The new Art market needs new rules
What is happening in the Art world? Behind the fence of this shining Disneyland stands a huge number of people who want to participate but are not invited to this Party.
First of all, it is the artists themselves. Inspired by Contemporary Art’s booming of previous decades, many young people rushed into the Art market were found themselves pointless. An artificially limited market does not need lots of geniuses. Mega dealers breed exactly as many new superstars as would be enough for continuous profit and nothing more.
The work of emerging artists is still not worth tens of hundreds, which means that investors can “catch new stars” during takeoff. Like Robert Tibbles, who bought Damien Hirst for $1’000 in 1989 and just sold it on PHILLIPS (February 13–14) for $1’477’000.
Do new collectors want such results? No doubt! And mega dealers who used to dictate trends are interested in this? You know…
Secondary new art investors, whose number according to many professional sources is constantly growing, find themselves outside the market. All their lifetime they watched the growth of the Art Market, and now they want to get their share of the market. According to last year’s reports, these are not only representatives of Y and Z-Gen but include people under 45 years old.
They do not have much personal richness, but together they have huge financial potential which is not used within the narrow framework of the current Art Market’s structure. On their part, growing demand for a legally correct and liquid form of art object’s co-ownership as investment assets is a crucial concern.
Thirdly, these are young art dealers, consultants, gallery owners and art experts who have good, often very expensive, educational or practical experience, but because of the same artificial market restrictions, they are not able to realize themselves. The oligopoly controlling the Art market does not allow them to do this. Their services are not required to serve the interests of the “top of the market”, while their potential customers are simply not allowed on the market.
It is important to note that all three of these groups are massive. They want more openness and transparency of the market and are not focused on the level of “blue chips”, and therefore are not interested in being included in money laundering schemes.
On the other hand, the lack of transparency, which is beneficial only to a small group of mega-dealers and auction houses, creates an artificially high price for the work of megastars, a conspiracy of prices and speculation, which is associated with cheating investors and money laundering.
But super-rich investors, whose money provided the growth of Contemporary Art, also do not want to overpay for mega dealers working in collusion with the managers of auction houses, which Rybolovlev-Bouvier litigation clearly showed.
We are talking about eliminating these distortions. Not about revolutionary “market redistribution” when the poor change with rich places, but about a new level of opportunities for all participants, including HNWI collectors.
As we can see from last year’s reports, the number of Blue-Chip Artwork auctioned by their owners is decreasing. For the right to sell large collections between mega-dealers and the three largest auction houses, real fights broke out, as can be seen from the situation with the collection of Donald Marron.
Why is this happening? These are not just the consequences of “1031 exchanges Act.” We see that owners of top-level art assets are in no hurry to put them up for sale. Collectors expect qualitative changes in the structure of the Art market in the coming years. They expect changes that will enable them to sell their assets with greater profit.
What changes can we talk about? First of all, about the entry into the market of many new players capable of acquiring expensive art-assets in collective ownership.
But what about the artists? What profit will they receive from technological changes in the market? They will receive the status of shareholders of their work! As founders whose successful startups are growing in value with each new round of investment.
As shown in the study “Democratic art markets: partial ownership and securitization of art”, artists can and should be considered the first investors in their art objects. Having created them, not yet being famous, they can reserve, for example, 10% of the “shares” of their work in the form of crypto-certificates of ownership (crypto-id).
If their career is successful when the price of works increases hundreds of times, this form of “long-term investment” will be very beneficial for artists. For them, this will be an opportunity to participate in the profits from the next sales of their works in the Art Market, including an auction and all other forms of sales.
Using cryptography in combination with DLT, we can protect the interests of artists by making entries the structure of crypto-certificates of objects of the author’s rights to share the profits from the following sales of those art-assets. Sounds good, doesn’t it? Join now!
