Market Monday: Secret Histories

This week, a set of stories that dig into the past and the passed-by... 

It was only a matter of time: The Panama Papers––the headline-making deep-dive into offshore skulduggery by an ever-expanding web of global elites––finally broke the surface of the art world this week. Using a single restitution lawsuit over a Modigliani painting as its entry point, a new installment of the project swims through roughly 70 years of art market activity to drag out names as important to the industry as Christie's, Victor and Sally Ganz, and the Nahmad clan. Every facet of the case has interesting (if not entirely surprising) details. But for me, the biggest takeaway is an even stronger belief in one of The Gray Market's core principles: We can't fully understand the history of art without also understanding the history of commerce. [The Panama Papers]

Per a report by German business magazine WirtschaftsWoche, an audit of online auction platform Auctionata found that the company had quietly committed multiple trade violations over the past three years. The alleged misdeeds include executives participating in the site's own auctions under both real and false names, multiple consignments finalized despite incomplete or nonexistent contracts, and "substantial advances" accepted by the firm for certain auction lots. Given that Auctionata's brain trust commissioned the audit themselves to get one step closer to taking the company public, the leaked results seem only slightly less damaging to the brand than if its top executives had been caught trying to blow up the office for insurance money like ham-handed film noir villains. The whole sordid affair also stands as more proof that, despite their reputation, online auction platforms are not necessarily any more transparent or buttoned-up than their frequently criticized offline counterparts. [artnet News]

Magnus Resch, co-founder of the collector-focused database Larry's List and author of the controversial book Management of Art Galleries, released a free app designed to help rebalance the notorious asymmetry of information in the art market. Called Magnus, the software's key feature is to instantly deliver users the auction and/or private market pricing history of almost any artwork they snap a photo of. If the results are as accurate as claimed, the app is definitely a meaningful innovation. But while Resch's pitch to the press centers on trying to "democratize and hopefully enlarge" the art market, the software only truly moves the needle on the transparency front. As industry insiders know all too well, gallery and dealer sales are influenced by more than collectors' net worth and pricing knowledge. They're also influenced just as much, if not more, by a complex network of social relationships with a carefully determined pecking order for acquisitions––a pecking order that no technology will disrupt. And given that Resch is experienced enough to know this himself, I suspect that the app's release may be as much about attracting Silicon Valley venture-capital money for his next project as it is about opening up the market for uninitiated collectors. [The New York Times]

A collaborative coalition led by Microsoft unveiled a 3D-printed portrait designed to look like an entirely new Rembrandt work. "The Next Rembrandt," as the project was called, used an array of algorithms to carefully study characteristics of the Renaissance master's actual paintings. Once the software had completed its research, technologists instructed it to render a new portrait of "a Caucasian male between the ages of 30 and 40"––because, you know, art history desperately needed another one of those––that would be true to the traits it had absorbed from Rembrandt's hand. While critics have their own concerns, the natural question in the art market is this: As the technology improves, could software-created "speculative" works someday command prices in the neighborhood of the man-made masterpieces they're meant to postscript? I think the answer is a clear "no," because aesthetics are only one factor in determining fine art's value. Just as important, if not more so, is the mythology of singular geniuses and transcendent human creativity built around original works. And no matter how artistically skilled machines become, they won't be able to break into Olympus. [BBC]

Daniel Grant made my day by bringing attention to some of the many overlooked costs of safeguarding and preserving artwork after the glamour of acquiring it is only a memory. While he focuses the majority of his piece on security needs ranging from insurance to theft-deterrence, Grant also touches on nagging necessities like (re)framing and climate-controlled storage. Industry insiders won't find any earth-shaking revelations here. But in total the story highlights another one of my core principles: If you're going to call art an asset, remember that it's not an asset like stocks or bonds. It's an asset like real estate that needs constant upkeep and monitoring––not to mention the unpredictable hunt for (and negotiation with) a willing buyer if you want to get out of the investment someday. [Observer]

Led by $400M in total sales for Sotheby's, the unexpectedly muscular results at a slate of Hong Kong auctions appeared to defy forecasts of an art and luxury market downturn in 2016. Aside from Sotheby's, Poly Culture Group's offerings exceeded their cumulative high estimates by roughly 55 percent, and the local branches of both Bonhams and Seoul Auctions "also reported strong sales," per Bloomberg's Frederik Balfour. The surprise results are a great reminder that analysts (myself included) should be doubly cautious when projecting about the Hong Kong and mainland Chinese art markets. It isn't just that we don't have free access to what's happening in their galleries and auction houses (as in every other region of the world). It's also that we don't have free access to what's happening in their overall economy. My advice? Prognosticate at your own peril. [Bloomberg]

And finally, in an in-depth and encouraging interview, Art Cologne director Daniel Hug told the story of the fair's roots in the post-World War II partitioning of Germany, as well as why its unique origins have helped make Art Cologne into the rare fair that prides itself on regional flavor in a sector where so many global competitors now feel indistinguishable. Here's an excerpt (which doubles as a top-notch subtweet of Art Basel et al): "An art fair is about celebrating and investing in a specific place, ultimately bolstering and supporting the art infrastructure and working with the traditions and culture specific to that place. It is not about creating a domineering global conglomerate, like Nestlé, leading only to a global monoculture, destroying the delicate intricacies and regional identifiers of our diverse human culture." Personally, I hope Hug's perspective pays off as it should in an industry where finding a way to separate oneself from the masses has become increasingly difficult and increasingly valuable. [Artspace]

That's all for this edition. Til next time, remember that the past rarely stays buried forever.