By Hannah Tager.

On the morning of Tuesday, May 21st, the arts and culture news outlet Observer hosted its inaugural event, the Business of Art Observed conference at the Roosevelt Hotel in Manhattan. During the conference, attendees heard from a wealth of experts ranging from gallerists and collectors to attorneys and brokers. The conference shed light upon a myriad of topics, and more lengthy discussions were devoted to regulation in the art market, technological advancements in the industry, and risk management of works. The speakers touched upon many themes, but keynote speaker Michael Findlay’s idea of the cyclical and weak messianic power of the art market was debated and discussed throughout.

“A lot of people think that everything has changed in the art market. But I don’t think the basic business model has changed very much. There is a precedent for a lot that is going on now.”

Michael Findlay

The opening remarks were given by Pauline Willis, director and CEO of The American Federation of the Arts. Willis urged listeners to “envision a world in which we don’t have to go to one of these major metropolitan areas to see the greatest works of arts,” a scenario which she works to actualize through the AFA’s mobile art exhibitions.

Michael Findlay, director of Acquavella Galleries, followed Willis’ remarks and spoke of the traditional nature of the modern-day art market. Aside from the development of the art fair as a one-stop retail center for art collectors, contemporary developments in the art world, such as the presence of global galleries and a dealer-dominated market (versus sales through auction houses), began occurring up in the 19th and 20th centuries and have persisted through the present day. However, social media and technology have complicated these traditions, Findlay conceded, and he remarked that art viewings have been reduced to sending high-resolution iPhone images of a work that is not a “high-resolution painting.”

Greg Rohan, the president of Heritage Auctions, then delivered the Introductory Remarks of the conference. Referencing the 2007 sale of the painting Pushkin At The Waters Edge by Ivan Konstantinovich Aivazovsky, Rohan highlighted the newfound transparency of the art market brought about by technological innovations. The piece, estimated at $300,000 to 500,000, ultimately sold for $1.6 million to a bidder that was lounging in his bathroom in Russia at the time of the auction. Given the rise of online and over-the-phone bidding, geographical boundaries of the art market have virtually dissolved and pricing information is now available to all interested parties.

Rohan closed his address noting that “dealers and auction houses that do not innovate and embrace transparency will lose business to auction houses and dealers that do.”

PANEL 1: Regulating the Art Market

From left to right: Peter K. Tompa, Clinton Howell, Lark E. Mason, Jr., James McAndrew, Michael McCullough, Narric Rome. Photo courtesy of Observer.

The first panel, Regulating the Art Market, moderated by Peter K. Tompa, the executive director of antiquities lobby Global Heritage Alliance, was comprised of Clinton Howell, Lark E. Mason, Jr., James McAndrew, Michael McCullough, and Narric Rome. Tompa introduced the topic, speaking on existing government regulations on the art market – most notably the European Union’s anti-money laundering laws,[1] and recent attempts in the United States Congress to pass similar laws.[2] Additional regulations have also impacted the art market, particularly those pertaining to the sales of ivory and Native American artifacts in the United States and Europe.[3] Echoing the tone of Tompa’s opening remarks, the panel as a whole looked unfavorably upon these laws.

“At least some of the restrictions have been justified, not based on evidence, but on grossly overblown claims, that have now been largely discredited, that art antiquities fund terrorism.”

Peter Tompa

Clinton Howell, president of Clinton Howell Antiques, Art and Antique Dealers League of America, Inc. (AADLA), and the International Confederation of Art and Antique Dealers’ Associations (CINOA), added on to what Tomba had said and called the governments’ legislations overzealous and inaccurate. Howell and his organizations are currently working with the lobbying group The Whitehouse Consultancy to limit further regulations.

Lark Mason, Jr., president of iGavel Auctions and Lark Mason Associates, also spoke of ivory regulations and their implications on the art market. Due to their being “too costly, too hard to comply with, and complicating,” such regulations have “effectively ended the market,” he said, noting the added social stigma now associated with purchasing and selling the material.

James McAndrew, the head of the Art Law Practice at Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP, talked about the disconnect between the national and foreign governments and the art market, referencing his 27 years of experience as a Senior Special Agent working at US Customs and the Department of Homeland Security. He urged listeners to interact with officials instead of avoiding confrontation.“Why hide?” he asked. “The only way to stop the regulators from steam rolling over your business with ridiculous regulations is to engage them.”

Michael McCullough, founding partner of Pearlstein McCullough & Lederman LLP, followed McAndrew, and spoke about additional legislative developments that have affected the art market, namely the 2017 Tax Cut and Jobs Act, which removed 1031 “like-kind” exchanges and allowed for tax payers to invest capital gains in qualified opportunity zones (i.e. art).[4] McAndrew also mentioned the recent U.S. Supreme Court Case, South Dakota v. Wayfair, in which the Supreme Court ruled that a state can collect sales taxes on transactions within that state, even from businesses that do not have a brick and mortar presence in said state. Such a decision could have major ramifications on dealers that are selling and shipping to collectors in other states.[5]

Narric Rome, vice president of Government Affairs at Americans for the Arts and the self-professed “outlier” of the panel, then spoke of existing arts initiatives in the government. The Bureau of Economic Analysis recognizes the creative economy, Rome reminded listeners, and U.S. Congress estimates it to be a $788 billion niche in the economy (or 4.3% of the total GDP). Nevertheless, while other markets like agriculture and tourism have agencies in D.C. to represent them, the creative economy lacks such an agency.

Fireside Chat 1: Sean Kelly and Juliet Helmke

Juliet Helmke and Sean Kelly. Photo courtesy of Observer.

The conference’s first Fireside Chat was moderated by Juliet Helmke, editor at the Observer, and hosted the accomplished gallerist Sean Kelly, owner of Sean Kelly Gallery. Hearkening back to his time in the New York City art scene in the 80’s and 90’s, Kelly spoke of changes in the field. He lamented the diminishing frequency of in-person viewings of works, and the crisis of quality caused by art fairs. Kelly also mentioned his podcast, Collect Wisely, in which he interviews collectors with the end goal of combating the impersonality of art dealing and collecting. In addition to collecting contemporary art, Kelly has also devoted his adult life to gathering a collection of Marcel Duchamp and James Joyce materials, the latter of which he has recently donated to The Morgan Library & Museum. Another one of Kelly’s ventures is his new project space in Taipei. The new branch was an unexpected development for Kelly, who, until now, had kept his singular New York base amidst the rise in global galleries. The gallerist is contently contrarian.

“Everybody is rushing into Hong Kong, but we’re not—we’re going somewhere else.”

Sean Kelly

PANEL 2: The Art Market 2.0: Using Art & Technology Solutions to Drive the Industry Forward

From left to right: Massimo Sterpi, Elena Zavelev, Anne Bracegirdle, Devin Finzer, Curt Bilby. Photo courtesy of Observer.

Led by Massimo Sterpi, partner at Gianni Origoni Grippo Cappelli & Partners, the second panel, The Art Market 2.0: Using Art & Technology Solutions to Drive the Industry Forward, covered the intersection of art and technology.

Elena Zavalev, who started CADAF, the first digital art fair, and whose company New Art Academy works with blockchain technology in the art world, spoke about the technology’s capabilities with regards to provenance and authentication. Blockchain, the technology behind cryptocurrency, is known as an incorruptible digital ledger, which, when applied to art transactions, could serve as an immutable and failproof record of sales and exchanges of art.[6] This kind of use could potentially seal any holes in figuring out the provenance of future works recorded in the blockchain.

Anne Bracegirdle, AVP specialist at Christie’s, followed in a similar vein, noting that “if there were one consolidated space where people could track provenance and values, you can imagine how that would simplify the experience for a buyer and for a seller.”

Devin Finzer, CEO of crypto-art marketplace OpenSea, spoke of blockchain and crypto-art. So far, he noted, crypto-artworks (completely unique and ownable digital works, such as CryptoKitties) are mostly marketed to tech-enthusiasts familiar with blockchain technology like Bitcoin and Ethereum.[7] “Over time, these ideas around digital ownership will cross over to more of a mainstream crowd, one that appreciates the art more than the technology,” Finzer predicted.

Curt Bilby, CEO of Art Analysis & Research, noted a few risks inherent to blockchain technology, particularly when dealing with physical artworks. “When you do those digital transactions, you still need the physical verification to say it’s that same object,” Bilby said. “We’re dealing with some pretty sophisticated forgers especially with imaging techniques and 3D printing,” Zavalev also warned. “The quality of the ledger is only as good as the person who has entered the information.”

Sterpi then turned the conversation towards tokenization, which he defined as the process of dividing the ownership of artwork into shares that can then be sold and bought like one would trade stocks. He prompted the panel by posing the possibility of a more polarized market in the case of tokenization, due to smaller collectors who would gravitate towards purchasing mid-range works, now being able to come together to purchase more expensive pieces. While Bracegirdle did not see tokenization as a threat, and said, “If this can provide opportunities for emerging clients, especially those growing up in the digital age, I don’t see it as a problem,” Zavelev countered, doubting the success of a co-owning method like tokenization in the context of art: “First, there are legal issues—there are a lot of complications that have to be overcome,” Zavelev said. “Secondly, art is a very emotional asset; the idea is that you want to enjoy it somehow. With this kind of ownership, I think it’s very hard to enjoy the artwork.”

PANEL 3: Insurance and Risk Management

From left to right: Laurence M. Shindel, Laura Patten, Ronald Fiamma, Mary Pontillo, Dennis M. Wade. Photo courtesy of Observer.

The third panel, Insurance and Risk Management, was moderated by Lawrence M. Shindell, president and CEO of LMI Group, who initiated the discussion with the hypothetical life cycle of a $10 million work of art, bought by a private buyer, sold by an anonymous owner, and on view in Switzerland.

Laura Patten, art and finance specialist at Deloitte, began by reminding observers, “What is normal in the art market, doesn’t necessarily look normal to the rest of the non-art market.” She then recommended that her hypothetical client understand his or her risk vulnerabilities and look for red flags; i.e., reputation, legality, authenticity. Even in the case of an anonymous seller, one should do basic business intelligence research. “That’s not to say that everything should be public to everyone,” Patten said. “But if you buy a piece of art from a trust and then you find out it belongs to a dictator’s wife who’s committing human rights abuses and it’s on the front of The New York Times, that’s a bad thing,” Patten remarked to the applauding audience.

Once these potential risks have been checked out, the work can then be suited for insurance. Mary Pontillo, senior vice president and national fine art practices leader of DeWitt Stern, spoke on this matter. As an insurance broker, Pontillo works to understand the client’s needs and collecting goals before attempting to get the best price for insurance from a salesman like Ronald Fiamma, global head of private collections, AIG, Inc. Fiamma then checks the documentation and does his due diligence before drafting an insurance policy for the work. If it is later revealed to be a fake or forgery, the client is returned the work and the client’s premium. In the case of loans, one has to make a condition report, taking into account the transit methods and security of the work’s ultimate destination.

Dennis Wade, senior partner at Wade Clark Mulcahy, LLP, closed the talk by discussing mediations between owners and another party in the case of a legal dispute. His advice, before anything else, is to check contracts before blindly loaning or consigning a piece of art. 

Fireside Chat 2: Helen Allen, Maxwell Anderson, and Mary von Aue.

Another Fireside Chat, this time between Helen Allen, executive director of The Winter Show and Maxwell Anderson, president of Souls Gown Deep Foundation, closed the conference. Mary von Aue, editorial director of the Observer, moderated the talk. Allen and Anderson, both leaders at non-profits, discussed social efforts within the art world. Allen remarked on her art fair’s charitable roots, noting that ticket sales benefit the East Side House Settlement, which provides education programming in the South Bronx. Anderson, whose foundation works to promote and exhibit art from the African American South, spoke of how he is generating appreciation for these art pieces by placing more than 300 works by these often-overlooked artists in 16 national and international museums. Through this exposure overtime, Anderson explained, “What’s going to change is that art historians, curators, lecturers, gallerists, will begin to see this work as an importance, which will then have a downstream value in the market.”

Closing Remarks

The conference covered a wide variety of topics, and Elizabeth von Habsburg, managing director of Winston Art Group, presented the four main takeaways: the themes that ran central throughout the conference were privacy, the need to mitigate risks, the need to educate ourselves and clients on new emerging platforms in the art market, and finally, the need to keep up on the current legislation. Throughout the Business of Art Observed conference, topics from Russian collectors to CryptoKitties were broached, further proving Patten’s statement that “what is normal in the art market, doesn’t necessarily look normal to the rest of the non-art market.”


[1] Directive 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives. For further reading: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018L0843

[2] H.R. 5886, 115th Cong. (2018). For further reading: Illicit Art and Antiquities Trafficking Prevention Act.

[3] E.g. Endangered and Threatened Wildlife and Plants; Revision of the section 4(d) Rule for the African Elephant (Loxodonta Africana); Safeguard Tribal Objects of Patrimony Act of 2017; UK Ivory Act 2018.

[4] Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, 131 Stat. 2054. For further reading: https://itsartlaw.org/2019/04/04/tax-season/

[5]  South Dakota v. Wayfair, Inc. 138 S. Ct. 2080 (2018). For further reading: https://itsartlaw.org/2019/04/04/tax-season/

[6] Louise Carron, Blockchain and the Visual Arts, Center for Art Law (Feb. 20, 2018), https://itsartlaw.org/2018/02/20/blockchain-and-the-visual-arts/

[7] Jennie Nadel, Cryptocurrencies and the Art Market, Center for Art Law, (Oct. 17, 2018), https://itsartlaw.org/2018/10/17/cryptocurrencies-and-the-art-market.

The Center for Art Law was a proud sponsor of the first Business of Art Observed event, and would like to thank the Observer team for inviting them to attend and review the conference.

About the Author: Hannah Tager is a Summer 2019 intern at the Center for Art Law and a rising Senior at Williams College in Williamstown, MA, where she also works at the Clark Art Institute and serves on the board of the town’s radio station, WCFM 91.9.