found success with

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asymmetries and lowers the barriers for

the global market value lies in the primar y market entr y; however, it is impor tant
market, and the data on these transactions
is not readily available or understood. provides oppor tunit y, as it enables more
Shedding light on this data could have accessibilit y and comfor t in transactions.
enormous implications, as it provides the As Hugo Liu of Ar tsy ar ticulates: “You
last major piece for a complete picture. As shouldn’t look at ‘Ar tTech’ as threatening
Pip Deely of Wolfram Ventures suggests, your slice of the pie. You should see it as
“What it ’s going to take to see this change a way to grow the entire pie overall.” The
happen is for the holders of primar y
market data to understand the value of able to tap into a more expansive market
sharing their data.” Ar t insiders inherently than they have ever seen before.
want to amass as much primar y sales data
as possible because they understand the The nucleus of the market adopting
value that this information asymmetr y technology innovation will continue
to expand as prices become more
power. However, Deely believes dealers are transparent and demand better matches
star ting to understand that their data is not supply. However, there is broad agreement
going to stay private forever and it ’s in their that the ar t industr y has an intangible
best interest to tell richer stories and better qualit y that can never be replaced or co-
justify their prices. opted by technology. Much of the personal
satisfaction and appeal can be derived
Although the issue of primar y market from the “romance” of the in-person
data opacit y is ver y much alive, the need experience, and it ’s not expected that any
for transparency is becoming more and of these elements will ever be phased out
more compelling. There is no doubt entirely. Technology can go far in improving
that technology will play a critical role in the access and convenience of ar t, but the
unlocking this par t of the market, and it will nuances surrounding the experience of ar t
be exciting to see what the future holds. may never vanish.

Technology is here to enable and

support businesses, not replace t hem
While technology may invariably change
how business is done, it does not While technology may invariably
necessarily mean that traditional jobs are
at risk. Instead, incumbents will likely have
to evolve to adapt to the technology. Those
change how business is done, it
who are willing to transform can learn to
engage the market in more compelling does not necessarily mean that
ways. For example, an ar t appraiser can
embrace data-driven algorithms and
marr y them with the traditional appraisal
traditional jobs are at risk. Instead,
process to provide a more compelling value
incumbents will likely have to
can also play a role in the development and
evolve to adapt to the technology.
The major role of technology within the
industr y will likely be to reduce friction,

the underlying processes. Margins for

as technology eliminates information

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Trends
Online art market
continues to grow,
but competition

Despite a challenging According to the “Hiscox Online Ar t Trade

Repor t 2017,” online ar t m arket sales
year for the global art reached an estim ated US$3.75 billion in
market in 2016, with 2016, up 15 percent from 2015. This gave
the online ar t m arket an estim ated 8.4
global auction sales percent share of the overall ar t m arket ,
falling by 19 percent 100 up from 7.4 percent 1 in 2015. Tefaf
repor ted in 2017 that m ore than US$1
in 2016, the online art billion of ar t and antique dealer sales
market continued to show in 2016 were t aking place online, which
accounted for approxim ately 4 percent
resilience and further of the overall dealer m arket .
growth.
Figure 53. Online Sales 2013 - 2016 ($US billion)

8.4%
7.4%

6%

4%

1,51 2,64 3,27 3,75

2013 2014 2015 2016

Online art sales (USD billions)

% Online share of global ar t mar ket (TEFAF Report)

Source: “Hiscox Online Art Trade Report 2017”

210 100 Source: “TEFAF Art Market Report 2017”

 Art & Finance Report 2017 | Section 5 - Art and technology

Figure 54. Traditional Art Auction Houses: Online Sales in $US Million

400 344 348,5

300
217
200 155 162
130
100

0
Sotheby's Christie's Her itage

2015 2016

Source: “Hiscox Online Art Trade Report 2017”

Despite the global decline in auction sales, The “Hiscox Online Ar t Trade Repor t 2017”
Sotheby’s expanded its online business repor ted that the majorit y of online ar t The “Hiscox Online
(online bidding and online-only auctions) plat forms expected to see more industr y
consolidation. Among the online ar t Art Trade Report
percent in 2016, and Christie’s increased plat forms sur veyed, 71 percent said they
its online activities (bidding and online- expected more consolidation to occur. 48 2017” reported
percent of companies sur veyed felt that
that the majority of
Online-only auctions saw par ticularly in the same space such as Paddle8 and
strong growth at Christie’s, with an 84 Auctionata) will be the most common, online art platforms
percent jump in sales last year. Heritage while 53 percent believe “ver tical mergers”
Auction repor ted that 41 percent of its are more likely, i.e., companies operating expected to see
auction sales were now conducted online,
There is also evidence that online ar t more industry
2016 (up 1.3 percent). business models are converging toward
a one-stop shop template. Increasing consolidation.
While the lion’s share of online ar t competition is already forcing online ar t
market growth bet ween 2011 and 2014 plat forms to embrace new strategies to
was recorded by online-only plat forms, expand their business and diversify their
income streams. Among the auction
aggregators, Invaluable has ventured
growth has picked up in the last t wo years into the galler y and dealer space by
among the traditional auction houses, allowing visitors to buy directly from
which are rapidly investing and adapting
to the digital age. a plat form predominantly targeting
galleries, has held several online auctions
in par tnership with Phillips and Heritage
auction house Auctionata (announced over the last 12 months, and raised a
in Januar y 2017), casts doubt upon the 101
to expand the
abilit y of new online-only players to grow auction business. These trends suggest
we could see more consolidation in the
increasingly congested marketplace. On industr y over the coming years.
the other hand, the growth in online-only
auction sales from traditional auction
houses such as Christie’s suggests that
the power balance might be shifting back
to the incumbent ar t-market players. 101 The round of financing was raised in July 2017
from 56 investors led by Avenir Growth Capital
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Art data & analytics

providers
Table 5.

Product s AM A/ Art Art fact s.net art net Art price

Analyt ics

Art price Ar t Analytics do not own any Ar tFacts.Net compares ar tnet has a database of Ar tprice.com covers 30
dat abase price database itself. exhibition careers and auction records dating million prices and indices
auction trends using data back to 1985. The database for 630,000 ar tists. The data
provided by Mutualar t.com contains over 11 million comes from 6,300 par tner
auction houses and covers
design, and decorative auctions from 1962 to the
ar t auction results with present day.
complete lot descriptions.

Art price A new family of ar t price Ar tprice produces price

indices indices launched in indices per ar tists as par t of
autumn 2017, showing the their ar tist analytics ser vice.
representative prices of ar t
market sectors and ar tists.
These indices help users to
track the evolution of prices.

Primar y AMA covers extensively all Ar tFacts.Net is the

art market ar t market news including leading provider of data
analysis fairs, biennials, events, and analytics related to
museum and galler y exhibition information.
exhibitions. Ar tFacts.Net produces a
set of rankings for ar tists,
galleries and ar t fairs.
The Ar tist Ranking is an
indicator of the cultural
value of an ar tist career. It
is calculated by quantifying
the exhibition success of an
ar tist, acting as an impor tant
counterbalance to the
formation of prices in the ar t
market.

Source : Deloitte Luxembourg & ArtTactic Art & Finance Report 2017

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Art market dat a, research,

has gone into e-commerce-related ar t and new analyt ical t ools
businesses, we are also seeing more Many of the ar t data analytics companies
activit y in the ar t ser vices and ar t have existed for more than 15 years and
infrastructure space. In this section, we
have highlighted a number of new and both quantitative and qualitative analysis
recently launched initiatives in the ar t aimed at improving the understanding of
and technology space, which may have a risk and per formance in the ar t market.
real impact on the Ar t & Finance market The following table illustrates some of
in the future, and many of the key issues these companies:
discussed in this repor t.

Art Tact ic M ut ualart Pi-eX

Ar tTactic has developed a proprietar y auction With price analysis, auction results and "Pi-eX has a clean and exhaustive database
price and price forecasting database for event listings for over 300,000 ar tists, the
around 1,300 modern and contemporar y from the top three auction houses. The data
ar tists. This data can be accessed via extensive view of the global ar t market. includes withdrawn, unsold and guarantee
bespoke projects and repor ts. information."

Pi-eX believes that the disparate nature

of transactions do not allow for the

construction of accurate price indices. To
obtain better benchmarking, Pi-eX developed
a buyer/seller behavioral analysis, switching
the focus from the ar twork to the collectors.

Ar tTactic ar tist repor ts map the

characteristics and structure of the primar y
market for an ar tist using a mix of galler y, subscribers the MutualAr t Index, which uses
exhibition, museum, media, social media and a comprehensive proprietar y algorithm to
collector sentiment data. rank ar tists. MutualAr t's extensive primar y
market data is featured in their subscriber
newsletter, where they highlight key
exhibitions, and is a primar y source for their
mobile app, which uses geo-location to aler t
users to nearby exhibitions of their favourite
ar tists. This data is also used in the MutualAr t
Index (as described above).

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Product s AM A/ Art Art fact s.net art net Art price

Analyt ics

Risk analysis ar tnet can use its new ar t Ar tprice regular market
dynamic career char ts indices to calculate market repor ts inform about
for over 500,000 ar tists. volatilit y and correlation with historic trends and market
This unique career trend other asset classes. risks. Ar tprice ar tist analytics
analysis can be used to make allows users to compare the
informed decisions about per formance of the market
the likelihood of an ar tist with other asset classes.
to become historical and

estimating risk value.

Valuat ion / Ar t Analytics produces on-

Analysis of demand ar twork valuation ser vice called Ar tpricing.
single art and analyses. These ver y This is not an appraisal, but
works detailed (up to 50+ pages) will provide an estimated
repor ts focuses only on range of the work's current
the valuation and market value based on the detailed
research. Ar t Analytics does auction results for at least
not provide any t ype of two comparable ar tworks.
forensic or ar tistic analyse.

Art ist Ar t Analytics produces "Ar tFacts.Net provides Repor ts to track an ar tist ’s Analytics to track an ar tist's
report s numerous ar tist repor ts for repor ts on individual auction market per formance auction market per formance
AMA’s readership as well ar tists breaking down their and trends over time, or and trends.
as for third-par t y medias. It exhibition and primar y against any other from
also produces on-demand ar t market per formance ar tnet's database of over
ar tists repor ts for ar t market data over time. This 130,000 ar tists.
professionals. includes global and local
ar tist rankings, peer ar tist
comparisons, exhibition t ype
and location.
Ar tFacts.Net also creates
customised ranks on ar tists
according to gender, ar tistic
movement, countr y and
fair par ticipation, among
others. "

Art market Ar tFacts.Net has been Ar t market analysis on various Ar tprice publishes the annual
& sect or related repor ts (auction, fairs, contributing data to the Ar t collecting categories and global auction repor t, as well
report s etc.). Ar t Analytics produces Basel Ar t Market Repor t since regional sectors based on as half-year repor ts on the
2017. its comprehensive database. global auction market. It also
sectors: tribal ar t, bought ins, The in-depth analysis shows publishes special repor ts on
etc. the evolution of market and the contemporar y ar t auction
includes exper ts' insights into market, as well as regional
the rational behind changes. repor ts on Asia.
ar tnet publishes yearly auction
repor ts on the Chinese ar t
market and in par tnership with
ar t fairs.

Source : Deloitte Luxembourg & ArtTactic Art & Finance Report 2017

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Art Tact ic M ut ualart Pi-eX

Ar tTactic produces bespoke risk analysis Pi-eX standard methodology provides clear
and due-diligence repor ts on individual indicators of liquidit y,per formance and
ar tist markets. Ar tTactic is also using its
Ar tforecaster platform to crowd-source for houses, price ranges, etc.
for ward looking data, which is then imbedded
in market risk analysis and expected loss
scenarios.

MutualAr t's ar t exper ts have over 30 The per formance of single ar tworks can
and sits within the family of ar tist research years of experience in ar t appraisal and be viewed in comparison to other relevant
repor ts. These repor ts would analyse the authentication, assisting private collectors, ar tworks sold or bought by collectors of the
value of a single ar t work in the context of corporations, insurance companies and same ar tist, at the same auction, in the same
the overall market for the ar tist, and analysis legal professionals to valuate ar tworks. location, etc.
around current value and future (12-months) Their exper ts are members of International
value are provided. Fine Ar t Appraisers (IFAA) and have worked
for leading ar t auction houses including
Sotheby's and Christie's.

Ar tTactic produces monthly ar tists repor ts MutualAr t provides subscribers with detailed
on impor tant Post-War and Contemporar y auction per formance analyses including: the behavioral trends of ar t buyers and
sellers for that par ticular ar tist. Data
on any ar tist, and provides a holistic look at per formance against estimate, relative value
the market using a mix of primar y market, compared to related ar tists and price band easy understanding and comparison.
auction market, media/social media and comparisons. They also provide links to
collector sentiment data. exhibitions (past and upcoming), ar ticles and
other information about the ar tist.

Ar tTactic produces weekly, monthly, quar terly MutualAr t produces seasonal auction Pi-eX market and sector repor ts focus on
summaries; sale week summaries (i.e. post-
developed and emerging ar t markets, with and sellers for that par ticular market or sector.
and collecting guides.
In 2017, Ar tTactic launched a new set of market easy understanding and comparison.
repor ts on Old Masters and Impressionist &
Modern Ar t. Ar tTactic is also par tner in several
research projects such as the annual Hiscox
Online Ar t Trade Repor t, Deloitte Ar t & Finance
Repor t and the South Asian Ar t Market Repor t.

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art net ’s new Insight s plat form Pi-eX develops analyt ical
Based on ar tnet ’s database of auction
results, the newly launched ar tnet Insights Over the past four years, Pi-eX has
platform allows users to understand an
ar tist’s market per formance, with repor ts
understand and manage risk and volatilit y
series, and more. The platform makes use

vir tual device (please see the contribution

on page 220. of auction sales results and developed

liquidity, per formance, volatility, and

hedges against volatility. Please see the
contribution on page 226.

A new init iat ive t o fost er t he role of

science in t he world of t he art market
and cultural herit age: The Seracini
Foundat ion
Award winning scientist and ar t Art Tact ic launches new art market

secured funding and is expected to Over the last 12 months, Ar tTactic has
open in 2018 in Luxembourg the Seracini expanded its in-depth ar t market coverage
and market tracking tools. This includes
dedicated to fur thering the role of applied a weekly, monthly, and quar terly auction
science and technology to conser vation, tracking barometer (RawFacts), as well as
preser vation, discover y and dissemination regular in-depth analyses and repor ts on
of Cultural Heritage and to authentication
for the ar t market. such as the old masters, modern and
impressionist ar t, and post-war and
The Foundation will set-up a world class contemporar y ar t. Data and analysis
covering regional ar t markets in Africa,
the general public as well as train the the Middle East, and South Asia are also
next generation of ar t researchers and provided. Fur thermore, Ar tTactic continues
scientists. Additionally, it will develop an
at auction, and with more than 5,000
studies making it available to scholars individuals sur veyed on a weekly basis, and
and ar t professionals worldwide and constant monitoring of changes in buyers’
fur ther develop the “Clinical Char t for taste, preferences, and sentiment.
Please see the contribution on page 222.

authentication of ar t.

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Although the majority of

e-commerce-related art
businesses, we are also seeing
more activity in the art services
and art infrastructure space.

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New
infrastructure
developments
1. Art valuat ion used to generate crowd-based market
having been acquired by valuations (current and expected value in
the now-defunct Auctionata in 2015, but 12 months), as well as developing scenarios
subsequently bought back by the founder to assess the probabilit y of downside risk
over a 12-month period. The current shift
(VMS) will now exclusively focus on in accounting regulations around ar t-
expanding its valuation business and secured lending (discussed on page 164), in

for 38 percent of its business dealings, over historical data for risk management
purposes, means that new t ypes of data
launch a new app at the end of the year are and models will be required, and this is
aimed at increasing mobile conversions. an area that Ar tforecaster is currently
addressing.

years, amassing over 500,000 clients and 2. Blockchain

per forming over 1.2 million valuations to sm Art chain: smAr tchain is a recently
date. From October this year, this software
will be ready to be shared with third-par t y blockchainhub.net, which showcases ar t
businesses as a white-label ser vice. This projects and ar t star tups using blockchain
would, for example, allow auction houses technology. The aim is to draw attention
to outsource their online valuations, and to case studies involving the use of
blockchain, smar t contracts, DAOs, and
that they would consider for a sale. VMS is ICOs by ar tists and the ar t industr y alike.
moving from simply providing valuations Please see the contribution on page 232.
to integrating their valuation exper tise
and software platform into existing ar t- Art Trackt ive: Deloitte Luxembourg has
related businesses. In doing so, it hopes to developed a technological alternative to
the paper trail that normally proves the
allow these businesses to focus on their provenance and movements of an ar twork.
strengths.
revealed the application during the ICT
Art Forecast er: the market prediction spring summit in Luxembourg in May 2016.
The Deloitte Ar tTracktive proof-of-concept
launched by Ar tTactic in 2014, has tested provides a distributed ledger for tracking
the provenance and whereabouts of
market analysis ser vice with a number
of ar t-secured lenders and insurance application manages the interactions
companies over the last 12 months. between all par ties involved, from the ar tist
or the owner of the piece of ar t, through
freight for warders, customs, ar t galleries,
groups of forecasters with par ticular museums, and all the way to potential
skills based on their past forecaster buyers.
per formance. This unique data has been

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 Art & Finance Report 2017 | Section 5 - Art and technology

3. Tagging and aut hent icit y management model. This represents an 5. Technology and logist ics
Tagsmart : Tagsmar t uses DNA tagging oppor tunit y for existing ar t collection Art a: the company connects high-qualit y
technology to identify ar tworks alongside management providers to collaborate shippers with customers, and seeks to
a unique system for issuing secure more closely with the wealth management
industr y in developing solutions that opaque high-end ar t shipping and logistics
are fully integrated with a provenance addresses their concerns regarding client market. The ser vice aims to streamline the
record that enables ar tists to verify the process by creating a one-stop shop for
authenticit y of their ar tworks and create with the landscape currently fragmented
an accredited ownership histor y over time. between new and incumbent providers
With over 15,000 ar twork records stored into a network of selected ar t transpor ters,
on its platform, Tagsmar t has tagged it is still not clear whether technology will compare pricing, transact and pay online
be the dominant competitive factor, or (which streamlines the invoicing process),
It is now also providing its API to online whether the abilit y to provide tailored and manage an entire logistics operation. It
platforms including Ar tRepublic (launched solutions will suit the wealth industr y
in August 2017), enabling end-users to better. shipping. The company is also working on
developing APIs to connect seller and buyer
authenticit y, and establish provenance systems directly, bypassing the manual
records for works sold via their website. ArtTracktive: pen-and-paper processes that are t ypically
Tagsmar t recently announced its next- required to complete a transaction.
generation range of products and ser vices, Deloitte
including location security for ar tist studios Ar trunners: this is an online comparison
and a new method for establishing proof Luxembourg and contracting ser vice striving to be
of ownership. Tagsmar t is also working
with leading material scientists at the has developed logistics ser vices such as crating, packing,
Universit y of Surrey in the development transpor t, and installation, anywhere in
of highly secure, uncopiable materials to a technological the world. The ser vice is currently in a live
work alongside their existing synthetic DNA beta version, and aims to give other ar t
solutions, as well as exploring other forms alternative to the lovers, collectors, and ar t professionals
of tagging, including limited-edition books.
paper trail that them to choose from a diversity of ser vice
4. Art collect ion management : new vs. providers and make informed decisions.
incumbent providers normally proves the Ar trunners tackles the complexit y of ar t
logistics using its proprietar y technology so
activit y in the ar t collection management provenance and that users can save time. It has developed
a proprietar y algorithm that matches your
in Series A funding in July 2014, and movements of an
other new providers, such as Collectrium capabilities of each of its ser vice providers.
(founded in 2009) and Ar tCloud artwork. There is also a strong communit y element,
(founded in 2012), joined the traditional whereby communit y member reviews
market of existing providers such as enhance transparency and satisfaction for
Ar tsystems (1989), Ar tLogic (formally customers and ser vice providers alike.
incorporated in 1999), and Ar tbase
(set up in 1993). Christie’s repor ted the

in 2015, signaling that the ar t industr y

was increasingly seeing ar t collection
management as an attractive customer
ser vice tool, and a potential platform on
which to integrate other ser vices (such
as valuation, insurance, and shipping, as
well as a potential platform for buying and
selling). It is clear from this year ’s sur vey

incorporating ar t and collectible wealth is

a key priorit y for both clients and wealth
managers, par ticularly as the wealth
management industr y is increasingly
moving toward a holistic wealth

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Art & Finance Report 2017 | Section 5 - Art and technology

CASE
STUDY

artnet Insights
case study
Pablo Picasso
Fabian Bocar t
Vice President of
Analytics
ar tnet

Established in 1989, ar tnet

is dedicated to bringing
Pablo Picasso is one of the most liquid
transparency to the ar t world artists at auction, and thus a prime
with a range of products that
ensure easy access to the
candidate for any serious art investor.
latest ar t market information Over the last 12 months, global auction
and news online. More than
ever, the world of

considerably from an accurate,

77 percent successfully sold. According
metric to assess ar t as an to the trend of the artnet Picasso price
asset. ar t net Insight s comes
as the latest development in
index, the sale price of his paintings saw
a decrease in 2016, but increased by 38
Finance.

total sales volume in 2016 had dropped

million in 2015. Picasso works are now

back on the rise again, and look set to
make a strong recovery in 2017.

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 Art & Finance Report 2017 | Section 5 - Art and technology

Market-wise, Christie’s New York has had ar tnet has also employed another ar tnet Insights has also introduced a
the largest market share of Picasso’s much-needed metric in the ar t world:
auction market histor y over the last market shares of auction houses per
powered by a new vir tual device—a ar tist. At a glance, users can identify which
accounting for 38.36 percent of the total auction houses occupy the top positions
sales value—followed by Sotheby’s London in consigning works by a given ar tist, which
(23.98 percent), and Sotheby’s New York set of works produced by an ar tist: an can help determine the right par tner for
(19.08 percent). With the data pulled from algorithmically generated group of works an auction sale. Similarly, this option gives
ar tnet Insights, prospective investors can that are variations on a theme or other wise auction houses the capabilit y to identify
either choose the right par tner for an resemble one another. For each series, a their strengths and weaknesses in the
auction sale or select from a list of over 200 market for any ar tist.
galleries for a private sale. trends among the various groupings by the
same ar tist. For example, the algorithm
art net Insight s
These t ypes of analyses are highly sought- Pablo Picasso’s male por traits and then
after on the ar t market. Based on ar tnet ’s
database of auction results, the newly series.
launched ar tnet Insights platform allows
users to understand an ar tist's market
per formance, with repor ts that enable Figure 55. artnet Insights

and more. Covering a total of over 103,000

ar tists, it provides an up-to-date price
index for any given ar tist, which can be
used to compute the estimated potential
return on investment.

The tool also allows for data to be

downloaded directly in CSV—a format
that is compatible with most data analysis
software packages, including Microsoft
Excel. This new approach allows dealers,
money managers, hedge fund managers,
and private bankers to use ar tnet ’s indices
to easily obtain an indicative update on
the value of their stock or their client ’s
collection without the risk of sharing

traditional metrics are readily available as

well, including total auction sales, number

by medium, such as paintings, works on

paper, photographs, sculpture, and design,
allowing users to directly focus on the
medium of interest to them.

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Art & Finance Report 2017 | Section 5 - Art and technology

EXPERT
OPINION

ArtTactic: Market
sentiment analysis—
Anders Pet t erson
understanding the risk
associated with market
Founder
Ar tTactic Ltd

fashions and tastes in the

contemporary art market

artists. This unique dataset covers changes in market sentiment

months and are based on a sample of 120-130 key international

collectors, curators, auction houses, dealers, and art advisers.
The relationship between the short-term and long-term

of the greatest risks in the contemporary art market, can be

In the following brief example, we take a closer look at how this

artist: namely, Damien Hirst.

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 Art & Finance Report 2017 | Section 5 - Art and technology

Figure 56.

Hirst market experienced a substantial

drop in 2008, ahead of and after the

Millions
100 $250
ground-breaking single-ar tist auction 93 94 94
at Sotheby’s in September 2008. This 87
90 95
sale raised £111 million over two days, 93
90 80
in the midst of the outbreak of the
80 75 $200
74 73
79 70
68 67
70 75 65
interpretation of the events was ver y 70 61
58 59 58
60 56 56 55 $150
percent leading up to the event, and 51
48
a fur ther 85 percent after the auction 50 55 46
49
has recovered from its lowest ebbs, the 40 45 45 $100
42 43 41
43
41
40
market has remained in limbo since 2010, 28 37 38
30
with a lack of consensus as to where
31
the market will be heading next. In the 27 28
20 $50
most recent reading from June 2017,
11 20
17
10
(a reading below 50 signals that there is 11
more negative than positive sentiment 0 $0
in the market), down from 45 in Januar y
2017. This could imply that Hirst’s

exhibition in Venice has had little positive Damien Hirst Auction Sales Damien Hirst Market Con dence
shor t-term impact on the market ’s Source: ArtTactic
perception of where the market is
going next.

recovered from its lowest ebbs,

the market has remained in
limbo since 2010, with a lack
of consensus as to where the
market will be heading next.

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Art & Finance Report 2017 | Section 5 - Art and technology

Figure 57. ArtTactic Hirst Market Survey March 2017

In addition to measuring exper ts’ Question: How impor tant do you believe Damien Hirst's Market will be in 10 year's time?
perceptions regarding shor t-term
100% 3% 1% 4% 0% 4% 0% 0% 0%
8% 6% 7% 7% 9% 8%
12%
90%
respondents’ perceptions about their
31%
long-term outlook. Despite negative shor t- 23% 35% 35% 36%
80% 40% 33% 43% 22%
39% 37% 32%
term sentiment, the market has remained 43%
70% 42%
41%
term impor tance. Based on the recent 60%

50%
of market exper ts believe the ar tist will
be of high impor tance and a fur ther 40%
70% 69% 69%
43 percent believe the ar tist will be of 30% 63% 65% 63% 64% 61%
55% 56% 59% 53% 57%
medium impor tance in ten years’ time, 50% 48%
20%
which suggests that the majorit y think
the ar tist's market will sur vive and play an 10%
impor tant role in the future. Accordingly,
0%
only 17 percent believe that the market
09

10
10

11

12

13

14

15

15
12

13

14

15

16

17
will be of low impor tance.
c

c
n

n
n

n
De

De
Ju

Ju

Ja

Ju

Ja

Ju

Ja

Ju

Ja

Ju

Ja

Ju

Ja
High Medium Low
Source: ArtTactic

Figure 58. ArtTactic Hirst Market Survey March 2017

charact erist ics Question: Which period(s) do you consider to be his most impor tant?
Overall shor t-term and long-term
0% 10% 20% 30% 40% 50% 60% 70%
the market’s perception of a par ticular
ar tist in broad terms. This, in turn, may 1990-1994
give an indication as to where the market
and prices could be heading next, and
1994-1999
to what extent this trend is sustainable.

to extract more granular details regarding 2000-2005

The analytical tools, see Figures 58 & 59,

2006-2012
depict the market ’s perception of the
period and series of works believed to be
of the greatest impor tance at the time of 2013-2017
the sur vey.
Source: ArtTactic

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 Art & Finance Report 2017 | Section 5 - Art and technology

Figure 59. ArtTactic Hirst Market Survey March 2017

Question: Which series do you consider the most impor tant?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Formaldehyde 81%
Butter y Colour Paintings 75%
Medicine Cabinets 74%
Pill Cabinets 72%
Spot Paintings 70%
Diamond Skulls 68%
Spin Paintings 61%
Entomology Cabinets 59%
Kaleidoscope Paintings 57%
Diamond Cabinets 54%
Instrument Cabinets 52%
Entomology Paintings 50%
Vitrines 50%
Cigarette Cabinets 45%
Diamond Colour Paintings 34%
The Last Supper 29%
Mental Escapology 28%
Colour Charts 26%
Remedy Paintings 21%
After Beautiful Paintings 20%
Black Scalpel Paintings 19%
Collages 19%
Visual Candy Paintings 17%
Fly Paintings and Sculptures 17%
Pie Charts 16%
Fact Paintings 14%
Poison Paintings 10%
Scalpel Blade Paintings 10%
When Logics Die 10%
Ashtray Paintings 7%
Biopsy Paintings 7%
Source: ArtTactic

Despite negative short-term sentiment, the market

long-term importance.

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Art & Finance Report 2017 | Section 5 - Art and technology

EXPERT
OPINION

Pi-eX: A new approach

to art data analysis
Christ ine Bourron
CEO
Pi-eX Ltd
Shifting the focus from the
artwork to the collectors

and understand market trends, the art market continues to

struggle with data. This was clearly demonstrated earlier this

as shown by the wide discrepancies between the 2017 TEFAF

report and the 2017 Art Basel report.

The discrepancies not only highlighted the

database of auction sales results and
but also the absence of widely established developed a systematic methodology for
methodologies and analytical standards on
and volatilit y hedges. As in the traditional

Does this mean that the ar t market risk assessment and management, Pi-eX
should remain forever a world where all uses a behavioral analysis approach to gain
that matters is emotions and feelings as insightful information on the dynamics
opposed to quantitative, objective data
and rational analysis? Not necessarily, but the behavioral trends of ar t buyers and
it clearly shows that ar t is a unique asset
class that requires a new approach to data st yles, Pi-eX strives to provide valuable
analysis and communication. market-focused information to those
interested in better understanding liquidit y,
Over the past four years, Pi-eX has
market.

understand and manage risk and volatilit y Here is some of the rationale behind Pi-eX’s
new approach to ar t data analysis.

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 Art & Finance Report 2017 | Section 5 - Art and technology

multiple comparable items. By mixing too

art market st ill st ruggling wit h dat a? many loosely related items, one may lose
Various elements contribute to this track of the par ticularities of the original
struggle: a lack of trade transparency, analysis. Does this mean that no data
lack of industr y standards, the multiple analysis can be done? Not at all, but it
distribution channels, and of course cer tainly means that the analysis should

ar t in which each item is unique and non allow the reader to see and understand the
impact of ever y single ar twork involved in
truly compare like for like. Even the same the analysis.

be used as a point of comparison.

While it would be easy today
Is Big Dat a analyt ics t he solut ion

While it would be easy today to browse

to browse through millions
through millions of ar t sales records, the
of art sales records, the reality
similar to comparing apples to oranges.
In fact, when looking at the historical trends
for a par ticular ar twork, the researcher

relevant data points. We can therefore very similar to comparing

forget any correlation or regression
analysis, variance calculation, Sharpe
Ratio, etc. With only three dots, it is often
apples to oranges.
challenging to discern any historical trends.
As for predictions of the future based on
these historical trends, one might as well Shift ing from an art work-focused
analysis t o a collect or-focused analysis
“a line is a dot that went on a walk.” In a Smar t Data analysis, one way to
overcome the challenge of a small data
set at the ar twork level is to switch the
par ticular asset class, for which standard focus from the ar twork to the collectors.
analytical solutions do not per fectly apply,
is an impor tant step. In this regard, we at repeat sales for one par ticular ar twork,
Pi-eX strongly believe that the solution for the focus should be on the collectors of

rather in Smar t Data. between sellers and buyers. While data for
collectors’ behaviors is not available across
What is Smart Dat a? all ar t distribution channels, there is one
channel where there is a profusion of data:
ways to deal with the unique challenges public auction sales. In fact, this channel

behavioral analysis of ar t buyers and

that any analysis can only be based on sellers.
a small dataset. Consequently, it is not
meaningful to look at the data exclusively
through averages or indices, as any t ype of
aggregation could be dispropor tionately

impor tance of others. The other impor tant

cannot easily be extended by adding

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Art & Finance Report 2017 | Section 5 - Art and technology

Why is behavioral analysis relevant

Fernand Léger: 2007 - 2016

Total HP versus LE & HE of auc oned artworks
$120 M at Sotheby's and Chris e's in London & NY evening sales beyond its intrinsic value: the cost of the
canvas, the oil, or the time spent by the
$100 M Total Low Es mates (LE) ar tist creating the ar twork represent a
Total High Es mates (HE) mere fraction of the price eventually paid.
$80 M Total Hammer Price (HP)
What mostly drives the value of an ar twork
is at which price sellers are willing to sell
$60 M their works and buyers are willing to pay.
In the end, the sale price of an ar twork
$40 M
is a fragile equilibrium between the
expectations of both sides. If no common
ground is found between the two sides,
$20 M
the ar twork does not reach the reser ve
price and it is unsold or “bought-in”.
$M
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Behavioral analysis of buyers and sellers
deals with understanding this critical price
point at which sellers and buyers may or
The Pi-eX graph above shows the combined per formance of all Fernand Léger ’s may not meet. It is the analysis of where
collectors who bought or auctioned ar tworks at evening sales at Sotheby's, this price point has been historically and
Christie's, and Phillips in London and New York from 2007 to 2016. The grey lines where it could be in the future.
are the sums of the Low Estimates (LE) for the auctioned ar tworks, i.e., the total
expected low valuation that sellers hoped to receive, while the blue lines are the How does behavioral analysis help
sums of High Estimates (HE) for the same works, i.e., the levels of high valuations wit h t he small dat aset challenge?
that the sellers again hoped to receive for the works they were selling. Against these While historical sales for a par ticular
expectations, contrast the gold dots that represent the total Hammer Prices (HP) for ar twork generate ver y little data,
the same works, showing what the buyers were willing to hammer for these works behavioral analysis of buyers and
before additional fees and commissions. Looking at the results year after year, one sellers can be based on abundant data
can get a good understanding of where buyers and sellers stood regarding the
Fernand Léger trade of ar tworks sold at evening sales. and numerous ar tworks, especially
when dealing with collectors buying at
Source: Pi-eX Ltd public auctions. Thanks to the annual
regularit y of public auction sales, one can

collectors like to buy or sell, where they

prefer to do so, how their tastes evolve,
what their critical price points are, which

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 Art & Finance Report 2017 | Section 5 - Art and technology

Frank Stella: 2007 - 2016

Total LE of auc oned artworks at Sotheby's, Chris e's and Phillips
$25 M New York & London evening sales (works with es mates only)

$20 M

$15 M

$10 M

New York
New York
$5 M
New York
New York New York
New York

New York New York New York

London London
$M New York

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Frank Stella: 2007 - 2016

Total HP of sold artworks at Sotheby's, Chris e's and Phillips
$25 M New York & London evening sales (works with es mates only)

$20 M

$15 M

New York
$10 M
New York

$5 M New York
New York

New York New York

New York
London New York London
$M
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

As an example, the top Pi-eX char t shows the total sum of the Low Estimates (LE) chosen by sellers
for Frank Stella’s ar tworks auctioned at evening sales at Sotheby's, Christie's, and Phillips in London
and New York from 2007 to 2016. An immediate conclusion is that sellers of Frank Stella ar tworks
clearly prefer New York as a public auction trading place. The char t above shows the total sum of
the Hammer Prices (HP) obtained from buyers for Frank Stella’s ar tworks sold at evening sales at
Sotheby's, Christie's, and Phillips in London and New York from 2007 to 2016.
By comparing both char ts, one can conclude that while sellers had a hard time obtaining the value
they desired for their Frank Stella works from 2008 to 2012, 2013 to 2016 have been good years
for sellers as they have generally obtained more value than their LE, especially in New York
in 2015 and 2016.

Source: Pi-eX Ltd

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Art & Finance Report 2017 | Section 5 - Art and technology

What else can be done to make dat a

Lucio Fontana: auc oned lots at Sotheby's, Chris e's & Phillips
When looking at the behavioral analysis HP/LE results year by year: 2007 - 2016 (works with es mates)
of ar t collectors, one should never forget London and New York evening sales
600%
that these collectors are buying unique
ar tworks. Therefore, while there cer tainly
HP>LE

there will always be a few outliers that

500%
they are so unique. How to identify and
showcase these outliers is critical in a
Smar t Data analysis. A successful way to do
so is through granularit y and visuals.
400%
1. Granularit y
Instead of just producing indices or
averages, a granular approach makes
sure to always represent the various
300%

ar tworks according to the criteria chosen

for the analysis.

200%

HP=LE
100%
HP<LE

0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

The Pi-eX volatility analysis above maps the ratio of the Hammer Price (HP) against
the Low Estimate (LE) for each Lucio Fontana ar twork auctioned at evening sales
at Sotheby's, Christie's, and Phillips in London and New York from 2007 to 2017.
Sellers whose ar tworks end up above the 100 percent line were most likely to be
happy as they obtained more than their initial LE for the work. On the other hand,
sellers whose works ended up below the 100 percent line were most likely to be
disappointed, as their works did not reach their LE. Sellers whose works are on the
bottom 0 percent line went home with their work as the work was unsold (bought-in).

As illustrated by this graph, individual ar tworks per form in a wide range, in this case
from 69 percent to 490 percent, with some clear outliers. Therefore focusing on
top per formers or averages only provides a skewed image of historical sales and
per formances.

A granular approach showing each work individually provides a fairer picture

of the market.

Source: Pi-eX Ltd

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2. Visuals Conclusion
While ar t is considered by many as an Traditional analytical tools available to
alternative investment oppor tunit y, it
cer tainly cannot be reduced to a number or value-add to the risk assessment and
an index. Along the same line, ar t analysis investment decision process when buying
could not just be a ratio. It requires its own ar t. As interest in ar t as an asset class has
visual representation that talks both to the grown recently, a new analytical approach
left and right par ts of our brain.
Data approach and the behavioral analysis
Pi-eX was shor tlisted for the Best of ar t buyers and sellers not only makes
Innovation in the Data categor y for the
2017 UK Financial Innovation Awards. The perspective on the market, especially in
company was selected for the work it has regards to risk analysis and assessment
done developing a new methodology to during the investment decision process.

as described here.

Christopher Wool: 2007 - 2016

Total (HP - LE) for lots auc oned at Sotheby's, Chris e's & Phillips according to
their HP/LE performance in London and New York evening sales
$20 M

$15 M

$10 M

$5 M

$M

-$5 M

-$10 M

-$15 M

-$20 M

-$25 M

-$30 M
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Bought-In Under LE LE Over LE

The Pi-eX char t above visually represents the overall mood of buyers and sellers of Christopher
Wool ar tworks at evening sales at Sotheby's, Christie's, and Phillips in London and New York from
2007 to 2016.

From 2010 to 2015, buyers of Christopher Wool work were clearly competing to acquire works as

Prices (HP) and the Low Estimate (LE).

The mood clearly changed in 2015 and 2016. As value of bought-Ins and ar tworks selling below their
LE increased, buyers were less willing to pay above the LEs set up by sellers.

Source: Pi-eX Ltd

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EXPERT
OPINION

Blockchain
Case studies
Dr. Sherm in Voshm gir
Founder
blockchainhub.net
in the art industry
blockchainhub.net is
an information hub
and think tank
and beyond
advocating blockchain,
smar t contracts and the

We recently launched the smArtchain102 initiative at

blockchainhub.net, where we showcase art projects and art
startups using blockchain technology. Our aim is to draw
attention to case studies involving the use of blockchain, smart
contracts, DAOs, and ICOs by artists and the art industry alike.
Furthermore, we have forged a partnership with Lensbased—
Hito Steyerl’s class at Berlin University of the Arts—where
we critically examine the role of blockchain in society.
As blockchainhub.net, we are also collaborating with Propellor
Film Tech Hub—a joint venture between the Berlinale Film
Market and Rotterdam Film Festival.

Art -indust r y case studies without relying on cloudy and sometimes

The ar t industr y is one of the world’s most still paper-based systems of recording
opaque business sectors, with a multitude
of middlemen between the creators the ar t industr y by resolving questions of
and the consumers of ar t. Each of these provenance, and improving transparency,
middlemen takes a cut of the revenue and copyright, and ownership issues. Seeing
passes along the rest, with the leftovers the potential, ar t star tups are already
t ypically reaching the ar tists themselves building real-world applications based on
months, if not years, later. Blockchain could blockchain.
help keep track of an ar twork’s movements

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 Art & Finance Report 2017 | Section 5 - Art and technology

Blockchain as a creat ive tool ICOs, art ist tokens, and crowd funding
platform for uploading their digital works, Blockchain is much more than a tool to Blockchain and smar t contracts can also
securing their attribution, and selling them. be used by ar tists to fund their projects
In 2015, the Museum of Applied Ar ts (MAK) Blockchain technology could also ser ve as through token sales, creating their own
in Vienna acquired several editions by a new creative medium for ar tists to use ar tist coins or using it as a crowdfunding or
the ar tist Harm van den Dorpel that had to push the boundaries of creation and crowd-investing tool.
been authenticated by Ascribe. MAK also societ y, as we can see with Plantoid and
showcased an exhibition of the work of Terra0.
Valentin Ruhr y, an ar tist and the cofounder
of Cointemporar y,103 a scheme that exhibits Terra0108 is a self-owned forest. It is an Coin, long before ICOs and token sales
works online that are available for purchase ongoing ar t project by two students of became a mainstream application. Owners
in bitcoin. Berlin Universit y of the Ar ts, who are of TCs could redeem them for members-
seeking to set up a protot ype of a self- only rewards including autographed
Blockai is a star tup that seeks to memorabilia, advanced copies of music,
on the blockchain allows the forest to merchandise, and access to exclusive
protection, allowing ar tists to claim become an autonomous piece of land that events, and also custom music, house
copyright on their work instantaneously manages itself in accordance with the rules concer ts or sponsorship oppor tunities.
and see where it is being used. Blockai established in the smar t contract. With With Ethereum, token issuance and sales
also acts as a fraud deterrent. If someone Terra0, the forest is able to sell licenses to have become easier, and we are likely to
tries to claim somebody else’s work, there log trees through automated processes. see more ar tist coins emerge in the future.
will be a permanent record of this on the The forest thereby accumulates capital.
blockchain. A shift from valuation through third par ties

Chainmark, on the other hand, is a star tup forest to procure its real exchange value,
that seeks to bridge the gap between and eventually buy and own itself.
physical ar t and blockchain. Combined The augmented autonomous forest is
with tagging technology, chainmark is a then in a position to buy more ground and
mixture of materials of var ying colors that therefore to expand.
can be placed on the side of a painting.
Another ar t project using smar t contracts
then be hashed onto a blockchain. is Plantoid109 —the plant equivalent of an Other References
A missing chainmark could reveal that a android. It is an autonomous blockchain-
work has been tampered with. based lifeform that is able to reproduce ht tp:// thear tnewspaper.com /
itself through a smar t contract. Plantoid news/ blockchain-how-the-
Grammy-award winning singer-songwriter is a hybrid creature that lives both in the revolutionar y-technology-could-
Imogen Heap104 has pioneered Mycelia, a physical world, as a mechanical contraption change-the-ar t-world/
think tank to empower a fair, sustainable, made up of recycled steel and electronics,
and vibrant music industr y ecosystem. and in the digital world, as a piece of
uk/ar ticle/ view/1724/ 2238
The star tup Ar tler y105 is attempting software deployed on top of a blockchain-
the same thing for physical ar t such as based network. ht tp:// w w w.coindesk.com /
sculptures and paintings. blockchain-technology-inspiring-
It is autonomous, self-sustainable, and ar t /
Earlier this year, music streaming company capable of reproducing itself through a
Spotify acquired blockchain star tup combination of blockchain-based code
Mediachain Labs,106 an open-source and human interactions. Contributions
platform that seeks to enable creators to are made through the bitcoin blockchain, 102 https://blockchainhub.net/smartchain
attach information to projects and create a by simply sending funds to the Plantoid’s 103 https://cointemporary.com
104 http://myceliaformusic.org/2016/05/14/
record on the bitcoin blockchain stored on bitcoin wallet. Once a Plantoid has proven imogen-heap-decentralising-the-music-indus-
try-with-blockchain/
quantity of bitcoins, it will enter into 105 https://artlery.com/
106 http://www.coindesk.com/mediachain-block-
In the enter tainment industr y, the reproductive phase, initiating a chain-tech-next-spotify/ and http://www.coindesk.
SingularDTV107 is working on a blockchain- procedure whereby the Plantoid will look com/spotify-acquires-blockchain-startup-mediachain/
107 https://medium.com/@SingularDTV/anatomy-of-sin-
based digital content management and for humans willing to help it in the process gulardtvs-code-centrally-organized-distributed-enti-
distribution platform. The vision is to of reproducing itself—physically building ty-cd7285d63549
another Plantoid in exchange for bitcoins. 108 http://digital.udk-berlin.de/ ?/students/kolling-paul/
projects/ss16.terra0/
109 http://okhaos.com/plantoids/

to make.
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