Alison Harper, the editor and publisher of Australia’s Art Market Report, has graciously allows us to reprint some of the articles from her magazine. Dr Iain Robertson looks at how the system of creating value for contemporary art has developed over the past century. More about Art Market Report can be found here.

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The simplest actions are almost always the most profound. When the Berlin-based art database, ArtFacts (AFN), drew a connection between the reputation of artists and the price of their art at auction, an industry-wide revolution was at hand. Insiders always knew that an artist’s success was largely the result of social networks and the “taste” of a few key decision makers, but never before had reputation been measured so accurately against unprecedentedly transparent prices.  ArtFacts had uncovered the mystery behind an artist’s aesthetic worth, just as auction houses were “posting” the prices for their paintings and sculptures.

The origins of the market’s obfuscation lie in the murky and unconventional mid-19^th century world of Paris’ rive gauche, a time and place that writer Henry Murger captured in his Scenes de la vie de Bohème. In a series of stories in the satirical magazine Le Corsaire-Satan (Le Corsaire after 1847), he recounted the exploits of the Bohemians: “Gustave Colline, the great philosopher; Marcel, the great painter; Schaunard, the great musician; and Rodolfe, the great poet – for so they styled each other among themselves” writes Murger about those “frequenters of the cafe Momus”. Generations of artists since have so styled themselves but, as the market ripened, finance stepped in to provide some of them with untold wealth. They were, in the main, able to avoid the fate of the sculptor Jacques D who, Murger recounts, “gave promise of splendid talent; but poverty and misery did not give him time to bring the promise to fruition. He died of decline, in March of 1844, at the Hospital of St Louis, Ward Sainte Victoire, Bed 14.”

While the economic situation of the visual artist improved dramatically over the succeeding years, the perception of the true artist as an impoverished creator, working on the fringes of society, referred to – pejoratively – at the Salon d’Automne in 1905 as les fauves (wild beasts), persisted. The pictor economicus, the norm since the Renaissance, had become an outsider and a rebel. The key to the artist’s success in the capitalist society he (and it invariably was he) inhabited was, ironically, the commodification by the market place of the notion of rebellion into monetary value. The artist was now encouraged to play the Bohemian card for profit.

How finance turned the most economically asymmetrical activity into a potent moneymaking industry is the story of the art market from the end of the 19^th century in France to today. In the past the monetary measure of aesthetic value rested on the “selections” made by academies of art, and before that on the requirements of guilds and aristocratic patrons. Now, and for the first time since that unique event in the Netherlands in the 17^th century, artists had to rely on commercial intermediaries (art dealers and brokers) to introduce their production to potential clients. The names of dealers like Daniel-Henry Kahnweiler (1884-1979) and Paul Durand-Ruel (1831-1922) became almost as noteworthy as the artists whose work they represented. The system of creating value for contemporary art became more sophisticated as the first generation of practitioners – the Impressionists – died. A secondary market was developed to deal with the resale of the works of deceased or mature artists. Then, in 1929, at the moment the international economic system was about to collapse, the city of New York established the world’s first Museum of Modern Art dedicated to this day, it asserts, to reflect the “vitality, complexity and unfolding patterns of modern and contemporary art”. The museum acknowledges that the ideals and interests of the work it shows and collects originated in the 19^th century (and by implication amongst the Bohemians of the Latin Quarter), that its art transcends national boundaries and that these ideals are open-ended and so able to accommodate each new wave of contemporary expression. The Museum’s first director, Alfred H. Barr Jr (1902-1981), was largely responsible for the enhancement of the reputations of numerous artists that we now recognise as the key figures of Modernism. A blockbuster exhibition on the work of Van Gogh in 1935 fixed this artist in our collective mind’s eye more than any other.  In his famous diagrammatic map, Cubism and Abstract Art, which served as a dust jacket for the eponymous show in 1936, Barr uses colour to distinguish between internal (black) and external (red) influences on these new forms of art and creates a hierarchy of movements by varying the size of the nouns in proportion to their artistic relevance. Cubism is writ large, with neo-Impressionism and Cézanne marked as its greatest influences, while nearly all the subsequent noteworthy currents of Modern Art are attributed to Cubism, confirming the “selections” made by that coterie of 19^th and early 20^th century Parisian dealers. The diagram culminates in non-geometrical and geometrical abstract art.

Barr’s remarkably important idea-gram and the role that his institution played in cementing in the minds of collectors the importance of Modern and contemporary art, provided a reputation grid on which economic value could, in future, be inscribed. Other MoMAs were built in the image of the first, and the ideology of the primacy of Modernism over any other act of creation, to the extent that the word contemporary was appropriated to refer to art made solely in the Modernist tradition, triumphed.

By the time that the German academic Willi Bongard published his list of the world’s top 100 artists (kunstkompass) in 1971, the mechanisms that we now accept as the market for international contemporary art were well established. Primary dealers acted as market-makers for new “talents” and filters that prevented “junk” from polluting the key commodities. The secondary market enjoyed high levels of liquidity, circulating works amongst private collectors and, significantly, “positioning” art in prestigious (public) museums. It would not be long before auction houses published the prices of living artists through the first sales of Modern and contemporary art.

Kunstkompass, which was published in the broad sheet Art Aktuell from 1971 until Bongard’s death in a car crash in 1985, and thereafter in the magazine Capital, represented the first attempt to draw attention to the relationship between the reputation of the artist and the underlying socio-political networks. This was achieved by attributing “points” to a number of factors that were known to enhance an artist’s acclaim. A solo exhibition at the Museum of Modern Art in New York attracted the highest number of points. Lesser values were attributed to group exhibitions in European kunsthallen, catalogue essays, reviews and commercial gallery shows. Amusingly, points could also be deducted, if for instance an artist decided to live outside one of the main centres of the zeitgeist. Kunstkompass was, unsurprisingly, unpopular in the art world because it sought to unmask what can best be described as a variation of the quadrille. Artists/dealers, curators/dealers, collectors/dealers and curators/collectors spun artists’ reputations until their name and work were secure in the Modern pantheon.

ArtFacts (AFN) has joined up all the dots and taken the kunstkompass premise that an artist’s reputation can be scored, and married this to the collection of auction house data. The latter function was first undertaken in a comprehensive way by the British based Art Sales Index (ASI), which started in 1972 to publish art prices across a range of categories. It continues to do so today under its new owners, Louise Blouin Media. ASI picked up the reins from the British art economist and historian Gerald Reitlinger (1900-1978), whose seminal three volumes; The Economics of Taste, published in the 1960s, added commentary to selected prices for works of art dating back to the 18^th century, adjusted to the real values of the day. The importance of the work undertaken by ASI and Reitlinger lies in the range of salerooms they drew upon for their data. It is worth mentioning at this point that the Sotheby’s sales archive in London comprises possibly the largest single repository of price and object information that has not been transferred to digital media.

Technology has played a very significant role in ensuring that the volume of recorded prices has increased from the thousands of results collected by Reitlinger to the 3.5 million brought together by AMI, to the 25 million assembled by the French based ArtPrice (AP). A small army of data in-putters inhabit the subterranean offices of the French company, recording the prices and images of lots that have sold at auction houses from around the world. ArtPrice’s nine departments deal in a range of sectors from current and past prices to the fine wine auctions. The user is able to glean instantly a great amount of single picture information from the site. Through its indicator, the AP asserts that it can provide the indicative past and present value of a given work of art, using the economic tool of hedonic regression by which the various constituents and properties of the work of art are taken into account and set beside past prices. But despite AP’s useful extras, such as its indicator, confidence index and graphic artist’s price trajectories, it is experiencing fierce competition from rivals ArtNet and Chinese-based Artron. Other sites that play a significant role in the art world are the British Art Market Research (AMR), which covers the greatest number of sectors and provides extremely useful graphic indicators on price shifts in markets other than fine art, and the American Beautiful Asset Advisors (Mei Moses Index) (BAA). The AMR’s methodology is based not on past prices but on a select basket of goods that is seasonally updated and the BAA’s on repeat sales information. The Australian site, Art Sales Digest (AASD), which has records of the sales of Australasian and aboriginal artists dating back to 1969, but also registers the sales of all works sold in the continent, in common with its competitors, offers market comment and news. The recently launched Australian Indigenous  Art Market 100 (AIAM100.com) is working in similar ways to ArtFacts, albeit on a much smaller scale, by creating a value measure of the top 100 indigenous Australian artists and ranking them according to their  ‘career performance’. None of the databases attempt to predict the future value of art and antiques nor ask investors to speculate on an all art index. The systemic problem with art as an asset remains the inability of any of the indices to capture all the auction house information and any of the dealer or private treaty sales prices.

The niche territory that AFN occupies sets it apart from the other websites. First, it constructs a fluid ranking system of the world’s “highest regarded” artists and second, places their critical status beside their average prices at auction. This allows a collector or investor to monitor the intrinsic value of their “holding” against its market price. It is possible, in these circumstances, to refer to an artist as being overpriced or undervalued, and to introduce to the convoluted world of contemporary art valuations much needed transparency. A particularly interesting aspect of this knowledge revolution is the site’s peer group analysis graph, which compares the critical reputations of half a dozen like-minded artists over a set time period. It is fascinating to see, for example, that despite the high levels of curatorial endorsement given to Joseph Beuys, his critically neglected contemporary Andy Warhol has comprehensively out-performed him at auction. All this has only been made possible by AFN’s huge online archive of contemporary art exhibition history, dating back to the Salon des Refuses (1863). The Salon des Refuses was the first of the unofficial Salons that stood in direct opposition to the Salon d’Apollon within the Louvre Palace and resulted in the triumph of the independent dealer-led market over the Academy’s and state’s selection.

A great deal of weight is given by AFN to MoMA curators around the world, with the highest number of points awarded to artists who are represented in exhibitions and collections in American and West European kunsthallen. The weighting of points in favour of the West’s institutions and curators will have to be re-adjusted when the major cultural projects in the Middle East and East Asia are complete and the zeitgeist moves slowly but surely away from its traditional strongholds. ArtPrice has already shown us that the turnover of the top Modern Chinese artists, much of whose work is sold through Beijing’s two largest auction houses, Poly and Guardian, is now comparable to that of their Western peers. How long will it be before ArtFacts reveals through China’s powerful, neophyte cultural institutions, the latent critical value of the new wave of contemporary Chinese art?