Market Monday: Behind the Candelabra
This week was all about exposing truths usually hidden by the industry's glitz and glamour...
New York State attorney general Eric T. Schneiderman bagged another trophy kill on his ongoing safari into the art industry, as Larry Gagosian agreed to pay $4.28M in back taxes and related fees on roughly $40M in sales made to NY clients from 2005 through 2015. After nailing both mega-collector Aby Rosen and private dealer/Gagosian director Victoria Gelfand on similar infractions earlier this year, Schneiderman charged that one of Gagosian's California-based LLCs, Pre-War Art Inc., subjected itself to New York sales tax when it transferred possession of the artworks in question to specialty shippers headquartered in state. While I'm sure Gagosian isn't happy about writing a seven-figure check to Albany––especially based on what one impartial legal observer called a "new interpretation" of the tax code by Schneiderman––the reality is that Larry can make up the difference with the proceeds from one sale. To me, that makes the most significant part of the settlement one that Randy Kennedy's Times story only mentions in passing: To insure full compliance going forward, Gagosian "has agreed to set up a new shipping company of its own." True, plenty of galleries already pack/crate works and make local deliveries via their preparators. But the decision to set up a dedicated in-house shipping company would be unprecedented, to my knowledge. More importantly, it would slide a new component into elite galleries' increasingly "full stack" approach to client services. If you thought the high end of the sector was already feeling corporate, the trend lines point us toward a future where its members become fully autonomous, vertically integrated megaliths, with no need to hire out for anything. And by giving Gagosian another nudge in that direction, Schneiderman probably deserves to have his likeness printed on every urinal screen in the art-services sector. [The New York Times]
Citing anonymous sources, Paddy Johnson and Rhett Jones reported that Jeff Koons LLC laid off 14 night-shift painters (of Koons's actual artworks, to be clear) covertly attempting to unionize inside the artist's Chelsea studio complex. A day-shift assistant described as "friendly with those night crew organizers" was also shown the door. Prior to their dismissal, the Koons staffers in question allegedly made contact with United Scenic Artists, Local USA 829, in order to facilitate negotiations with their then-employer. The painters then reportedly met with the union after being, in the words of my high-school gym teacher, shit-canned––this time, to explore legal action against Jeff Koons LLC for improper termination as defined by the National Labor Relations Act. (Long story short: You can't shit-can people for trying to organize.) Given Koons's prolific (some would say "assembly-line") output and the well-publicized downsides of painting for him, there's a certain amount of poetic justice at work here. Any artist who essentially transforms his practice into a sleek corporate factory shouldn't exactly be surprised that some of his assistants might be inclined to start thinking of themselves more like factory workers, or at least professional craftsmen––and advocating for the same kinds of rights and regulations that those other groups enjoy. It's anyone's guess how this situation will unfold. But either way, it has the potential to become a landmark event in the industrialization of contemporary art. [Art F City]
Christie's released a few key results from its opening half of 2016, headlined by a 28 percent decline in total sales value compared to this same period last year. The house's revenues from art and collectibles submarined to £2.1B (versus £2.9B in 2015). But as usual, officials chose not to divulge profit and loss numbers over this stretch––a privilege that, for better or worse, publicly-held rival Sotheby's will not be able to exercise when it reports this coming week. Still, if Christie's owes zero information to anyone on the other side of its bedazzled corporate veil, some might ask: Why trot out any results at all? The simple answer is that the house has already made a habit of divulging a few basics and cherry-picked details on the regular––mostly, I expect, to remind clients of its strength during the good times. Yet this long-established precedent also means that officials still have to volunteer the basics even when they're unfavorable, because a sudden information blackout after all these years would compel the industry to think Christie's latest results were a tire fire of historic proportions. Sotheby's may not have many advantages in the constant battle for the auction crown, but at least in the first half of this year, it has this little Catch-22 on its side. [Bloomberg]
Finally, on the art and technology front: Rene Chun introduced readers to four innovations aimed at turning the authentication process into a hard science rather than the glorified magic show it has too often been in the hands of human "experts." Those innovations include blockchain technology (made famous by Bitcoin), which can equip any digital-artwork file with an incorruptible provenance, tracked in real time on a "secure distributed database"; AI-driven deep learning, which dissects the telltale traits of an artist's hand with superhuman precision; peptide mass fingerprinting, or PMF (not to be confused with this Rick Ross banger), which analyzes the makeup of art materials like paint and adhesives down to the molecular level; and synthetic DNA tagging, which embeds physical artworks with an irreplicable, electronically scannable, postage stamp-sized "certificate" of authenticity manufactured in a lab. The cross-sector enthusiasm for these innovations shows why I expect technology to make a vastly bigger impact on art services than art sales. The most powerful gallerists and dealers will be happy to buy into a better mousetrap if it enhances their core business––and, unlike e-commerce, poses no threat to the aura of exclusivity and exceptionalism that has driven that business since its inception. [Artsy]
That's all for this edition. Til next week, remember: Sometimes the light can be just as blinding as the dark.