Price Traceability in the Art World

Introduction

According to the Art Dealer’s Association of America (Ref. 1), the key issues behind determining the price of artworks include:-

1. Authenticity: an original work of art as opposed to a reproduction (Ref. 2)
2. Quality: evaluation of the work within the context of art history and the artist’s oeuvre
3. Rarity: how many similar examples exist and how frequently such works become available
4. Provenance: origin or chain-of-title (Ref. 3,4)
5. Condition: any damage or unusual characteristics due to wear and tear or restoration

We will assume that the first three variables are not going to change over time. What will change over the lifetime of the artwork is the provenance and the condition.

Art Condition

Works in poor condition are ones which have suffered damage, with the major cause being poor handling in transit (Ref. 5). Insurers cover this risk of course and also cover fire, theft and flood but do not cover gradual damage resulting from changes in temperature, humidity or light, since it cannot be determined when the damage began (Ref. 6,7). The risk of gradual damage therefore needs to be mitigated.

Condition Report

Before deciding on a mitigation strategy, an assessment of the condition of the artwork is carried out by an expert in the field through a condition report, which is used by dealers, auction houses and insurers to establish the damage on the object at a specific point in time and at one location (Ref. 8).

But Things Change

So, what happens when parameters such as incident sunlight change drastically over the course of a year? Carrying out condition reports for an entire collection every 6-12 months becomes time-consuming and expensive.

So Let’s Monitor the Environment

The trouble is: environmental monitoring solutions for artworks currently do not interpret the sensorial information measured within the context of the sensitivity of the object. E.g. A light level of 400 Lux on a stone sculpture is not a problem, whereas that same level on a silk garment would be disastrous. Also, the condition of the artwork is not continuously traced back to the requirements stipulated in the latest condition report and it is not traced forward to the expected price the object could fetch on the market (to determine if the market value is being preserved adequately).

So Why Not Correlate This Data?

ArtRatio vitrines collect real-time environmental data in-situ but also request from the owner an estimate of the sensitivity of the object. This allows the ArtRatio system to automatically reduce the light exposure on the object if the vitrine deems the work to be too sensitive for the current light conditions. Reduced light exposure reduces the energy entering the vitrine, reducing fluctuations in temperature and relative humidity and maintaining the electrical conductivity of the air inside the vitrine within bounds. This reduces the risk of electrostatic charge build-up on the insulative surfaces of the vitrine, avoiding ‘lift-off’ of friable media such as charcoal and graphite.

Art World Traceability

ArtRatio is currently working to improve the traceability between the following art world data: the initial state of the artwork (imported from the condition report) real-time environmental monitoring data, such as temperature, humidity and light the sensitivity of the work to changes in these environmental parameters up-to-date estimated market price of the work (imported from existing databases) This allows us to correlate over time how art market prices vary with condition.

But What About Provenance?

Other ArtTech companies have established technologies to certify provenance by issuing digital certificates that guarantee the authenticity of the work. Artratio is currently developing collaborations to bring together certified provenance data with ArtRatio’s certified condition data, giving the end-customer more complete traceability.

ArtRatio Value Proposition

The current maturity level of data traceability across the art world is poor. A lot of data sits in silos, resulting in a broken value chain for the end customer. ArtRatio’s value proposition patches together these disparate data silos into one coherent real-time value chain. We achieve this by converting the raw art condition data into:

1. ArtRatio Index of Equilibrium:  ArtRatio currently has a patent pending at the European Patent Office for an algorithm to achieve equilibrium between conservation and exhibition of an artwork. This gives an optimal light balance to ensure the piece can be viewed in photopic vision, yet minimises the damage from light exposure. We will quantify this balance point as an industry-first Index of Equilibrium.
2. ArtRatio Index of Risk: This metric depends on the amplitude and frequency of fluctuations in temperature, humidity, light intensity and light exposure. A higher number indicates a greater perceived risk on the object. Although this type of risk is not insured, there is an opportunity to generate more value for the customer by offering risk mitigation strategies in collaboration with art insurers.
3. ArtRatio Index of Popularity: This metric details the total time an artwork has been viewed, irrespective of by whom and irrespective of whether multiple viewings are by the same person. The extrapolated data allows better estimation of future light exposure (and hence damage) on the object. Since the data is anonymous, we escape the new EU General Data Protection Regulations (GDPR), which enter into force in 2018, which require control of privacy data.

This hard data, along with provenance data from 3rd party sources, may be correlated over time to match trends in the price fetched by the work at auction or by private sale.

Art and the Internet-of-Things

The Internet-of-Things (IoT) applied to the art world involves embedding microcontrollers into the direct vicinity of the artwork (i.e. its associated vitrine), allowing 24/7 connectivity of the object to auction sales data, discoveries of lost works by the same author and also geopolitical events, allowing for the following use cases:-

1. When another work by the same author is sold at Christie’s in New York on the same day, for example, an IoT-enabled ArtRatio vitrine would be able to automatically take into account the current condition of the work and inform the owner (e.g. by text message) that the valuation of the artwork has been substantially improved by the recent auction sale, suggesting that now may be an optimal time to sell the piece.
2. The recent destruction of cultural heritage by ISIS in Syria and Iraq has led to an 145% increase (Ref. 9) in the supply of ‘conflict antiquities’ to the Western art market between 2011 and 2013. An IoT-enabled ArtRatio vitrine, knowing what is contained within, could notify its owner of an increased supply of black-market imports of the same genre which may negatively affect the price of the legitimate artwork.

Conclusions

There is an enormous opportunity for Art+Tech companies to improve the traceability between the various ‘data silos’ that exist currently in the art world. This would result in benefits to the object, it’s owner and to the transparency of the art market itself.

References

1. http://artdealers.org/ sites/default/files/adaa_guide.pdf

2. http://www.tate.org.uk/ art/art-terms/a/authenticity

3. https://news.artnet.com/ market/the-importance-of-provenance-in-determining-authenticity-29953

4.www.ifar.org/provenance_guide.php

5. http://xlcatlin.com/~/media/uki-fact-sheets/ xl_catlin_fas_intro_to_fineart_br_final.pdf

6. http://www.appraisingart.com/ Information/InsuringYourArt.html

7. https://www2.chubb.com/sg-en/ articles/collecting-art-art-insurance.aspx

8.http://www.sgs.com/en/news/2016/10/ sgs-global-art-condition-reporting-solutions

9.https://www.theguardian.com/ artanddesign/2016/feb/26/western-art-funding-terrorism-isis-middle-east

10. Monetisation of Cultural Assets