Kobel's Art Weekly

Kobel's Art Weekly 33 2023

The third and last part of the half-year review is about everything in the art market that is not an art fair or auction, in other words, the essentials.

After half a century, the Michael Werner Gallery in January is turning its back on Cologne, reports Andi Goral at report-K: "Michael Werner is concentrating on his gallery space in Berlin at Hardenbergstraße 9a and wants to continue his work there. In October 2021, he showed works by Markus Lüpertz there in the Provisorium. Werner is now closing the provisional space with the exhibition 'Footprints of a collector: Reiner Speck - Mallarmé, Broodthaers et les autres'. From February, the exhibition will continue on the ground floor, which has been under reconstruction for months. Here, Werner wants to deal with the art of the 19th to 21st centuries and present and comment on the art-historical development of the last decades."

After NFTs, art generated by artificial intelligence, or AI for short, could be the next issue to set the art market abuzz. Stephan Scheuer explains the phenomenon in the Handelsblatt: "The question of intellectual property is easy to answer at first glance, said Sarah Polcz of Stanford University Law School. 'A work of art created solely by artificial intelligence is not subject to copyright protection.' This means that anyone could freely copy such a work, she said. [...] But the issue of copyright goes a step further when it comes to the use of AI in art, Polcz argued. 'Some AI models are trained with material that can be protected by copyright,' Polcz said. 'The attraction of some AI systems lies precisely in being able to imitate the style of a well-known artist. That's where the next problem begins. Until when is a work inspired by a well-known artist and when is it a copy? In the music industry, these questions are already being fought out in court." Sebastian Meineck takes a detailed look at the legal issues of AI-created art at Netzpolitik.org.

And the winner is: Dubai! As a sanction-free space, the financial oasis is not only interesting for Russians, Sophia Kishkovsky found out for The Art Newspaper: "Benedetta Ghione, the executive director of Art Dubai, the Gulf region's leading art fair, says: 'Since the pandemic, Dubai has been experiencing an economic boom, and an influx of wealthy people from all over the world-this includes international collectors, as well as artists'. Dubai-based gallerists working with Russian clientele also speak of an unprecedented influx of Russians."

The news from mid February that the Chinese collector and entrepreneur Adrian Cheng (K11 Art Mall and K11 Art Foundation in Hong Kong) will become co-chairman of the Hong Kong-based Meta Media Group, which owns fashion magazines as well as ArtReview, fits in with all the above. Reporting the news is not only Zinnia Lee at Forbes, but also Denni Hu at Women's Wear Daily from Penske Media Group, which itself recently acquired Artforum.

Free museum admission not only ensures significantly higher visitor numbers, but also a more diverse and younger audience, according to some long-term experiments in California, the results of which Lori Finkel summarizes for The Art Newspaper.

Ursula Scheer examines the questionable role of the Emirates as crisis profiteers in the FAZ of 25 February: "The United Arab Emirates are not taking part in the sanctions, and so Dubai - during the pandemic already a refuge for the rich who wanted to escape Corona restrictions elsewhere - has become a safe haven for wealthy Russians. They come by sea in their luxury yachts, by air in private jets, and by land they buy their way in. Since the start of the war in Ukraine, real estate prices and the cost of living in Dubai have risen sharply. The 'Art Basel and UBS global art market report' predicts an upturn in trade in luxury goods and works of art between Russia, the Gulf States and Turkey in 2022 - as a consequence of Western sanctions. Half of Moscow is practically in Dubai, they say".

Art lending seems to be booming (once again), Georgina Adam found out in mid March for The Art Newspaper: "There are two main groups of players: specialist lenders, who loan against art and other assets, and banks, who as part of their service will give loans to their clients, their art and other assets being the collateral. Sotheby's Financial Services is in the first category. Sources say that its total portfolio of art loans is around $1bn, and the firm says this grew by 50% between 2021 and 2022. Even allowing for 2021 being difficult, that is impressive. And the firm boosts its business by offering high-end buyers the immediate loan of 50% of the hammer price on anything they buy at its auctions over $2m. From application to funding in 30 days,' trumpets the firm."

The Russian sanctions have made the art market one of the most regulated sectors, explains Paula Trommel in The Art Newspaper: "The traditional refrain about the art market has been that it is the last unregulated market. This refrain was never entirely accurate, but now it is less and less correct. Not only do various laws like sanctions and bans apply to the art market more broadly, but much of the art market is subject to anti-money laundering regulations. The US has already enacted the Anti-Money Laundering Act, adding antiquities traders to the US money laundering regulated sector, and a law adding art and collectibles is under consideration. So, bit by bit, it seems that, in fact, the art market is indeed becoming more regulated."

AI has arrived in the art market! Shanti Escalante-De Mattei visited an exhibition at Gagosian for Artnews: "The arrival of AI text generators and chatbots like Chat GPT and Bing (or is she named Sydney?) over the last year has shattered the assumption that creativity is the sole domain of humans, and other living things. But, while image generators like DALL-E and Midjourney are the visual equivalent technologies, the same crisis has not quite registered in the art world. Perhaps, this lack of response stems from a lack of opportunity. No longer! Earlier this week, mega-gallery Gagosian opened an exhibition of works by DALL-E, which, like its AI image generator competitors, can turn a simple text prompt into an image in seconds. Might I find some crisis awaiting me there? (Yes)."

Every year in April Clare McAndrew produces a market report (PDF) for Art Basel and UBS. Eileen Kinsella has boiled down the summary at the beginning of the report for Artnet. In the Standard Olga Kronsteiner has formulated a coherent text on the most important points.

As to why the mega-galleries are constantly adding new artist names to their portfolios lately, Alex Greenberger, Daniel Cassady and Angelica Villa try to find out for Artnews: "New York-based art adviser Lisa Schiff told ARTnews that a lot of this talent acquisition has come after the police killing of George Floyd in May 2020 and the subsequent racial reckoning across the art world, among other industries. Every level of gallery, not just the megas, ramped up their artist rosters significantly during the pandemic. And most of it (but not all) was done in a frenzy to accommodate a more inclusive art world whose history needs to be and is being rewritten,' Schiff said. 'A lot of the additions were done in haste and yet haste was imperative considering how late to the game we are.'"

"Back in full force" with "genually enthusiastic collectors" is Expo Chicago, as is actually always the case with any art fair with Eileen Kinsella for Artnet. Carlie Porterfield finds PR-speak of the same tenor for The Art Newspaper. Christiane Meixner reports in a more balanced way in the Tagesspiegel: "There are, however, also numerous works in which the black protagonists hardly change the sedate language of the pictures. Not even when they - covered with beads and fabric - switch to super kitsch mode and pretend to oscillate between pop and discourse. Much of this will no longer matter in a few years. But now it is gnawing away at the impression of the fair. And it ensures that people take refuge in stands by Yares Art, for example, where the tried and tested guard hangs out." I was in Chicago for the Handelsblatt and Artmagazine.

Art dealer Jane Kallir discusses the effects of inflation on the art market in The Art Newspaper: “For the time being, however, many collectors, spooked by recent economic and political uncertainties, are either buying less expensive works or not buying at all. The longer this trend continues, the greater the possibility that it will topple the art-market's top-heavy structure, which is sustained by a tiny sliver of super-wealthy collectors, together with the auction houses and mega-dealers who serve them."

The New York Times last reported on the Gallery Weekend Berlin 2019. Yet this spring, diversity and a spirit of optimism reign on the Spree as rarely in recent times. Kevin Hanschke sums it up in the FAZ: "Overall, identity, whether social, political or digital, is one of the common threads holding the weekend together. [...] The response from international visitors and collectors at this year's Gallery Weekend exceeded expectations and was above pre-pandemic levels, says Maike Cruse, who is responsible for the 19th edition of the weekend. With 55 galleries and almost ninety artists presented, it is particularly diverse. Among the newcomers this time are well-known names of the art market, such as Kunsthandel Werner or Galerie Nothelfer, which has been in existence since 1971. The seventh edition of the paper positions fair, which is taking place in parallel, is also setting a new record with 56 international galleries from twelve countries."

After half a year of seat-vacancy, Art Basel in Basel has a new director in Maike Cruse. Berliners lament the departure of the director of Gallery Weekend Berlin, including Marcus Woeller in early May in the WeLT: "The appointment is a good decision for the world - but bad for Berlin. A big gap needs to be filled here. Because in the capital, Maike Cruse has been in charge of the Gallery Weekend for the past ten years and made it the centre of attraction for the art scene par excellence." Ursula Scheer explains the hierarchy in the company in the FAZ: "Superior to the directors on site is Vincenzo de Bellis as the director generally responsible for fairs and exhibition platforms, above whom in turn ranks the CEO Noah Horowitz, who operates from New York. This is the hierarchy at the top of Art Basel in the year following the departure of Marc Spiegler, who had led the exhibition company as sole global director from 2012 and had also become a member of the board of parent company MCH in 2019." I spoke to Berlin gallery owner and GWB advisory board member Jochen Meyer about the change for the Handelsblatt and for the Tagesspiegel I try to classify the choice.

Is there a derivatives market emerging in the art trade? Judd Tully reveals in The Art Newspaper the latest developments around the guarantied bids of the major auction houses: "The market for third-party guarantees-which offer auction houses and sellers a useful tool to hedge their bets-is showing no signs of slowing, reaching a likely record of $3.4bn in 2022. But a darker, lesser-known market has been discovered by The Art Newspaper whereby third-party backers are selling off fractions of their guarantees to anonymous partners, sharing the risks as well as any upside. Some of the biggest names in the game include the Nahmad family of art traders, the mega dealer Larry Gagosian and the billionaire collector José Mugrabi, all of whom are known to routinely offer third-party guarantees, or irrevocable bids, on works in exchange for a negotiated financial fee from the auction house. While Gagosian and Mugrabi are unlikely to need helping hands for their multi-million-dollar guarantees, the pair are understood to trade guarantees back and forth between them." It is also surprising that the same names keep coming up in this and similar contexts.

Well-known New York art consultant Lisa Schiff is facing fraud charges, reports Rhea Nayyar for Hyperallergic: "It was only after an in-person confrontation last week, May 8, that Schiff allegedly told Grossman's spouse that the money wasn't there and that they should contact her attorney. According to the lawsuit, Schiff later doubled down over text, apologizing and saying, 'It's just complicated. The lawsuit claims the Ghenie incident is 'part of a much larger Ponzi scheme' in which Schiff allegedly takes money from one client to pay another in order to fund her 'lavish lifestyle'."

The firm of New York art consultant Lisa Schiff seems to have ceased operations, reports Alex Greenberger at Artnews, and he reports on further accusations.

The burglars in the Green Vault in Dresden will go to prison, reports dpa: "For the three men, now 26, 27 and 29 years old, the criminal court imposed prison sentences of six years and three months, five years and ten months and six years and two months. A 24-year-old man received a juvenile sentence of four years and four months. The judges saw his twin brother as an accomplice, he got a five-year juvenile sentence - including an earlier conviction."

With over 120 participating galleries, the London Gallery Weekend markets itself as the largest event of its kind. In view of the abundance, the press dispenses almost entirely with coherent text and restricts itself to Best of lists, such as Tom Jeffries for Frieze, Kabir Jhala as well as Ben Luke and Louisa Buck in The Art Newspaper, Wallpaper or the Guardian. For Artmagazine I try to characterize the initiative and to put it into context.

Not Gagosian, as many had suspected, but Perrotin is the first major gallery to go to an investor, reports Anna Brady in The Art Newspaper:
"Emmanuel Perrotin is in the process of selling a 60% stake in his eponymous gallery to Colony Investment Management (Colony IM), a French real estate, credit and private equity business, in order to grow the company. [...] Perrotin will retain the remaining 40% stake in the contemporary art gallery, which is headquartered in Paris and currently has ten galleries in cities across the world including Hong Kong, New York, Tokyo, Seoul, Shanghai, Dubai and Los Angeles." The website of the real estate company Colony IM, consists of exactly one homepage and the imprint.

Various providers of fractional ownership as a new popular investment model are presented by Abby Schultz at Barron's: "Fractional art ownership is relatively new and there aren't a wide array of offerings, so individuals should be aware they need to rely on their own research to get comfortable with the legitimacy of whatever platform they consider, including the expertise of its staff and its access to quality art at good prices. There are also extra costs. Masterworks adds about 10% to its purchase price for a work before selling to investors to cover expenses involved in buying and holding the painting, Lynn says. It also charges a 1.5% annual management fee and 20% of future profits; Mintus adds a 14% commission to its costs for acquiring an artwork, but Ozmen says it will return up to 5% of this cost to investors if a work is sold within four years. It charges a performance fee of 20% of profits when a work is sold, but no annual fee." The article is based on the example of an investor who reports a (!) successful exit. The similarity of the model to the well-known art fund is mentioned, but not the fact that almost all of these vehicles have been dissolved due to proven unsuccessfulness.

The EU has cleared the way for the reduction of VAT on art, now it is up to the German legislator, demand Birgit-Maria sturm and Silvia Zönrer of the BVDG in the WELTKUNST (paywall): "It is now up to the national legislators to reintroduce the tax reduction for the art trade in their countries. In Germany, this requires the cooperation of financial and cultural policy. The government of the traffic light coalition can now prove that it is serious about 'strengthening the cultural industry' and 'supporting free cultural venues such as galleries' - as it says in its coalition agreement. It's urgent! The deadline for implementation is 1 January 2024 [...] By the way, resentment against the art market, which was presumably the cause of the old, fatal tax directive, must be dispelled. [...] Art is cultural property - regardless of whether it is sold by authors or art dealers. Reduced VAT was even introduced for digital media and Berlin's famous Berghain won it for its ticket sales. Should digital mass media and clubbing be 'more culture' than original works of art?"

The KUNSTZEITUNG will be discontinued. "After 27 years, Gabriele Lindinger and Karlheinz Schmid, publishers and editors of the KUNSTZEITUNG, are ceasing publication of the free publication - of necessity," says the website. "Issue 306 of KUNSTZEITUNG (which will be distributed from 5 July 2023) is to be the last." Apparently, it is not possible without lamentation: "The editors of the KUNSTZEITUNG had previously repeatedly and in vain pointed out the tense situation and the lack of or insufficient support from advertising customers." It goes on to say: "Although Lindinger + Schmid gave clear signals and cries for help at all levels, whether federal or provincial, whether economic or cultural departments, the politicians did not want to grant any support. Thus the KUNSTZEITUNG was not supported with a single cent from the 'new start' budget of the Minister of Culture (BKM)". And even further: "Their understanding of journalistic work, shaped by the attitude that the press has to act as a corrective, did not allow them to give in to the recently massively increasing pressure. 'Better to stop than to bend', Gabriele Lindinger and Karlheinz Schmid said in unison." However, the biweekly newsletter Informationsdienst Kunst will continue to be available for an annual subscription of 296 euros.

Artsy has laid off about 15 percent of its workforce, reports Tessa Solomon at Artnews. However, according to Artsy CEO Mike Steib, the departure of 35 employees is by no means due to the company's economic difficulties: "For now I'll note that, though our business is stable and revenue has been growing, the broader economic headwinds and art market slow down were pushing profitability out of reach this year, which would have put our business and mission in jeopardy,' he wrote in the email."

Journalism is sometimes a tricky business: while others still had to wait for the press release so as not to burn their sources, the Financial Times and the New York Times already had official interviews on the news of the week that Frieze is taking over the Armory Show in New York and Expo Chicago. Now, exclusivity is a nice thing when the topics are the fruit of one's own research. But when quality media buy this privilege by giving message control to the subject of the reporting itself, it is questionable. The first German report by me can be found in the Handelsblatt. For Monopol I try to place the takeover in the larger art fair context. The next day Ursula Scheer comes to astonishingly similar conclusions in the FAZ.

Kabir Jhala reports the insolvency of the Simon Lee Gallery in London in The Art Newspaper: "Simon Lee Gallery is now in joint administration with the business advisory firm BDO LLP according to a notice placed yesterday in the window of the gallery's London space. A limited company goes into administration when it is in debt and cannot pay the money it owes, ceding control to an insolvency practitioner. The court-ordered administration came after a petition from Barclays Bank; three partners from BDO have been appointed as the joint administrators of Simon Lee Gallery Limited."

German magazine Der Spiegel wants to buy the art magazine art reports Monopol with reference to the Süddeutsche Zeitung (paywall): "'Art' is apparently to be converted into a culture portal under the 'Art' brand umbrella. It is unclear whether the entire editorial team will be taken over." Is there a competition somewhere to see how long you can ride a dead horse? The Hamburg-based company missed the boat at the latest when the former publisher Gruner+Jahr thought it would be a good idea to cut the online editorial staff.