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Text Project recap "Art Commodities". 2014
Smart Art Investment Advisory embraces the notion of art as an asset class. It advises for the best investment for art, for avoiding financial losses, and inefficient business. Art is good hedge against inflation, stock, bond and currency market fluctuations: buying art allows investors to diversify their portfolios while pursuing financial gains. Works of art can also be used as collateral in order to secure loans, transfer assets, or they can be bundled with numerous investments funds, or capital shields as donation’s tax and insurances value. proposes a new formula for an innovative art investment in an attempt to reorganize the economic and symbolic value of contemporary art while maintaining and assuring social, cultural, and financial capital returns.

Why Value Investors Should Buy Critical Art? is building an art investment market whose social impact increases its potential for economic returns. As the social impact and relevance of a work increases, so does its market value. Today's art market logic is highly dysfunctional and inefficient over the long term. Art collectors are endangered by incentives on short-run profits and the selling of quick, aimless and trivial art rather than on supporting an independent oeuvre of lasting quality and thought-provoking art. This false paradigm of low-intellectual and cultural value as tied to high-financial value negatively affects the infrastructures and formations that sustain the cultural industry complex. Overvaluation and mispricing of easily digestible and entertaining art is becoming more and more prevalent, a situation that misguides the investors and harms the intellectual value of artists and the whole art world, which are the real source of value. The present conservative model is often unsustainable, leading to collapse and creating losses for its investors.

A simple economic analysis into the production of values of artworks

Symbolic value can be exchanged for high economic value, however recently commercial value has been exchanged for the symbolic, making the market unreliable. Popular taste and the artistic canon have been influenced by the misleading dominant forces, which ultimately determines a false system of values. is committed to building symbolic and intellectual capital to create a new market value of art, believing in the equation between social value, artistic significance and economic development. Art is a concept of value constantly requiring its own (re)evaluation. However, the factors influencing the valuation and validation of contemporary art, artistic reputation and credibility are too often determined by the economic conditions and status of its producers, dealers or buyers. wants to invert this paradigm, and assert a new scenario where the social validation of art influences its economic value, which is then redistributed to the social bodies that fuel and create the art economy itself. Economic evaluation should be democratic, hence conditioned by discernible quality and consumable artworks. promotes a new age of critique, awarding prestige and cultural capital to critical art, and encouraging its appreciation by popular audiences. Many have been questioning the authority of cultural experts and how they could legitimate their own valuations to generate estimations for inflating the value of artworks. Today, within the sphere of the contemporary visual arts, the agents whose interests determine the dominant values of art are mainly large institutional investors. Through their acquisitions these new agents shape artistic reputations, taste and establish the art market's elitist character. The role of the public expert has been gradually replaced by financial ventures in the art market, which has shifted both intellectual and monetary values to bend to these power dynamics. Experts themselves have lamented this questionable inflation of superficial values in the art market, a scheme that ultimately harms investors and artists.

Some common traditional art market deceptions

1) Insider trading via privileged access to information is common practice, as dealers often offer art to bid up prices in advance on their own sales. The lack of independent information on this trade endangers everyone in the art market.

2) Dominant art funds have higher acquisition budgets than public museums, and are able to manipulate the art market and extend their influence on the art world through tax-deductible donations to museums, sponsorships, and several types of advertorials on art publications.

3) Some collectors and art investors may support only artists who are subject to a celebrity or fashion logic, rather than artists whose represent the real spirit of the time and medium of the contemporary.

Goals for highly performative investments and acquiring social reputation and prestige as art collector

1) Establishing transparency in the market about prices and ownership, utilizing reliable sources of information.

2) Creating a market to maintain independent and autonomous production and democratic valuation of art that guarantees economic stability.

3) Supporting art that represents symbolically complex social and historical process, or art with socially transformative purposes.

Smart Art Economic Model

The economic model for a Smart Art Market presents a new logic of trade and valuation, ensuring fair access, distribution and acquisition for every types of art collector. It proposes a business model for contemporary art sales based on abundance and not on scarcity, driven by transparency and reliant on a mass of collectors, rather than a select few. Investing in abundant collectable artworks can be seen as owning blocks of shares or commodities. Collectors from the Smart Art Market can invest in this type of art commodity and they are supported by a discerned and accessible valuation system.

Business goals of 1) Providing the collectors an alternative art financial investment portfolio with cost-effective solutions. 2) Reestablishing the real economic and social values of art, which are the foundation of a healthy market. 3) Competing against an unregulated, opaque, volatile market which is producing financial losses and mistrust.

A new mediation system for innovating systems of value

The Smart Art Market suggests an economy similar to the one for cinema or music, where it is the appreciation by a large audience that drives the profit. This model circumvents traditional intermediaries or middlemen within the market, allowing for direct exchange between producers and consumers of products, and new patterns of taste formation within cultural industries. Shifting the sale of contemporary art to a model more similar to those now proposed within music and film enables mass collectors to express their opinions visibly and widely, challenging the separate status of the professional critic, and the inaccessibility of in the art market. Such collaborative filtering would enable a new process for the creation and assignment of cultural value.

Leverage new technology opportunities

The Smart Art Market leverages digital and internet technologies to shape today's art trade. Digital networks facilitate, accelerate and expand the distribution of art commodities, which increases potential access to investing in them from any type of demographic capable of market exchange. Easy reproduction of digital artifacts is another benefit that increases the access and share of copies of art commodities for viral-marketing. Yet, the uniqueness of the individual artworks is assured by crypto-algorithms that sign and verify the authenticity of the artworks. This means of ensuring the authenticity of digital artworks is a new opportunity for the art market. The mathematical impossibility of art forgery of Digital Art Commodities ensures the investment of the art collectors’ against such fraudulent acts that frequently happen in the traditional art market.

Costs of production

The artworks that are traded within this model are by nature cost-effective, due to the low material resources required for their production. As such, the prices of art commodities are independent of these concerns. This inherently low cost of management and fabrication is a characteristic that is specific to the model and technology of the Smart Art Market. This particular model supplements the opportunity for higher financial returns for both artist and collector, while refining the intrinsic value of the artwork. Instead, the traditional art market often needs a substantial cash flow or liquidity to cover production, marketing and transaction costs, which limits the creation of artworks to high-earning artists or galleries and excluding critical and socially valuable art from the market. Furthermore, this model would eliminate many traditional upfront and additional costs of the art market including insurance, handling, storage, shipping, preservation and ownership costs, which are negative cash flow assets. Low-maintenance circulation and easily-transferred art commodities would also potentially lower one’s carbon footprint.

Protocol for the Smart Art Market for Critical Art

- The market must be an open system of valuation, distribution and trade.

- It promotes collecting with the aim of creating economic value for art with a critical edge and function.

- It's not a donation or crowding-source model, nor a form of patronage. Instead, it embraces personal expressive needs for possessing art that matters.

- It ensures access to the ownership of critical artworks enabled by affordable prices and simple digital platforms.

- Abundance and accessibility is favored over a model of scarcity, while social value is democratically established and preserved within a sustainable economy.

- Artworks sold through are characterized as large series of unique pieces without multiples. Every art piece has unique characteristics, while the series of the same artwork can be composed of hundreds of thousands of pieces.

- The economic value of the individual art piece is intrinsic to its social, historical and aesthetic value, which is determined by a wide audience that judges the social, emotional and visual qualities that the piece offers to them.

- The authenticity and certification of the original and unique artwork is guaranteed by crypto technology within digital signatures on a unique certificate of authenticity, the contract of ownership, and for the individual art piece.

- Physical and digital copies of the artworks may be produced by collectors, furthering the premise that the value of a work increases as it is shared. Removing any restrictions against the production of high resolution or printed copies of the artworks allows for them to multiply in infinite copies and modifications.

- The artwork can take any form and medium, including digital files, as long as the production and management costs for the series is not incidental on the final sale price.

- The sale and resale of the artwork can take place with or without an intermediary, such as an art dealer, based on the contract terms set between the artist and collector.

Access to the market

The model proposed has the ambition to bring quality art to the masses at affordable prices, enabled by its low transaction costs and little to no reliance on material resources. Today only a few can access and make use of the art market, which consequentially radically affects the very meaning of art and its social role. Democratizing the art market through lower priced collectibles and digital distribution changes how art is consumed and experienced, thereby raising returns for both collectors and artists. Better access to the market transcends the simple idea of making the market more democratic through lower prices, as today the contemporary art suffers from a narrow audience and reach. This new model would generate wider interest in critical artworks, elevating both their social and economic significance.

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