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Analysis out of the box

Valuation signs, obsolescence and new parameters

Analysis out of the boxArt Market | Understanding a place in the market necessitates comprehensive and powerful measuring tools. The art world is no exception, and valuation signs seeking to establish models for the profitability of a work or an artist are numerous and diverse. However, with a field of study limited to public auction sales, the pertinence of this type if indicator is questionable : the opacity of the art market is once again underlined.

Illustration réalisée par Stéphane Kiehl / Le Monde © Stephanekiehl.blogspot.com
Illustration réalisée par Stéphane Kiehl / Le Monde
© Stephanekiehl.blogspot.com

State of affairs

From 500,000 collectors in the 1950’s, the art market has reached an estimated size of 70 million « art consumers » throughout the world, according to Thierry Ehrmann. A figure difficult to verify but that nonetheless reflects the exponential growth of a market where demand has grown considerably and buyer profiles have diversified. This phenomenon has been accompanied by the development of valuation indicators - a primordial resource for those who see art a financial asset. Analysis of the market, a sector, an artist or a work : Artprice Global Index, Artnet contemporary C50 or Mei Moses World All Art Index of Beautiful Asset Advisors are among the international indexes consulted. While numerous differences exist between them, in methodology as much as in the results produced, their inadequacies raise some common points.

Valuation indicators and the structure of the art market

Whether it be Artprice, Artnet or Beautiful Asset Advisors, their art market expertise and respective valuation indexes have made their international reputations. However, the art market’s structure means that the information available to these companies is far from perfect. Using results from 4,500 auction houses for Artprice, 1,600 (not including Christie’s and Sotheby’s) for Artnet and only Sotheby’s and Christie’s for Mei Moses, the primary market is de facto overlooked. A market that - according to the 2014 TEFAF Art Market report - represents 53% of the global art market. Private auctions and gallery sales cannot be studied, as their results are not published. To this major default is added works « bought-in » i.e. those that received no bid or whose reserve price was not met. Very difficult to interpret, none of these indices takes into account the notion of the depreciation of a work, an important variable in the history of a work’s sales and, by consequence, the establishment of an artist’s rating. Moreover, the method of repeat sales used by Artprice and Beautiful Asset Advisors is not totally unquestionable. A work is only listed when it has sold more than once, several sales being necessary to obtain a significant analysis.

Influence and development of the online market

Even if it only represents a small part of the global art market, the online market is attracting more and more amateurs and collectors. Sales concluded each year increase and reports such as those published by Hiscox underline the confidence buyers show in this platform. However, the online art market appears undervalued by current measuring tools. Whether coming from auction houses or digital platforms, only online transactions that adhere the format of live auctions and whose results are published can be integrated into these indexes. Furthermore, the online market has recently split into several marketplaces... This multiplicity of platforms complicates access to data for Mei Moses as Christie’s dœs not publish the results of Christie’s LIVE and Sotheby’s is only in the early stages of putting in place its strategy for this sector. Artprice uses Heffel figures and Artnet those from its own platform, Heritage Auction and Auctionata.

Presented as the major technological challenge of the 2010’s, Big Data could bring about profound changes in the models used by valuation indexes. The online art market seems undervalued today, and it is also under-exploited. Constructed on an analytic approach, these measuring tools skip over a booming area of research : machine learning, a technology that has the advantage of using no explicit algorithms in creating autonomous systems. This logic of automatic apprenticeship could shed new light on our understanding of the art market. The approach would no longer be merely analytic, but also predictive, by locating significant correlations through observation. An alternative to the asymmetry of information that governs the current art market.

Vincent Kozsilovics
Publié le 23/09/2014
Copyright © Observatoire de l'art contemporain - Tous droits réservés
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Illustration réalisée par Stéphane Kiehl / Le Monde © Stephanekiehl.blogspot.com

Illustration réalisée par Stéphane Kiehl / Le Monde
© Stephanekiehl.blogspot.com

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