coindesk.com
Magnus Resch has been called many things: an art collector, a storyteller and at least once, by CNN, “the world's leading art market economist." He’s run galleries, taught in the Ivy League and has tried to quantify the often opaque world of art collecting.
In his new book, “How to Collect Art,” which will be published by Phaidon in February, Resch tries to give an objective answer to the very subjective question of what artworks are right for me? Beyond the mantra of “buy what you like,” Resch attempts to offer a systemic approach to actually turning a profit by collecting.
Some of the advice is obvious, like researching and classifying the artists, galleries, art fairs, auction houses and rival collectors that create the market. Other lessons can only be learned by sifting through mountains of data or forming personal connections with artists and curators.
It turns out, it’s easy to overpay for work in an industry that can find value in a scribble if scribbled the right way. Nowhere is this more evident than in the world of non-fungible tokens (NFTs), which has been dominated by cartoon figures (typically animals) meant to be used as social media avatars.
While Resch does not see many NFT projects, rocked by the market downturn, rebounding, he does believe the technology itself will profoundly reshape how the art market economy functions. “[I]nformation on provenance will become clearer and more accessible, eliminating much of the historical mystique that the art industry has, to some extent, fostered,” he writes.
That’s important considering some of Resch’s earlier research, analyzing sales information from nearly half a million artists around the world, which found there is a “network of interconnected galleries and museums” that essentially determines whether an artist succeeds in their lifetime. NFTs help by allowing artists to form closer relationships with collectors, breaking down barriers and making it easier for interested collectors to enter the market.
See also: Magnus Resch — The Art World Underestimates the Power of NFTs | Opinion
“The opacity of the art market benefits a tiny elite of collectors, gallerists and artists, but makes it harder for most artists and art lovers to connect,” he wrote.
CoinDesk spoke with Resch about the biggest lessons for people looking to get into art collecting, how new technologies like blockchain are changing the practice and why he thinks the biggest problem in the contemporary art scene is a lack of buyers. The interview has been lightly edited and condensed.
Do you expect the NFT market to bounce back? And if so, in what ways – will it be driven by the launch of new projects or is there hope for NFTs that have dropped to $0?
I expect that most NFTs will retain their current status, which is often significantly lower than during the peak of their hype. Historically, digital art has not played a significant role in the art market and is unlikely to surpass paintings as the primary medium dominating the market. Nevertheless, five to 10 digital artists, such as Refik Anadol, will continue to be relevant, as they have successfully integrated themselves into the traditional art market and its institutions.
What are the primary insights that your book offers to aspiring art collectors?
It's twofold: My book helps you identify artists that suit your preferences. For instance, if you are buying for investment reasons, I provide guidance on how to identify artists with investment potential. Secondly, it provides insights into how the mysterious art market truly operates, guiding you on which galleries to buy from, which curators to follow, which fairs to visit — so you never overpay. In essence, the aim is to transform you into an informed and discerning buyer.
How do you perceive the current obstacles faced by the art market?
The art market has been grappling with a shortage of new buyers for an extended period. Despite the global number of millionaires doubling in the last decade and a surge in attendance at art events, the value of the art market has remained stable. This disparity underscores a conversion problem, as the newly affluent are not seamlessly transitioning into art buyers. I believe a combination of education, entertainment and transparency can play a pivotal role in converting more art enthusiasts into active buyers. My new book is a contribution towards this goal, and I've observed similar initiatives emerging from galleries, museums and auction houses. An increase in the number of buyers is crucial for supporting the endeavors of artists, gallerists, advisors, and museums in the art world.
What lessons can the art market draw from the NFT hype in 2021, and what enduring effects remain?
The three key takeaways are: Firstly, artists have the capability to build their own following and cater to these buyers. Secondly, a larger market with increased liquidity is created through price transparency, verifiable provenance and low transaction costs. Thirdly, traditional art institutions still maintain value and won't disappear.
Similarly, what won't be repeated by the NFT space following the market collapse? (i.e. lessons learned?)
Being an artist is challenging. Lasting value is primarily established when works are showcased in reputable institutions. The physical presence still holds importance for digital art. To succeed as a digital artist, it still requires the endorsement and support from established traditional institutions.
Where do you anticipate the trajectory of the art market, and what significance do NFTs hold in shaping it?
The introduction of blockchain technology and the various ways of using it has the potential to change the art market in a way that could not be accomplished otherwise. The convergence of digital art, crypto money and blockchain technology will bring about a profound structural shift in the art ecosystem. Collectors won’t buy if a work is not registered on the blockchain. Artists will exert more control over their work and earn royalties from resales. More collectors will populate a transparent market. And the art market will become more regulated — for the better. This won't happen immediately, and initially, other luxury industries need to adopt it. The art market usually follows rather than taking the lead as a first mover.
The art market is rife with money laundering. Do you expect the same to metastasize in NFTs?
It's important to dispel this misperception: While, like any other industry, there may be criminal elements, it's crucial to recognize that such instances are not representative of the entire art market. Instances of money laundering are present across various sectors, and the art market is not uniquely prone to this issue. Additionally, these occurrences primarily impact the top end of the market, involving less than 0.1% of all exhibiting artists.
Personal favorite artists working with NFTs?
Kevin Abosch, Operator, Refik Anadol, Claudia Hart, Vera Molnár, Sasha Stiles, IX Shells
See also: What You Own When You Own an NFTShould "crypto art" be considered a unified category? As distinct from other fine arts?
Certainly not. In the past, when photography and video emerged in the art market, they faced challenges in being recognized as part of the traditional art landscape. Similarly, digital art is poised to play a more substantial role in the future, and there is hope that it will gain increased representation in museums and established art institutions. The Buffalo AKG Art Museum, for instance, is leading the way in this movement. Distinguishing "crypto art" from "fine art" could spark an unnecessary debate about defining crypto art. In my perspective, it is simply art.