The use of artificial intelligence in the art world has been touted for its supposed ability to detect forgeries and authenticate works by old masters, identify which emerging artists will become the next superstars, and even create works of art without human intervention. It’s all very space age and largely niche. But behind the scenes in a rapidly changing art market, AI already plays an important role in price formation.
Perhaps necessarily. The art market is “notoriously opaque,” New York City art consultant Alex Glauber told Observer, because the only information about what something costs comes from auction sales data — and only a small percentage of artworks are sold at public auctions. Most sales are made by galleries and dealers who never disclose what buyers paid. How should art advisors inform their clients about a potential purchase if they do not know whether a price is reasonable? How should insurers write art policies for collections when the appraisers they rely on have little or no access to the prices paid for works of art?
A growing number of companies have developed programs that use AI technology to help with this, including iownit, Wondeur, ARTDAI and the Winston Artory Group. Glauber, a member of ARTDAI’s advisory board, noted that while “databases allow you to compile auction comparisons, ARTDAI is different in what you can do with that information. The platform can automatically generate customized reports that analyze auction sales patterns and market performance for an artist. From there, you can upload artwork details for works that have not been sold publicly at auction, and ARTDAI can analyze the entered transaction data against historical auction results to presume a fair market value based on public auction data.”
Part of what makes the art market opaque is that it is based on trust – trust in a dealer or advisor who presumably has a lot of knowledge and feeling for what is to come – rather than on verifiable facts. Maybe that dealer just wants you to buy the work of an artist he currently represents. Maybe that advisor owes someone a favor. In fact, verifiable information about art does not mean your nose for sniffing out quality, your sharp eye, your expertise or your connoisseurship. Wondeur’s model is fed with vast amounts of information about art galleries and museums, as well as artists and artworks, especially from the past 75 years – such as where an artist’s work has been exhibited, which institutions have collected the work, the prices dealers earn for selling artworks, the artist’s main medium and most acclaimed period, as well as the critical response to the work and the artist’s gender and nationality – to identify patterns identify in the career paths of all kinds of artists, from emerging to world-renowned, who can create similar opportunities. In the words of Olivier Berger, co-founder of Wondeur: “AI can understand why and when the value of an artist’s work changes over time, making art values explainable in the past, present and future.” He added that “we can deliver technology to drive impact investing. AI can see opportunities in the market not seen by others.”
A number of technology companies have entered this field. Some – ArtWorldInsights.com and ArtBnk – have fallen by the wayside, while others are still in development. The other technology companies distinguish themselves in specific ways. Anne Rappa, national fine arts and specie leader at Manhattan-based insurance brokerage Marsh McLennan Agency, told Observer that “Wondeur’s model is based on predictability over a large data set. ArtDAI is focused on the part of the market that represents the majority of sales and a smaller data set.”
She added that AI will not replace “honest, knowledgeable, experienced experts” in evaluating risks or processing claims, but noted that Artory, which recently merged with art consulting and appraisal company Winston Art Group to become Winston Artory Group, “is routinely retained by insurance companies for loss and damage claims.”
Even more skeptic is Roman Kraussl, a professor of finance at the University of Luxembourg who specializes in the art market, who said: “Fact-based is good, but art has no fundamental value. It’s all subjective. I can say to someone, ‘This should be your price, but if paying more or less makes you happy, then that will be your price.'”
Nanne Dekking, co-founder and co-executive chairman of the Winston Artory Group, also doesn’t see artificial intelligence replacing human expertise now or anytime soon. However, like Berger, he sees the need for more facts instead of subjectivity in determining the value of art.
“As art and collectibles become a larger part of private portfolios, many collectors and their advisors face a persistent challenge of understanding the current value of these assets in a way that is reliable, defensible and executable. Traditionally, art market valuations have been episodic, updated only when necessary for a transaction, estate planning or insurance. Now However, as wealth advisors, insurers and private clients increasingly seek to treat art like any other financial asset, there is a growing demand for real-time, data-driven insight.”
Dekking describes himself as a “strong believer in human expertise,” especially when it comes to inspecting “the physical artwork, rather than just betting on AI to do that work for me.” He added: “We’re not saying AI is doing reviews for us, but what AI is doing is helping us find similar things, not just because of image recognition.” There is a vast amount of information about works of art that can be pieced together from published references, exhibitions and previous owners. “So there’s a whole bunch of different data sets that AI is mining that allows us to make connections between different works of art.”
A key element of Artory, now available to Winston’s client base, is the use of blockchain technology to record and validate research and due diligence information about artworks in a client’s collection. Blockchain creates tamper-resistant, time-stamped records of ownership, provenance, value and condition that increase the potential for liquidity and make it easy for collectors to provide authorized access to insurers, lawyers, financial advisors and wealth planners.
The advantage of blockchain is that essential information is not stored in one computer file, but in a more secure system. “If you look at Los Angeles and the fires,” Dekking said, “there were actually people who weren’t storing the information about their artwork in the cloud because they didn’t trust it, and they had their own computers in the houses with the data from these artworks, and literally everything was lost.”
