Can new technologies bring genuine and transparent trust to the art world? Like VIN numbers for artwork.
In 1987, I had the chance to attend the auction of Vincent Van Gogh Vase With Fifteen Sunflowers at Christie’s in London. At the time, the sale price of $39.7 million was staggering. Adjusted for inflation, that’s $127 million today. Two years later, in 1989, the Dallas Cowboys were sold for $140 million. In November 2017, Leonardo da Vinci, Salvator Mundi, has been sold for more than 450 million dollars. The prestige associated with rare assets (Forbes estimates the Dallas Cowboys are now valued at over $5.7 billion) has a lot to do with the market value of rarely traded assets. Yet, authenticating the origin and history of a sports team is easy. But doing the same for expensive artwork has always been incredibly difficult.
The art market has experienced extraordinary growth in size and asset value over the past 25+ years. Living artists are now able to sell their works at significant market entry values – known as primary market sales – over their lifetime and see significant increases in value. of their art, including in the secondary market. This is a relatively new experience for the market. History’s old masters and more modern artists were never able to experiment with these trends in their lifetime. Art market auctions have swung $50 billion in 2021, and the unofficial private sector of the market likely accounts for another $50 billion. Think of an industry with $100 billion in annual sales, based on trillions of dollars in assets, all of which must be authenticated, secured, and monitored for many different purposes, ranging from insurance to sales value and other market opportunities.
Our guest for today’s podcast is Lawrence Shindell, he is Chairman, President and CEO of LMI Group International, Inc., headquartered in New York. LMI Group is a strategic investment banking-type firm that represents art owners and investors in the authentication underwriting and marketing of major orphan works of art – works of art that data shows are from top-notch artists and have an expected market value between $15,000,000 and $200,000,000. A trained litigator, Mr. Shindell holds licenses in a number of US jurisdictions, including admission to the bar of the US Supreme Court. Prior to founding LMI Group in early 2018, Mr. Shindell served as Managing Director of a US-regulated title insurance company catering to the international art industry.
His knowledge of the art market and its needs and trends over the next decade – ranging from technologies to solve the challenges of identification and authenticity of art objects to NFTs – provides insight into a very complex industrial sector. It is often said that world art serves as tree rings for society. Advances in technology can bring efficiencies to this market sector just as technology has brought efficiencies to other markets, and can reassure us of the integrity of these valuable assets when we visit museums. art, collect art, invest in art, or engage in and around art in many other ways.
Works of art, old and new, digital and physical, constitute a huge market that offers cultural engagement as well as incredible economic benefits for investors who invest in art. Improvements in four areas can change the comfort level of investors.
- Anti-money laundering – legislation that increasingly provides transparency but also puts pressure on market participants to verify the source of funds, as well as the legal status and identity of the seller and the buyer, whether to buy or sell art or to use art as collateral for loans, for example.
- The advent of blockchain and more recently NFTs are revolutionizing the way we link compelling identity credentials to physical and digital art, as these assets travel the market through purchases, gifts, sales, exhibitions and events. retention of terms among other events, and in the case of NFTs, particularly as a means of creating art in the first place, as a means of creating verifiable partial and full ownership interests.
- Different technologies will separately allow us to imprint identifications on existing secondary market physical works that can distinguish these objects from copies and also allow conclusive linking of information around the object captured via the blockchain to the exact physical object.
- Advances in artificial intelligence and machine learning science and technologies that can help traditional art assessment and verification measures complement these other technologies.
The idea of reliable object identification is not new. We use VIN numbers for automobiles and CUSIP numbers for the securities industry. And we use DNA markers to authenticate the origin and history of, for example, cloning material.
Hollywood has been using tales from the historical art world for decades, perhaps the best-known example is the 1999 version of The Thomas Crown Affair, starring Pierce Brosnan and Rene Russo. While interests and tastes in the art world have evolved from Old Masters to Modernists to an expanding contemporary art market today, the art market as a whole shows no signs of slowing down.
We can expect continued rapid growth, especially with the introduction of NFTs and factional ownership options. Each of the issues just highlighted is central to the LMI Group and its specialization in authenticating to conclusive factual standards culturally and historically significant works of art that have been lost to history but may be reliably reintroduced to the cultural sector, and in applying its expertise to cultural heritage initiatives that involve complex authentication of historical objects and information.
LMI Group is at the forefront of advances designed to enable objective, data-driven analysis and decision-making in the art and cultural heritage sector.