The art market has been a global market for centuries and ARTPRICE is, according to news agencies and the major references in the international media, the global leader in art market information. ARTPRICE permanently enriches its databanks with information from 4,500 partner auction operators and it publishes a constant stream of art market trends for the main news agencies and 7,200 print and audiovisual media organizations. ARTPRICE has 3.2 million free and paid subscribers, having adopted the freemium mode.
This digital model - which is experiencing very strong growth all over the world - is called "freemium". Much of the data is available free, but the value-added information is paid.
ARTPRICE's interim report on the art market, distributed by Agence France Presse (AFP) in August 2014, shows that the art market is booming. The title of the long press release by AFP summarizes the condition of the market, "Global art market: sales jump 17% in the first half of the year, to a new absolute record."
Trading And Ipo confronts the theories of Clayton Christensen with those of Thierry Ehrmann, CEO and founder of ARTPRICE, to confirm, point by point, ARTPRICE's position within the precepts of the "disruptive economy".
Trading And Ipo: According to Clayton Christensen, disruptive innovation is primarily a way of defining the transformation of a market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill. How does ARTPRICE justify its position as a disruptor?
Thierry Ehrmann: ARTPRICE is exactly that: the disruptor of the Art Market. We went from 500,000 avid collectors of postwar art to 70 million professional and non-professional art consumers thanks to information instantly available online. ARTPRICE has by far the largest art market information database in the world and provides unlimited access for less than $100 per year.
Trading And Ipo: According to Clayton Christensen, "the potential for the emergence of new companies of this type is substantial... and growing. Wherever there are activities that can dematerialized and reintermediated, there is room for new business models."
Thierry Ehrmann: That's exactly how ARTPRICE built its monopoly, in full respect of the law. We "standardized" 108 million works of art and more than a million artists with unique identifiers and perfect traceability, a task that involved over a million hours of work by art historians. The dominant disruptor cannot dematerialize and reintermediate without standardizing the market it wishes to monopolize. Once that was in place, it was easy for ARTPRICE to bring supply and demand into direct and ultra-rapid contact, either on its standardized fixed-price marketplace or on its standardized auction platform, allowing millions of people the opportunity to buy and sell artworks in just a fraction of a second.
Trading And Ipo: According to Clayton Christensen, "disruption helps new models to emerge and creates larger markets by making products and services cheaper and more accessible in markets that have been dominated by non-transparent oligopolies or companies that enjoy "status quo profits"". This involves a fundamental, radical and irreversible transformation of the capitalist system. "Disruptors are innovators seeking solutions to the problems they encounter."
Thierry Ehrmann: We were very lucky to arrive on an art market whose players, of all sizes, were still operating with nineteenth century practices with a high level of distrust for computers, no standardization whatsoever, opaque information closely guarded by a veritable caste, often with hidden agreements between them and incestuous relations with those in power. And that had been going on for more than five centuries. On top of that you had a large market of "willing victims" who would buy artworks at somewhere between 7 to 9 times the price paid by the seller. Now, with ARTPRICE and its capillarity on Internet via principally GOOGLE and subsequently BAIDU (number 1 in China) and BING (Microsoft), and after making 540 million data available online in six languages, the margins have mechanically collapsed. To summarize Clayton Christensen, we found "solutions to ancestral problems" via innovation.
Trading And Ipo: According to Clayton Christensen, "disruptive innovation is quickly becoming the cruel and brutal rule of capitalism." As a result of this new context, the companies and institutions of the "old economy" literally buckle under the weight of regulations, overhead expenses, the immediacy of the market, the financial results demanded by financial markets, the jobs that need to be maintained, etc. ... and try to pressurize governments to throw regulatory batons into the wheels of the disruptors, often with little or no effect, and above all, often increasing their exposure to long-term risk. They can also imitate the disruptors in an attempt to grab the remaining market shares with the hope of benefiting from the overall increase in the size of the market. As a last resort, they can buy up newcomers, if they can afford it, which is not always the case.
Thierry Ehrmann: Clayton Christensen's analysis applies to ARTPRICE in every respect. The old economy of the Art Market has launched nearly a hundred legal actions, all of them futile and some of them extremely vindictive. Our legal response was equally ruthless and much blood has been shed.... but you can't stop the train of history.
70% of the art market's players are dying, crushed by overhead costs, auction room closures, real estate costs... with thousands of employees being made redundant.
In France, the business community and the State have a visceral fear of disruption. This has been amply demonstrated in the telecom, hotel bookings and taxi sectors... amongst many others.
After 500 years of monopoly (since 1556 in fact), the old French art market appealed to the legislator to pass reforms (2001) and then prompted the "reform of the reform" in 2012, under which, in 2014, they managed, quite simply, to get the term "online auction" banned from the Internet. In fact, they dreamed up practically everything possible and imaginable to kill off any kind of market disruption, which is why we are leaving for the United States (New York) via our subsidiary Artmarket.com, formerly Artprice Inc. / Sound View Press (1973).
Our strength is the full standardization of the Art Market across the entire value chain. This standardization is protected under intellectual property rights and is absolutely essential for dematerialization. After many years of under-valuation, we have decided to get the true value of our client base recognized via an IPO on the US market. We have a preference for the Nasdaq which incidentally has just crossed the 4,500 threshold. French accounting methodology is closely linked to the old economy. The concept of the digital economy is non-existent in France and hence an appropriate valuation in that country is impossible.
Trading And Ipo: ARTPRICE claims to have 3.2 million members and targets 12 million members. AirBnB claims 11 million members and its value exceeds $10 billion. What is the difference between and an AirBnB member and an ARTPRICE member?
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