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Rob: We’re speaking with Alan Bamberger of ArtBusiness.com about sourcing art to sell through your ebusiness.
Rob: So Alan, it sounds to me like credibility, authenticity, these are really critical things in the art world, and it leads me to think certificates of authenticity. Are these important? Who creates them? And when should you have them?
Alan: Yes, the appraisal and the certificate of authenticity are probably two of the least understood and most abused documents in the art business. A certificate of authenticity has to be from a reputable source, that is the key. And the contact information of that source and often the qualifications of that source to provide a certificate of authenticity must either be evidenced or explained in the certificate. You can’t just have something that says it’s by Picasso and there’s some illegible signature and that’s it. And it also has to be an original document, it cannot be a photocopy, because it’s easy to doctor photocopies. So you have to have full contact information and the more important the artist gets chain of ownership is extremely important. But it has to be from a reputable source, that’s the key, and a reputable source can include the artist, the artist’s publisher, a gallery that is a qualified representative of the artist’s work, that is a regular seller, not just someone who happened to get one on the secondary market somewhere.
Rob: So can you explain the chain of ownership really quickly in a little more detail?
Alan: Yeah. The chain of ownership would be Picasso gave it to such-and-such a dealer in Paris, and the dealer sold it to Mr. Smith in New York City, and Mr. Smith owned it for sixty years and then he sold it to Sotheby’s, and there’s a documented chain of ownership there.
Rob: Got it.
Alan: Any time you hear stuff like it came from a big house at the top of the hill and everything was great, that’s not a documented chain of ownership.
Rob: (Laughter) It came from the magic house.
Alan: Right, right, the magic house and everything the guy had was fabulous. That kind of stuff doesn’t work, it doesn’t wash.
Rob: Right. How can you determine if the seller’s claims are valid?
Alan: The method that you have to go about is they say something and you want names, dates, places, sales, that sort of thing. And then beyond that you want to be able to corroborate that at sources outside the seller. There are some artists and some dealers who are legends in their own minds and you have to be able to distinguish those from the ones who really represent art or produce art that is purchased across a significant range of the market, regardless of who is selling it. So basically you want proof that what they say happens actually does happen and it doesn’t just happen with them, it happens with other people too.
Rob: And how rampant is fraud? On the whole, do you think your chances are more likely that you’re dealing with an honest person?
Alan: I would say on the whole that your chances are far more likely that you’re dealing with an honest person. However, it’s really a function of how important the artist is. Most art dealers and most artists and most people who sell art are more than reputable, way up into the 90 percentiles.
Rob: Great.
Alan: I would say, though, that when you’re talking about famous artists, until you know what you’re doing, you have to do business with an established gallery, dealer, agent, representative, and those people have to show you proof that they are such. You just can’t find random people selling random bargains, that kind of stuff. That said, I have come across a website or two where everything is problematic.
Rob: And you know, look, what we’ve found with most sourcing things in our experience and of course at Worldwide Brands we’re in the sourcing business and talking to thousands of suppliers, millions of different products, the more detailed information you can have anyway, regardless of fraud, the better the details you have on your product the more powerful your sale is going to be, the more useful it’s going to be to your consumer. So your detailed approach is both helpful to prevent fraud, but also really complimentary to the product that you’re selling because you’ve got the information that counts.
Alan: Right.
Rob: I want to go back, we had the IRS question in the last segment.
Alan: Yes.
Rob: So what kind of appraisals does the IRS take?
Alan: You want to look for the words “fair market value.” And the definition of fair market value is the price that a willing buyer pays a willing seller, neither under duress to either buy or sell, and both with adequate knowledge of the product. That means that nobody’s able to pull the wool over somebody’s eyes, nobody needs money really fast, stuff like that.
Rob: Makes sense.
Alan: It’s basically with two knowledgeable people like when you go to a big store to buy a washing machine, you do your washing machine research, they present the washing machine, you’re both fairly on the same playing field, same level, you make the purchase. It’s just like that.
Rob: So let’s move on to the big subject of price. How do you determine if a price is fair when you’re buying and how do you set a price when you’re selling?
Alan: You determine that a price is fair when you’re selling mainly based on the artist’s track record, based on how far along that artist is in his or her career, based on how long it takes for the artist to make the art, how complicated the art is, what its physical dimensions are, its physical characteristics. This is for artists who are relatively early in their career, who are just starting out. The premiums get added on later. As the artist accomplishes more and more of the work progressively acquires a premium value. Let’s say the artist has a museum show, prices may go up 10% to 20% to 25% even as a result of that step up in the artist’s career. So it’s all pretty well quantified, far more quantified than people would think. In fact, there are databases, mostly paid, that contain millions of auction records of art that is auctioned internationally all the time. These databases are updated constantly with the latest auction results from all over the world. Of course, these are artists who are more established in their careers.
Rob: Sure. Can you give an example of such a site?
Alan: Yes, artprice.com would be a good one. There’s gordonsart.com for print prices. Artprice.com is sort of everything, it’s a catch basin, paintings, prints, photographs.
Rob: Great.
Alan: I use artprice on a regular basis when I’m doing appraisals and gordonsart.
Rob: Fantastic. Are there particular pieces that sell better online or particular types of art that sell better online or even when art is presented a certain way online does it sell better?
Alan: Yes. I find that the most effective websites, and these are individual artist’s websites as well as self-representing artists on eBay, and self-representing artists on eBay I should say should not be overlooked because there are great bargains. One of the benefits of the internet is that artists who are living everywhere can now get in and show their stuff whereas back in the old days nobody would have ever found them.
Rob: Right.
Alan: But regarding your question, it’s the artists who present images like, welcome to my home, welcome to my studio, it’s like you’re getting to know a person.
Rob: Right.
Alan: And that’s the artists who I find are most successful online and on eBay and some of them, it’s surprising, the art isn’t even that good, but they do such a great job of presenting themselves and selling it’s like, I like you, I’m going to buy something.
Rob: Right. So it’s credibility, authenticity, and then presentation, but also presentation with the context of just really identifying with the customer, making the customer feel comfortable within that setting.
Alan: Yeah right. At the base it’s all about people communicating. Here’s my art, it makes me feel a certain way, hopefully it makes you feel that way too, and here’s what I like about it and maybe you’ll agree, and maybe you’ll agree enough to buy some.
Rob: Yeah. It makes a lot of sense. Frankly, there are a lot of parallels that can be drawn from all kinds of retail in that experience.
Alan: Absolutely. Art is not this mystical commodity that only art people know about. There’s so much of that smoke and mirrors in the business that people exploit. Really, none of it exists, it’s very matter-of-fact.
Rob: Yes. I want to ask you one more question on pricing because we get this all the time. People say to us, how much margin should I put on my product? They say, 15.23%? And I always say to people pricing and margin are really relative to so many different aspects. Do you find that true in the art world as well?
Alan: Yeah, I mean, once again, it’s a function of you have to figure out what your expenses are with respect to selling the art and listing it online or renting a gallery space or what have you, and figure out how much you have to sell per month. And then you mark it up accordingly. It’s not like there is a set markup. Sometimes commercial galleries in very expensive real estate in, let’s say, downtown San Francisco or Soho in New York or Beverly Hills, places like that, they have to have huge markups just to meet expenses, they have to mark up at least two, three, four, five, six times.
Rob: Right.
Alan: But if you’re selling out of your house you don’t have to do that. And if you can crank up some volume you can cut the margins down pretty low. It’s just you have to get a feel for what it is, there are no set rules here.
Rob: How does someone sell their own artwork online, where should they start and what should they do?
Alan: eBay is a pretty good place to start. But I’ve got to tell you that if you don’t have a profile and you don’t have a name nobody can type you into Google, so they’re never going to find you unless, and here’s the key, you have to pepper your website with keywords that relate to the type of art that you produce so that hopefully people who collect that type of art will be fiddling around typing in general terms and they will happen to land on your website. It’s very difficult. For example, you can take out a free gallery on absolutearts.com and you can do some other stuff, but there are so many thousands of artists there you have to really work if you’re going to sell online to strategically position yourself, as it were, that people might find you.
Rob: So artists would do well to learn a little bit about selling online. That is our time today with Alan Bamberger of ArtBusiness.com. Please check out their site. Alan, thank you so much for your time.
Alan: Thank you.
Rob: Coming up next, our Product Source of the Week segment, when the Entrepreneur Magazine Product Sourcing Show continues. I’m Robin Cowie.
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