Deloitte Art & Finance Conference, Luxembourg

Deloitte’s 11^th Annual Art & Finance Conference took place in Luxembourg on Friday 26^th October and focused on the role of technology within art and finance sectors. The event featured over 35 international industry leaders including tech experts, art lawyers, start-up innovators, gallery owners, art collectors and art dealers. This included ArtMarketGuru’s Founder Frédéric de Senarclens who moderated the first panel discussion of the day: The challenges to deploy blockchain in the art market to allow fractional investment. Here the main questions asked were:

• Can blockchain technology allow for a more efficient way to share the ownership of an artwork?
• Could blockchain technology reduce the cost of managing an art asset?
• Could blockchain increase trust between separate parties?

Frédéric de Senarclens introduced the main challenges that blockchain and art investment presented including the lack of trust due to lack of transparency and regulation as well as illiquidity and the cost of doing business. The panel included Dino Lewkowics, Member of the Board of Directors at 4ARTechnologies, Frédéric Laffy, CEO at Danae HI, Niccolò Filippo Veneri Savoia, Founder and CEO at Look Lateral, Lukasz Radawiec, CSO at ArtWallet and David Dehaeck, Co-Founder and CEO at artfintech.one.

Other themes explored throughout the day included:

• The challenges of deploying blockchain in the art market to allow fractional investment in artworks
• Art, Law and Technology. How do the three intersect and what challenges do they present?
• Risk Management. How can technology support transparency in the art market?
• Big Data & Artificial Intelligence: How to improve Analytics, Financial Decision & Experience in the art market?
• Investment in ArtTech companies

We spoke to Hugh Jennings Senior Consultant of Strategy & Operations at Deloitte UK who shed some more light on the discussions that took place throughout the day.

What were the core concepts discussed on the day? 

Deloitte’s 11^th Art and Finance conference was dedicated to exploring the opportunities and challenges that technology is introducing to the art sector. An array of established and emerging tech was championed; from social media to big data, AI-driven art creation to digital fingerprinting, and of course blockchain. In the same breath, caution was advised: a need for sustainability and robustness to outlive the typically slow adoption rate of new technology in the art industry. The core concepts were framed by the five panels of the day: fractional investment enabled by blockchain, the legal challenges presented by disruptive technologies, risk management and the ongoing question of trust, big data and the transformative power of AI and finally, how and why the investment landscape is irrevocably changing due to technology.

In reference to technologies that are disrupting the art market what problems/issues were discussed?

Hot topics of the day were the intrinsically linked challenges of both blockchain and data.

Abby Brindley, specialist art lawyer at Mishcon de Reya, counselled that the ongoing challenge of verifying authenticity and art provenance remains regardless of blockchain. Any blockchain is only as good as the data put into it, and so the same vetting of information to ensure erroneous data is not set in ‘digital stone’ is required. Furthermore, blockchain-enabled solutions must reach a critical mass to be effective, i.e. enough players in the artwork’s lifecycle must adopt the blockchain system for it to become valuable.

The art world is rich in data; however, the sharing, accessibility and cleanliness of its data remain fundamental issues. Auction houses’ data may be readily available, but for galleries, collectors and other private organisations, data often remains a closely guarded secret. In the same way that blockchain requires critical mass to be effective, the art market data pool remains murky due to it lacking the holistic picture.

The issue of liquidity has been touched on a few times in conferences like these, were there any new/interesting points made? 

Art is still considered relatively illiquid compared to other traditional assets.  However, because of technology disruption in the market, the meaning of liquidity is changing. Liquidity is no longer about turning art into cash, but about making the art itself more obtainable, accessible and liquid.

Digitisation of artwork and physical recreations using 3D printing are some of the catalysts driving liquidity in the art market today. These tools may offer a solution, yet in doing so spark debate relating to the value erosion of the original artwork.

Often it is the bigger companies who seem to be nervous about blockchain, was this true on the day? Did anyone discuss reservations towards specific technologies? 

As in all sectors, incumbents are prudent to be wary of disruptive forces and the new kids on the block. However, Christie’s teaming with blockchain-secured art registry service Artory for the sale of the Barney A. Ebsworth collection proves a willingness to trial and trust in new technologies.

Undoubtedly, different organisations will adopt blockchain and other emerging tech at varying rates. Even if companies are nervous about the uncertainty in the market due to the shake and re-deal caused by blockchain and ArtTech, the conference focused more on the opportunities rather than concern.

What are people disagreeing on? 

There is unanimous agreement that technology is here to stay in the art sector. That said, with the market poised at the beginning of its digital transformation, organisations and investors are choosing to back different emerging technologies and solutions.

Blockchain’s potential to solve the fundamental market problems such as provenance, transparency and security, whilst also enabling the democratisation of art through fractional investment makes it a current favourite.

Artificial Intelligence presents an equally exciting proposition. Quantitative analysis on valuation and market trends, coupled with pioneering qualitative applications such as image recognition, stylistic analysis for fraud detection and even art creation, demonstrated by Parisian collective Obvious’ with the Portrait of Edmond Belamy, highlights the power and diversity of AI’s use cases.

Blockchain and AI are just two technologies in the rapidly expanding toolkit available to the market today. Organisations cannot adopt all the technologies at once.  Depending on each organisation’s market opportunity, certain technologies are more valuable than others.

How are technologies affecting the traditional experience of viewing an artwork in a museum, gallery or art fair? 

Extra dimensions are being added to the spaces in which art is exhibited and the experience of viewing art itself.

Digital artwork has become commonplace on programmes of leading fairs, galleries and museums worldwide, due to the reflection it offers on contemporary society. Digital art has an immediate effect on the physical space where it is experienced, increasing interactivity between the work and audience.

Virtual reality and augmented reality provide artists with the ability to envelope their audiences in an alternate reality, either in situ, or through creating entirely online or virtual exhibitions. These levels of mediation are hugely subjective, heralded as the next frontier in art by some, while shunned as a gimmick by others.

The experience of viewing art remains a personal question: is the magic of viewing the Mona Lisa augmented or eroded if it is experienced through a headset, while sitting on your sofa, in your pyjamas?

Tokenisation of artworks is an interesting topic and one that was discussed, what is your view on fractional ownership? 

On a simple level, fractional ownership offers a solution to the high cost of art. Through sharing ownership art becomes cheaper to the individual consumer, and for new entrants to the market this is both encouraging and exciting!

Tokenisation also reflects a behavioural shift in the wider society today. The sharing economy giants of Uber and Air BnB are reliant on a change in mind-set of the consumer; a willingness to consume, share and experience. Tokenisation via blockchain offers the practical solution to fractionalise and share art. It remains to be seen if the mind-set shift will be adopted in the art sector.

Lastly are there any key quotes/thoughts/interesting facts that stuck with you from the day?

Technology will undoubtedly continue to improve interactions between the three sectors of Finance, Art Businesses and Culture. Ideas, conversations and debate at the conference were inspired by strong representation across these three sectors, as well as a truly global audience with representatives from twenty-six countries, highlighting the significance of the technology-focused agenda.

For us at Deloitte it was a particularly exciting year with nine member firms attending. As our Deloitte Art and Finance community grows globally, we will continue to support and accompany our clients and the sector through this technology-led revolution.

A final thought: one speaker evocatively described the art world today as being in the ‘landrush phase’, a chance to stake a claim to an unregulated landscape. There is no doubt that the opportunities technology is unearthing in the art sector today are immense. The time is now!

Cover image: (c) Blitz Photo Agency/Laurent Antonelli – from left to right: Frédéric de Senarclens (ArtMarketGuru), Lukasz Radawiec (ArtWallet), Niccolò Filippo Veneri Savoia (Look Lateral), Frédéric Laffy (Danae HI), Dino Lewkowics (4ARTechnologies) and David Dehaeck (artfintech.one).