Third Part of the Exclusive Interview of Thierry Ehrmann, Founder of Artprice.com (March 7, 2012)
PARIS, March 8, 2012 /PRNewswire/ –
We already published in-depth interviews with you on June 5 and October 9, 2011. Today we
are at the beginning of March 2012 and bidding started on Artprice nearly a month and a
half ago. What are your impressions so far?
Before we begin, I should warn readers that some of the themes discussed in this interview
are followed directly on from our discussion on June 5, 2011 and October 9, 2011 which are
therefore the basis for this third interview. So… we actually started our auction
activity on January 18, 2012, after 16 years of legal wrangling with one of the world’s
oldest monopolies, art auctions, dating back to the Edict of 1556. At the end of this
struggle we have finally managed to impose a situation of free competition via the now
famous law of 20 July 2011.
You have become an “Auction House”?
No. Specifically we have become an auction broker, operating remotely, via internet, as
defined by Article 5 of Law 2011-850 of 20 July 2011 and by our standardized auction
Can you clarify?
Artprice has a unique set of art market standardization processes based on a broad range
of Intellectual property patents (sui generis software patents, copyright, etc), which
allows us, via the Marketplace Normalized, to match supply and demand in real time, either
in a fixed price environment or an auction environment. In the latter case, we are not
responsible for the auction because we are not linked to the parties (buyers and sellers).
It is the vendor who ultimately chooses the highest bid, according to his own criteria,
and he pays between 5 and 9% commission for using our Standardized Auction Market Place
and our client database. This client database is currently the world’s largest in the art
market, with 1.4 million members, about whom we know, for each one, very precisely, what
they are looking for and what they want to sell.
Returning to the last month and a half. What have you seen in seven weeks?
Our initial challenge, and it by no means an easy one, was to gather an offer of 5,000
lots for the auction opening day on January 18, 2012. The total value of the works
amounted to more than 810 million euros with prices ranging from a few hundred euros to
tens of millions of euros. Of course the background to these first 45 days of auction
brokerage activity is our Standardized Fixed-Price Marketplace, which began on 18 January
2005 and has grown very substantially from an initial offer of EUR1.2 billion in 2005,
followed by more than EUR2.7 billion in 2006, EUR3.6 billion in 2007, EUR4.5 billion in
2008, EUR5.4 billion in 2009, before stabilizing in 2010/2011 with approximately EUR6.3
billion with approximately 30% of completed sales being commission-free (the exact figures
are available in our reference documents and regulated communication on the ActusNews
website, approved by the AMF). The reactions we have received from the art market
principal players to our latest auction platform in 2012 have been fast and remarkably
positive; however there is still a small hard core, mainly centered around Drouot, that
has given us a distinctly hostile reception and the old guard has deployed means of
harassment and threats that are really out of place in modern Europe.
Let’s talk about this “remarkable positive” reaction, as you say.
We were rapidly congratulated by a whole generation of Gallery owners, Auction Houses, Art
Dealers, Artists, Collectors and Enthusiasts who have realized that nothing will be the
same as before. As our auctions are limited in time, the volume of transactions and
exchanges has really exploded compared with Artprice’s Standardized Fixed-Price
Marketplace where time is not an important factor. In the days that followed our launch,
our internet bandwidth traffic and volume of logs multiplied almost fivefold. We have had
testimonies and contributions of an unrivaled intensity. It is clear that for a whole
generation of art market players – aged 25 to 50 roughly speaking – Artprice, with its
giant client database (1.4 million members) and its billions of behavior logs stored in
accordance with European and French law, has opened the possibility to consult information
on little-known artists from the office or the home in seconds and to reach tens of
thousands of potential buyers of specific artists on five continents in just a few hours.
We have established unprecedented discussions with a number of these market players who
have had the courage to re-think their entire sales process.
What is the objective of these discussions and what will be their outcome in practice?
For these art market players it amounts to a complete overhaul of their business model.
They have suddenly discovered that they have a de facto firepower substantially greater
than that offered by the client lists of the largest auction houses or famous galleries.
Trapped within their own client lists and obliged to spend fortunes attending
international art fairs to attract clients on other continents, suddenly, via Artprice’s
Standardized Auction Marketplace, they have discovered a new economic paradigm that impels
them to migrate permanently to the Internet, which is now the best and most efficient way
to conquer the five continents.
What do you mean by new economic paradigm?
They understand that their economic model, namely the practice of high margins with a
limited number of sales due to a limited customer base, is changing. Some are considering
partially closing their galleries or secondary showrooms; others will close their physical
auction rooms. They are discovering, from a macroeconomic viewpoint, that the art market,
which has grown from 500,000 collectors after the WWII, to 450 million “art consumers”
today, can now be reached within minutes from their homes or offices. They can, therefore,
very substantially reduce their margins, that were previously prohibitive, and multiply
their turnover in proportions that they did not imagine before because they lacked the
necessary and heavy financial means as well as a deep knowledge of the Internet. In six
weeks, we have managed to brush aside lots of doubts and inhibitions. Economically, the
story has only just begun: bearing in mind the fourteen days of auction, the settlement to
the trusted third party (approximately 15 days for international transfers) and the
finalization of the sale between the buyer and the seller who gives the final release
instruction, we are just beginning to receive the commissions from late January 2012 when
we launched our auction brokerage service. So we will certainly be posted good surprises
soon, because the offer on our Standardized Auction Marketplace is constantly growing and
has been regularly since it opened January 18, 2012.
Do you know what the major Anglo-Saxon auction houses think of your business model?
I invite you to read the full page article in Les Echoes of March 3, 2012 by Robert
Martine, in which Artprice Annual Art Market Report is presented alongside an interview
with the Chairman of Christie’s who concludes by saying “The future of the middle market
(800 to EUR 10,000) is on the net”. Who better than Christie’s to confirm this?
I add, as CEO of Artprice, that this segment represents, on a global scale, 81% of
global art market transactions. If an undisputed expert of the “old economy” of the art
market is able to confirm that 81% of the global art market will be conducted over the
Internet, it clears that our de facto leadership in this market via our standardized
auction marketplace puts us in a very favorable position.
You mentioned doubts and inhibitions. Could you be more specific?
Indeed, particularly a major problem concerning the trusted third party. We selected the
world’s leading trustee Escrow.com. Their modus operandi is absolutely perfect but Escrow
is handicapped by only accepting the US dollar, which was a significant drawback, mainly
for our European customers. We therefore chose, in record time, a second trustee, after a
tender, which is Transpact in the UK, who handles the USD, the Euro and the Pound Sterling
and which became available as of mid- February. But we still have the problem of the
language barrier. Whereas our customers have access to Artprice in six languages, both of
the websites of our two trusted third parties are in English only which turns out to be a
real obstacle because the sums involved are very important and our customers want, from a
legal and practical perspective, to fully understand all the steps and procedures of
escrow and release with the trustee.
But why not choose a trusted third party for each linguistic area?
I must confess that no bank or similar establishment, particularly in France, has so far
been able to satisfy our specifications, despite the fact that the sums involved will
eventually be colossal and that, in the digital economy, the notion of a trusted third
party, is already applicable to many other groups and economic activities, quite different
from Artprice and the Art Market. This reflects, among other things, a certain failure of
the French economy to adapt to the digital and de facto global economy in which we are now
Is there no solution? And why not do it yourself?
Under the Act of 20 July 2011 concerning online auctions, and notably Article 5
transcribed in Article 321-3 of the French Commercial Code (paragraphs 2 and 3), it is
essential that the trusted third party that holds the sequestered funds and then releases
the funds be fully independent from Artprice, both legally and capitalistically. But I can
assure you that we have demonstrated to our two trustee partners, the high number of
clients who arrived on the web page of the trusted third party and then dropped of the
transaction because they feel that transferring large amounts of money without a complete
mastery of the text in their own language represents a significant risk. Thus by proving
to them exactly how much business they were losing we have managed to convince them to
translate their web pages and their computer APIs into the languages used by Artprice
(French, English, German, Italian, Spanish and Chinese). So the problem will be fully
resolved by the second quarter with also very likley the arrival of a third Asian partner
as trustee for the Asia / Pacific region.
Can we consider that the Standardized Auction Marketplace is now fixed?
Yes, in essence, everything is there. But Artprice has a very strong corporate culture of
building systems that are concrete, simple and inexpensive in human resources. We
deliberately leave a significant proportion open to a wide variety of extensions based on
information from our Customer Service that is a real advantage for analyzing customer
requests from all countries. The biggest danger is developing monolithic software that is
trapped within a colossal specification imposed by force on international customers. The
big mistake the French often make is trying to impose a product according to its own
tastes. Artprice has an opposite practice and we believe that customers and the market are
our best prescribers and advisers. This approach seems simple and yet very few groups in
France adopt it.
You mentioned in a press release that the current online offer already corresponds to your
forecast for 2013. Is that still the case?
Indeed, we had expected 300 new lots presented each day, corresponding to an average of
90,000 lots per year. We are currently seeing an average of around 500/700 new lots per
day within a very broad price range. It should be noted that for a large auction house, a
handsome catalogued sales never exceeds 300 to 350 lots offered and on average it takes
2-3 months of preparation, whereas for Artprice it takes 12 hours on average. That is
worth thinking about….
Why not transfer the Standardized Fixed-Price Marketplace to the auction platform
directly? This would bring in turnover that you already own, and which would be
substantial and immediate for Artprice.
Indeed, the question arose and we had a real debate at the heart of Artprice. As creator
of the Standardized Fixed-Price Marketplace I considered that its massive volumes
represent a genuine ecosystem since January 2005 and that we should make a smooth
transition, without forcing our loyal customers.
You seem very sure of your premise. Could you develop this idea?
It’s simple, I assume that a vast majority of sellers would naturally choose the auction
because, unlike real estate or automobiles markets where the difference between the
fixed-price and the auction price is not that large, in the case of Artprice, the fixed
price / auction differential on a work of art can easily run to double, even if the fixed
price seller is a market professional. It is this premise that has allowed me to believe
that for 7 years we have acquired a huge number of sellers and buyers worldwide in the
form of databases and proprietary software, who generate an annual sales volume estimated
at about EUR1.8 billion out of the EUR6.3 billion works presented for sale (in value
terms). It would, in my opinion, be mad to force these market players, who have strong
personalities and are perfectly capable of forming an opinion themselves, onto the art
auction market. In fact, this notion is confirmed everyday as we see natural migrations to
the auction platform.
But your shareholders want an immediate result?
We have already been extremely patient waiting for France to decide to write a European
directive into domestic law. I refuse to play a counter-productive game to appease a small
number of shareholders who want daily regulated communication and who equate our share
price with that of the gambling company La Francaise des Jeux. I have nothing against the
La Francaise des Jeux which is also a quality group; but the thrill-seekers who want a
daily performance are not destined to be Artprice shareholders.
What do your existing shareholders think?
In fact, all of our existing and major shareholders are almost more patient than we are.
According to art market historians and sociologists we are fostering a change as important
as the switch from open outcry trading to ECNs like the NASDAQ or Thomson Reuters’
Instinet. As such, it may take a little time, particularly as, with our intellectual and
industrial property rights, we have a legal monopoly regarding the standardization of the
Art Market (artist ID, work ID, catalogue raisonne ID, estimate / econometrics ID… See
previous Boursica interviews) without any abuse of a dominant position and therefore with
an absolute lack of serious competitors possessing similar intellectual property rights
over the last 16 years. In the unlikely event that one day a number 2 arrives on the
market, the hard rule that I have been practicing for 25 years with regard to online
business would apply, i.e. “Second place is the First loser”.
Will we see a report with the extraordinary general meeting of 30 March 2012 which was not
in the calendar?
Yes, indeed. This EGM will definitively set in stone the success of our economic
transformation that is now a certainty for us. First of all, after 16 years of work, we
have become the world leader in art market information with 1.4 million subscribers. In
early 2012 we have acquired the conviction that the heart of our business are the
Standardized Fixed-Price and Auction Marketplaces and that these activities generate an
optimal level of profitability. That is why we are substantially altering our corporate
purpose in order to remain consistent with the adventure that is Artprice’s extraordinary
growth and development.
Some of our readers have suggested that a capital increase will be announced at the EGM.
Is this the case? I thought you were against the idea.
There is no question of a capital increase but only of a stock option plan in order to
attract the rare and atypical profiles we are seeking for our Standardized Auction
Marketplace activity. It is clear that we are seeking the best people from the somewhat
exclusive world of the art market and we want to give ourselves the power to attract these
people. Similarly it makes perfect sense to reward employees of Artprice who have
committed so much of their time to the business.
Concerning capital increases, I reiterate my comments, that I am totally opposed to
capital increases which not only dilute shareholders but also – which is often forgotten -
prevent the listed company’s share price from rising very quickly. Unlike the vast
majority of listed companies, we have no debt whatsoever, no overdraft, no short, medium
or long term loans outstanding, no bank covenants or financial instruments to repay such
as equity warrants or other derivatives. At the same time we have an excellent cash
position and a negative working capital requirement.
A few days ago, you published your 2011 art market report. How is it that all the French
and international media and institutions only quote Artprice when talking about the art
market? Is the due to some kind of lobbying?
No, I assure you… there is only one answer to your question: Artprice’s history: today
we are the only group ever to have standardized the art market with more than one million
hours of work by historians, researchers and art market journalists who have researched
and written on all the works from these manuscripts and art catalogues from the 17th
century to today. It is because we have the world’s largest art market information
database that can trace works of art over the centuries, with 108,000,000 images and
engravings of artworks from 1700 to the present day, each accompanied by comments by our
art historians. With this normalization and more than 3,600 auction houses that are
connected to our secure intranet, we are the only news agency (Art Market Insight) to be
able to provide macro-economic data, prices and indices based on the repeat sales method
and over one hundred benchmarks that allow more than 6,300 media each year to understand
the art market via objective and comprehensive figures.
Do you have a concrete example?
Take for example China, where we are by far the only ones capable of gathering and
processing information in a market where the language barrier and the habits and customs
make it a difficult and delicate task.
This permanent presence in the media does it have a cost?
No, quite the contrary, on a systematic and contractual basis, the press and broadcast
media are obliged to quote their Internet sources with our code and to comment on our
methodology. We estimate that each year we save between 16 and 18 million euros by not
having to buy advertising space which, in any case, would not have the same relevance
because nothing can replace press agency content which has a much deeper impact than
advertising, however clever it may be. As regards market research destined specifically
for the media, insurance companies or private banks, this is of course billed at an
But didn’t you mention an international advertising campaign for the launch of the
Standardized Auction Marketplace?
Yes, in the framework of the launch of our auction activity, we certainly received very
good media coverage, but we have also decided to implement for the year 2012, a campaign
plan focused on the art press, whereby we select in each key country the leader and
co-leader as well as TV network campaigns that are highly targeted on art and the luxury
sectors. The campaign began in late January 2012, in line with the art market’s calendar,
which invariably gets into full swing with the so-called spring sales.
Returning to Artprice’s 2011 annual art market report which was just released. Although it
is available on your website, could you tell us briefly what is its basic conclusion?
The first lesson is its title: “Art has never sold as well as in 2011″. Global auction
revenue exceeded its absolute record with total revenue amounting to $11.5 billion. This
means that, based on a standard ratio between the secondary and the primary art market,
the total base of the art market, including the primary market (galleries, art dealers and
brokers), now represents approximately $90 billion. In addition, the unsold ratio was at
its lowest. China is way ahead of the United States generating 41.4% of total global
auction revenue and Asia alone has become a real market with almost 45% of the global
market. Chinese artists are ranked highest in both our Top 10 and our Top 500. Look for
example at the habitually top-ranked artist in the West, Pablo Picasso. For the first
time, in decades is not even in the top-3, having been relegated to 4th place. As for
France, nothing new, the continuous contraction, over and over again.
The number of auction results above the million-dollar line is continuing to grow
worldwide, particularly in Asia.
The art market is therefore like gold… is it a safe haven?
Yes, this phenomenon has been severely tested by the economic crisis that started in 2008
and the near-collapse of the financial world in 2011. In effect, the art market has shown
great maturity and performance. It’s not for nothing that the private banking and wealth
managers now advise, thanks to Artprice’s econometric tools, to diversify into the art
market in times of crisis. I invite you to study the progressions of our indices per price
range and you will understand that the Artprice Global Index has performed better than the
S&P 500 and the Eurostoxx 50.
Speaking of million-dollar results, how long do you think it will be before we see a
7-figure result on Artprice…an event that would indeed be momentous ?
Seven-figure results on Artprice are an absolute certainty, given our discussions with
major players in the art market. So it’s only a matter of time. One guess I will make….
whenever it is, it will concern a Chinese artist.
To return to France’s performance on the global art market, why such a contraction from
year to year?
I have often been asked this question. France was the world number 1 in the 60′s but alas,
it has continued to lose ground. Some numbers: its Contemporary art market weighs just
over USD 13 million a year, which on a global scale, is tiny. On a good day New York or
London are capable of generating more from just one cataloged sale than France can in an
entire year. It is evident that nearly 500 years of auction monopoly and the first
“reform” of 2000, which was a complete misnomer, have contributed to paralyzing the French
market. We have had very personal experience of this in our 16 years of litigation and ten
legal procedures from which we have emerged victorious after years of waiting.
But the war is now over between Artprice and the old monopoly?
Economically, the die is cast and we have a Californian highway in front of us. On the
legal front, without being vindictive, we have to finalize some issues where the economic
damage we have suffered must lead to a compensatory process. Likewise, some unsuccessful
claims deserve to be matched by counterclaims. In addition, we are firmly maintaining our
criminal complaint with the Competition Authorities against French auction houses for
non-competitive practices with new elements since late January 2012.
Who are you targeting?
In fact, a handful of former Parisian auctioneers, mainly at Drouot, with its judicial
scandals and repeated indictments. As regards France’s auction market supervisory
authority the Conseil des Ventes Volontaires (CVV), its press release dated January 6,
2012 a few hours before the launch of our Standardized Auction Marketplace, without any
prior mail or phone call or warning, was totally surreal as this authority knows us very
well, both from our meetings and from the data we supply them with each year for their
annual report on the auction market. I ask you…Since when has an initial legal
notification been delivered in the form of a press release, without any advance
notification through the courts? For me the mission of the CVV is important, but it should
conduct its missions in strict compliance with the legal and adversarial procedure under
French law. Things being what they are, we suspect that the afore-mentioned small group of
former auctioneers close to Drouot, angered by the consequences of the law of 20 July 2011
and in particular Article 5, which I just mentioned, intentionally misled the CVV that has
worked in recent years with scarce resources, and has had the courage to initiate a real
debate on the inexorable decline of the French auction market. You should know that we
have received extremely violent threats from a few players who cannot bear to see their
margins and markets collapse. My natural insight and many years of experience allow me to
observe with complete equanimity that such manifestations of hate and anger prove that we
have hit exactly where the profit is buried. In other words, our 5% net commission on
works sold over EUR15,000 and 7% on works sold EUR7,500 to EUR15,000… that is what they
So with your help, among others, has Internet therefore devoured the art market?
Everything must be kept in proportion and don’t forget that more than 4,500 art websites
have disappeared since 2000 and we have seen the virtual disappearance of listed Internet
art site, now relegated to the OTC market with hardly any trading volume. In our case, we
started Artprice when there were less than 30 million Internet users and there are now
over 2.7 billion users, with the best yet to come. But above all, the statement by the
Head of Christie’s about Artworks and Internet is an excellent reference for us.
There is still growth on the Internet?
We’re only at 30% of the growth cycle on the Internet and at 15% of the dematerialization
of the “old” economy. The mobile Internet suits Artprice perfectly, because our customers
are nomadic by nature and needs information in the heat of the action, as experts,
insurers, dealers, auction houses, customs services, and of course collectors and amateurs
buying or selling in galleries or at auctions. For Artprice, the mobile internet should
represent about 80% of our consultations. We are already over 30% and this year all the
major consulting firms have issued forecasts estimating the number of smartphones sold in
2012 at between 550 and 700 million, implying a massive number of new mobile users. In
2015, more than 3.5 billion mobile Internet users will be able to connect to Artprice.
Boursica: What do you mean by 15% of the dematerialization of the old economy:
We are only at the beginning of the dematerialization of the old economy.
Let me quote my old master Pythagoras, the first philosopher for whom everything was
numbers (with the exception of essences that are unquantifiable, inexpressible human
emotions that have nothing to do with numbers). Hence…beyond the number of Internet
users… almost every commercial transaction can be dematerialized… Artprice with the
Art Market is a perfect example. In fact, you will see that the world is heading two
distinctly complementary directions: dematerialization and sustainable development. The
only real answer to the energy crisis is dematerialization.
Faced with such figures, how will you cope technically?
In the 1990s, through our parent company, Server Group, which is one of the earliest
pioneers of the Internet since 1987 (according to Time Magazine), we have worked in
compliance with European directives and the CNIL (French Data Protection Authority) on the
concept of data mining, but we have now moved to the concept of “Big data” with data
storage units measured in petabytes. This data is generated in real time; it comes from
all countries in continuous streams, is meta tagged, but heterogeneously, and come from
very diverse deconstructed non-predictive sources.
What is the difference between Big data and Data mining? Are we talking about the same
No, I’ll explain why. The concept of data mining was to cross groups’ high value-added
database data in order to produce very high quality data. The concept of Big data has Data
mining as a subset, but with the collection – in compliance with the rules of personal
data protection – of billions of data (logs) previously considered non-core, whereas in
fact, as soon as we saw how the cost of the petabyte (1000 terabytes) was diminishing, we
realized that the data mining exploitation of this a priori less qualitative and
considered negligible data, could in fact produce uncommonly rich data. We can now
understand complex and immediate phenomena and quickly provide products and services that
literally follow the demand of our tens of millions of free or paid visitors.
Specifically, what types of applications may “Big data” be able to provide?
We were able to measure, for example, since the opening of the Standardized Auction
Marketplace on January 18, 2012, not only the sheer number of visitors who had never
visited Artprice before, but also, by examining hundreds of millions of logs as of January
18, 2012, to understand why these new customers came only now, i.e. since the start of the
auction service. Similarly, as I said earlier in this interview, in this enormous volume
of traffic that has increased almost fivefold compared with the Standardized Fixed-Price
Marketplace, we can interpret these new clients and prospects who appear to be only
interested in the auction service, but who actually spend their time zapping between the
Standardized Auction Marketplace and our free and low-value added data in our paid
databases on prices, indices, and biographies, without spending more than EUR50. Thanks to
the Big data, we can produce tailored subscriptions that assume that 70% of these new
clients and prospects are equipped with mobile internet and calculate their level of paid
information according to their profiles that we estimate at around EUR36 per year or EUR3
per month. What changes everything in this analysis is that our target is no longer
measured in millions of subscribers, as is the case now, but tens of millions of art
consumers on mobile phones such as iPhones or Android OS Google phones
In all this, where are the artists?
Well this is it! in fact…thanks to the Big data, we realize that, despite our
biographical database covering 1.8 million artists (of whom 450,000 sell through public
auctions), there are nearly a million other artists who are much less known, with more
discreet careers and who are really fascinated by the possibility of selling their works
on our Standardized Auction Marketplace, with their biographies online, without going
through the economic process of the gallery and then the auction house which they eschew
for reasons of independence. This potential is far from negligible and the price of their
works, often under EUR7500, allows us to apply our lower tariff range of 9% commissions
Regarding your social network Artprice Insider, how far have got with that?
This social network, built with sociologists and network professionals, will be the
opposite of Facebook; professionals and Artprice members will appear under their real
names and Artprice Insider will be coupled to the Standardized Fixed-Price and Auction
Marketplace. The first tests have given excellent results and the information exchanges
are all “uselful” unlike the majority of social networks which are overflowing with
useless information. We’ve been perfecting it over the past 18 months because it is going
to have an explosive impact on the cozy world of the art market, and we want to make sure
we get it right.
This network, would it be reserved for art market initiates?
No, not exactly. I would say that this network is more akin to a think tank or a Brain
box. The strength of Artprice Insider will be its capacity to foster original ideas, to
bring together a pool of experts, to be a forum for expertise, to feed the debate
concerning the art market and to encourage the emergence of new concepts. In
short…Absolutely every aspect of the art market needs to be re-invented, having been
totally asleep until the arrival of the Internet. Now here is a small scoop: there will be
live contributions from members of the top 100 Market Makers of the art market on Artprice
With all these projects, how do you find the time to prepare a retrospective of your 30
years as a sculptor-artist for June 2012 at the Abode of Chaos, which apart from being
Artprice’s headquarters, is also a Museum of Contemporary Art?
You are right… I will be “celebrating” my 30 years of work as a sculptor-artist in June
of this year and I have indeed been preparing this event for 18 months in the shape of a
major project consisting of 450 raw steel sculptures that are an invitation to visitors to
complete the course and discover the 3,609 outdoor artworks forming the corpus of the
Abode of Chaos (dixit The New York Times). The project involved more than 900 tons of raw
steel, master blacksmiths and high precision laser, to create what will be Europe’s
largest statuary facility. Once again, I would say that my direct connection with creative
processes helps me enormously in my relations with artists and art market players.
Artprice could not exist or succeed without being totally immersed in the field of art.
Anecdotally, among our 120,000 visitors per year, there are a significant number of
shareholders and customers; so I can enjoy weekends of discussions and exchanges that are
highly relevant to Artprice outside the work context. With a touch of humor, I can say
that I do a 63 hour week. That said, this choice, which I accept with lucidity, can
explain many things that some do not fully appreciate.
What about your stock price in 2011? And what are you expecting in 2012?
In my humble opinion, few managers of listed companies in Europe anticipated their stock
market progressions in 2011 as accurately as we did. In 2011 Artprice posted the best
performance of the entire French regulated market, rising no less than +472% over the year
(on a total traded volume of EUR873 million) and passing the symbolic EUR67 mark that I
had predicted on the basis of the famous stock market dictum “price seen, price re-seen”.
On a sliding annual basis to date, our share price has posted an increase of 476% on a
traded volume of EUR1.25 billion. This year, with the Compartment B Eurolist and our
transition to SRD Long Only a few days ago, and of course the new auction activity, I
believe that we could see Artprice’s share price consolidating around 90 euros. Naturally,
I say this with all the usual reservations, disclaimers and warnings that apply to such
predictive declarations, particularly with respect to exogenous events.
Boursica: You said recently that certain funds might be interested in Artprice. Can
you tell us more?
Without transgressing the principle of confidentiality between the parties, our switch to
the SRD Long Only segment means that many funds that are statutorily prohibited from
taking positions in French companies on the SRD can now acquire lines in Artprice. These
funds have a very different approach to the French funds and essentially approach
valuation through the stock market comparison methodology. In our case, with our
Standardized Auction and Fixed-Price Marketplace, Artprice is perceived as a major player
in the Art Market on Internet. Logically therefore, we are compared with a number of
different companies including Sotheby’s which is the only publicly-traded auction company
in the world. This vision of Artprice leads to a very different valuation of Artprice
because they believe that our stock price does not at all represent the company’s true
Boursica: Can you be more specific?
In our first interview in June 2011, we gave you computing elements with specific examples
of valuation methods that are more than 120 years old (N.B. 80% of the value of an Auction
House is its client base – between $800 and $4000 per client – and the other 20% is its
reputation if it is well known. Hence according to this method, the valuation essentially
depends on correctly assessing whether a client is worth $800 or $4000, and this
assessment is based on strata of information about the client). So for Artprice’s teams,
myself and our shareholders, we are almost certainly at the start of a new adventure. I
would say we are like a company that is preparing an IPO on the Nasdaq, with, as a
significant advantage, the maturity and experience gained from 11 years of outstanding and
irreproachable performance on a regulated market. It’s very exciting and extremely
And your agreements in Asia… how is that dossier progressing?
In March 2012, we are starting a long campaign in China involving nearly 40 meetings with
major Chinese auction houses with whom we share much in common, including the
dematerialization of the art market, and they think like us, that the notion of physical
auction houses is outdated in 2012 compared with the Internet and in particular our
Standardized Auction Market Place which will have its own HQ in our future offices in Hong
Kong. Asia, which I have known well for 20 years, moves at a very different pace to the
West. It takes much longer to gain the confidence of your future partner. A business man’s
word is considered more important than a contract. But, at the same time, Asians are
capable of setting up a business at speeds that would make most Westerners panic. I think
that Artprice is well positioned in Asia where we are considered forward-thinking, far
ahead of the old Anglo-Saxon auction houses that are seen by Asians as sometimes overtaken
Since you mention the old Anglo-Saxon houses, what is your relationship with them now and
especially since January 18, 2012?
The balance of power that was established in 2005 with the Standardized Fixed Price
Marketplace Standardized has changed considerably. It seems that the two economies
(physical and digital) have each conducted in-depth reflections on their future. It is
true that the confrontation between the old economy and the digital economy in sectors
other than the art market have advanced the debate. Once again, the die is cast, with
nearly three billion Internet users compared with 50 million in 1999, hence my theory of
the economic paradigm shift.
Can you tell us a little more about this paradigm shift?
The old economy has finally realized that our 25 years experience on the Internet as Group
Server (which controls Artprice), of which I am the founder, cannot be acquired overnight
and is very expensive to acquire in view of the sophistication levels of today’s Internet
culture. In the art market sector, I recall anecdotally that the New York authorities
issued recommendations to wealthy New Yorkers to avoid a number of locations, including
auctions, due to the “Occupy Wall Street” demonstrations. That said, the big auction
houses are gradually liquidating their real estate or prematurely terminating their
leases. They have discovered that IT systems within secure Intranet networks, data mining,
behavioral marketing, indexing, databases standardizing the art market… these are all
heavy industrial tools with very high financial and technological barriers to entry, and,
sometimes, as in our case, under the protections of intellectual property that quite
simply prohibit anyone from setting up Standardized Marketplaces(R) on the art market
(without a license from us) since Artprice owns the different copyrights, including,
amongst others, the sui generis rights.
So what should we conclude?
The first conclusion is that the old school has recognized the value of the tangible and
intangible assets that constitute one of Artprice’s major treasures. The second point is
that the big auction houses have all invested in the Internet, usually via two or three
investment plans, systematically involving hundreds of millions of dollars, with generally
unsatisfactory and sometimes disastrous results. The third point involves the recognition
of a historical actor like Artprice and the ability to imagine, for the first time, a true
sharing of the art market.
How would the Art Market be shared?
Very simply, the whole segment of works under EUR15,000 is foreign to them, and yet it
accounts for a colossal proportion of the art market (81%). Between EUR15,000 and
EUR50,000, they are not really competitive in price terms. This raises the issue of works
of more than EUR50,000 and of course works in 7-figures which can be accompanied by
tailored services for both the buyer and the seller. It doesn’t take long for these old
auction houses to realize that their marketing benefits and seniority will not be enough
to balance their projected budgets for the next five years. They therefore need to take a
pragmatic approach by moving closer to us. Of course, we respect them, but we cannot do
anything other than refer to our Asian partners who have long anticipated the situation
and therefore have no further problems to resolve. It is however quite possible that we
will manage to find common ground because there is now a younger generation of senior
management running these old houses who are not letting the ghosts of the past get in
their way and are finally taking action. I firmly believe that in 2012 our shareholders
will have plenty of good and occasionally surprising news.
Can you tell us more?
Without revealing any secrets, we have key players who, with great maturity, have decided
to progressively adopt us as a white or gray label. It is obvious that within these
frameworks, the transfer of revenues from traditional companies that have been operating
art auctions for many years, using our Standardized Auction Marketplace for their own
account, is likely to have a significant impact on our share price. Currently, this is the
type of scenario we are experiencing on a regular basis: the CEO of a large international
auction house retires and is replaced by a new CEO of 35 who, immediately after his audit,
approaches us with a real desire to do big business, whereas his predecessor, close to
retirement age, considered Artprice in the best of cases as nothing more than an art world
UFO. Once again, patience has been an essential element in the success of Artprice since
In that sort of context, what then is your status?
In such cases, we work as an IT services house and central server and we charge recurring
fees for hosting and for the use of our software and proprietary databases.
Finally, a last word. In our first interview, you said that Artprice was only at 10% of
its development potential; then, in the second interview, you thought that 5% would be a
more accurate estimate. How much would you say today?
We are still at 5% of Artprice’s development, but the big difference is that in 2011, that
5% was only an intuition, whereas now it is backed up by facts and figures, which changes
everything for our shareholders and for us …
(c) 2002-2012 all rights reserved Boursica.com
Previous interviews of thierry Ehrmann, founder and CEO of Artprice.com:
- June 5, 2011
– October 9, 2011
Artprice is the global leader in databank on Artprices and indices with more than 27
million indices and auction results covering 450,000 artists. Artprice Images(R) offers
unlimited access to the largest Art Market resource in the world, a library of 108 million
images or engravings of artworks from 1700 to the present day along with comments by
Artprice’s art historians. Artprice permanently enriches its databanks with information
from 4,500 international auction houses and auctioneers and publishes a constant flow of
art market trends for the main news agencies and 6,300 international written media. For
its 1.3 million members (member log in), Artprice posts standardized adverts in what is
today the world’s leading Standardised Marketplace(R) for buying and selling works of art
by private contract or at auctions (regulated by French law alineas 2 et 3 de l’article L
321.3 du code du commerce).
Artprice is listed on Eurolist B by Euronext Paris (SRD long only) : Euroclear: 7478 -
Bloomberg: PRC – Reuters: ARTF
Discover the Alchemy and the universe of Artprice http://web.artprice.com/video/,
which headquarters are the famous Museum of Contemporary Art, the Abode of Chaos
Follow all of the art market’s news with Artprice on Twitter:
Contact: Josette Mey – tel: +33(0)478-220-000, email: firstname.lastname@example.org