Paris, 26 February 2013, Art Media Agency (AMA).
Launched in February 2011, The Spotlist is the first collector-to-collector art online marketplace and aims to reduce transaction fees or commissions. Art Media Agency met with Clayton Press, US Director of The Spotlist, to record his opinion on his business, the art market 2.0.
Could you start by giving us an idea of your background?
The three partners of The Spotlist have different, but very compatible, backgrounds, grounded in both business and contemporary art.
Florian Baron, the German Managing Director, trained as a marketing and communications professional, before entering the gallery business, first at the Sfeir-Semler Gallery (Hamburg) and then at Galerie Christian Nagel (Cologne). Florian provides overall management direction to The Spotlist and is the primary technological innovator.
Gregory Linn, a US Director, trained as a marketing and information technology specialist. He formerly worked at David Zwirner and the Philadelphia Museum of Art before becoming a contemporary art advisor in 2003. Gregory has a broad foundation in post-1960s art, having been a collector and curator since the 1980s, along with Clayton Press.
Clayton Press, a US Director, trained as a cultural anthropologist before becoming a strategy consultant. He was a principal at A.T. Kearney and a partner of Andersen Consulting/Accenture, before he began his own family office and non-profit consulting practice in 2001. Clayton joined LINN PRESS art advisory services in 2003. In addition, Clayton is an adjunct professor at New York University, where he teaches “Art Market Innovations: Fairs, Portals, and Apps,” “Art as a Financial Asset,” and “The Concept of Value in Contemporary Art: Pleasure, Taste, Brand, Celebrity, and Price.”
What is the aim of the Spotlist? Why did you launch The Spotlist?
The Spotlist was launched in February 2011. It was the first non-gallery contemporary art retail portal in Europe. Our inventory came from some of the finest German galleries — Daniel Buchholz, Gisela Capitain, Bärbel Grässlin, Christian Nagel, Galerie NEU, and Sprüth Magers. The Spotlist gave fresh visibility to under-exposed original works of art that had languished in gallery inventory.
After speaking with Florian and Gregory shortly after The Spotlist’s launch, I suggested that it would be innovative to add a section to the portal where collectors could sell works from their private collections. I felt then, as we all do now, that: the global art market is really rather small with perhaps 80,000 to 100,000 people spending more than $10,000 annually on art, galleries are often hesitant to resell secondary market works valued under $100,000 since the margins are low on these consigned resales, auction houses are increasingly interested only in higher value works with high probability of sale, most online art portals are either auction houses or retailers that focus extensively on editioned works, the commission structures of most art resellers are high without providing a value-based level of service.
By Autumn 2011, we collaboratively developed The Collectors’ Spot (for secondary market works), which specifically focused on unique works of art (and a limited number of small editions) by highly respected artists. About six months later, we dropped the primary market material and devoted the entire website to secondary market works. Because of the success of being the first collector-to-collector art marketplace™, The Spotlist became the first and premier secondary market retail portal. Artviatic has a similar orientation, but it requires a prepaid membership and its entry price point is higher.
We also conduct high-value “Private Sales,” plus we have a unique feature called “Bulletin Board,” where prospective buyers can post searches for specific secondary market works. The Bulletin Board is also a very insightful way for us to understand current supply and demand in the contemporary art market. We know which types of works, by certain artists, are the most sought after.
The Spotlist requires no membership and no subscription fees. It is truly an open marketplace, or exchange, that we manage and curate for collectors of contemporary art of exceptional quality.
What is the range of the prices for the displayed works?
Generally, the value of works in our online inventory ranges between $5,000 and $100,000 USD in value. We are reluctant to work with lower priced art, since demand is low, and these works are often editioned. Our collectors generally desire unique pieces, with an emphasis on works that are part of the contemporary art historical canon.
The first works we sold were a sculpture by Rachel Harrison, several photographs by Christopher Williams, and a painting by Jacqueline Humphries. Today, we have works by Huma Bhabha, John Bock, Sylvie Fleury, Martin Kippenberger, John Miller, Raymond Pettibon, and Sterling Ruby, to name a few. The caliber of works is exceptionally high.
We have a special section called “Private Sales.” This area is for “vetted” buyers and sellers of exceptional works of art. The highest priced work we have managed for a collector is an exquisite Richter painting for $3,250,000 USD. We have other works that we only show on request, usually after a phone call with a prospective buyer. These are works that the sellers would prefer to “keep under the radar.”
We manage our inventory closely. We have a backlog of nearly 300 works, but we never want to overwhelm The Spotlist subscribers with more than 20 or 30 works. We want to be sure that each work has its fair viewing. In this way, we operate much like a conventional gallery, curating our presentations.
What is the profile of your collectors and buyers on The Spotlist?
With about 26,000 newsletter subscribers, we have an excellent understanding of our reach, which are primarily North American and European. Our sellers have come from the US, UK, France, Switzerland, Germany, Greece, and Israel. Our buyers have primarily been US and German collectors and, interestingly, galleries.
Our buyers and sellers are generally knowledgeable, experienced collectors. They have experience with all market channels. Some people have works they have resold at auction houses or through galleries, but The Spotlist has become an alternative market channel for them. Our fees are lower and our transactions are not recorded as part of any art database like the auction records on artnet.com. Hence, we can maximise discretion.
Who are your main competitors?
In principle, our competitors are other art portals or traditional bricks-and-mortar art retailers or auction houses. We honestly believe that we have an exceptional service and capability. We stay informed about online retailers and auction houses, but we consider their products and services extremely different. Clayton maintains an active, on-going database on competitors and we receive their newsletters and offers. They have different business models.
Online art retailers increasingly look and feel like other conventional businesses, offering customer incentives, like discounts, specials, and sales. But what really differentiates them from other retailers is that their “art product lines” connote cultural awareness. The auction portals can be differentiated from each other primarily on the basis of sale duration (live, 24-hour, or multi-day) and by buyer-seller commission structures. The Spotlist operates more like a conventional, secondary market gallery, offering original works of art at transparent, market-sensitive prices, subject to buyer-seller negotiations, which we mediate. But, like I said earlier, we emphasise on original works of art (versus multiples) that are part of the contemporary art canon.
Can you give us figures about your business?
As a privately held business we do like to keep our numbers close to our chests but I can give you our average number of newsletter subscribers (26,000), our average number of click-throughs to a specific work (600) and the highest single monthly sale ($200,000 USD).
Last week, Christie’s increased its New York buyer’s commission structure. Your buyer’s commission is 7.5 percent. How do you explain such a difference?
Simply, bricks-and-mortar companies of whatever type or scale have overheads. The bigger the company; the higher the costs. Our costs are manageable since most of our activities are virtual. We have a smart, lean team that handles almost everything from technology to art transfers. We are hard-working shareholders. Our commissions come from both sides of the transaction – 7.5 % from the buyer and 7.5% from the seller.
Do you think you can avoid the main actors of the art market like galleries or auction houses?
The art market has several channels, ranging from galleries to auction houses, from private dealers to on-line portals. The primary market is generally easier to understand, since its participants effectively operate as conventional retail operations. The secondary market has a more complex set of participants and relationships, and business transactions can be barter, retail or auction based.
As a business sector, traditional channels, especially galleries, have had or placed a high degree of emphasis on personal relationships between seller and buyer. Major auction houses also cultivate and maintain continuous relationships with preferred clients. Oftentimes, the business-client relationship is entirely contingent on on-going purchasing activities, rather than deeper personal relationships.
Art fairs — especially larger ones — have contributed to the depersonalisation of client relationships with their “buy it now” sales orientation. The Internet further runs the risk of further depersonalising traditional relationships, especially with the commoditisation of editioned works: “Press a button, buy art.” It is as easy as eBay.
At The Spotlist we try to maintain close personal contact with both our buyers and sellers, by email, phone and, whenever possible, in person. Many of our clients know us personally and well from our previous positions in the art market. So, there is continuity in our relationships.
Things are speeding up in the art market 2.0. Without physical presence, do you think all these projects are viable?
No. Absolutely not. Going back to our basic premise, the art market is really rather small. The European Fine Art Foundation set “the total size of the global art market at €46.1 billion, or about $60.8 billion for 2011… By way of comparison, the art market total is just about one-twelfth of the U.S. military budget for 2011, which was $739.3 billion, according to the Institute for Strategic Studies.” In its Luxury Goods Worldwide Market Study, 11th Edition (2012), Bain & Company estimated global comparative expenditures: cars (€290 billion), wine and spirits (€51 billion), jewelry and watches (€46 billion), luxury leather goods and shoes (€45 billion), fragrances and cosmetics (€43 billion).
The number of people spending in excess about $10,000 annually on art is limited, relative to the world’s total population. The number of people who spend more than $1 million annually is infinitesimal. Average New York gallery sales are estimated at $300,000 to $500,000 annually, depending on the source. Not everyone is as large and as successful as Gagosian, David Zwirner, and Hauser and Wirth. Most galleries are tight-knit operations with less than 6 employees. It is obvious that there are few Goliaths.
As for on-line presence, there is no reason why each segment (retail and auction) cannot support a few competitors, but not many. We are truly mystified at the investment costs and staff sizes that have emerged in the press for Art.sy, VIPart, and Artspace. Artspace just announced it is going for second-round funding of $8.5 million USD. Our total investment since inception in 2011 is about $32,000 USD.
Look at the art gallery inventory software business. There are now 5 or 6 competitors of tablet-based inventory systems, but the competition for clients is aggressive and extremely price sensitive. “Lean and mean” plus high quality products and services will win the day.
The Spotlist is market sensitive on the basis of supply and demand. Our cost structure and fees are low, and because we curate our material, our brand is associated with high quality secondary market works. If you have a $10 million USD Richter, you may be well advised to sell it through a gallery private dealer, or auction house. But on the basis of fees, you would do far better to buy it from us.
What do you think of the art market today?
As Robert Storr (Dean of the School of Art, Yale University) recently said in The Village Voice: “Art’s real problems have nothing to do with Larry Gagosian’s legal issues, or the fate of Jeff Koons’s or Damien Hirst‘s prices, or even how some few important artists evade this monster financialization,” Storr insists. Rather, they are about “how much of the world’s economy is tied up in art investments, and how that opaque economy is actually run. That is the $8 billion question. Ignoring that today and sitting around and worrying about who did what to whom—or things like late capitalism according to Adorno—is just jacking off.”
With the infusion of new global wealth, the highest end of the market has simultaneously become more competitive and speculative. This is understandable, since demand focuses on a rather small number of artists and a narrow band of types of works by those artists. Speculators operate as a herd, buying what is most popular in the market. Our offerings are broader, but they tend to have more institutional and curatorial support. The material we present on The Spotlist tends to appeal more to a “serious,” informed collector.
The online world is not terribly crowded. There are about 20 online retailers or auction platforms. (We have built a detailed spreadsheet of their various features and offerings, and we monitor their activity. Also we are happy to share our spreadsheet analysis.) But, like I said earlier, only Artviatic really appears to perform in a manner somewhat similar to our business model.
We believe that good to great secondary market art by highly respected artists invariably finds a home. It sometimes takes time. Prices can vary with supply and demand. The most successful approach is the balance between curatorial appreciation (history) and commercial success (economics). We like to think that each of the artists on The Spotlist has this balance. Moreover, we add personal contact with our website’s buyers and sellers, and often – very often – use the phone rather than email or SMS to communicate.
And lastly, have you any projects for the future?
We are all happily busy with The Spotlist and our other endeavours: advising, teaching, speaking, and organising exhibitions. It is enough.