modern art pricing model newmenon
TRANSCRIPT
The paradox of modern art
Why do modern art values rise when the volume of modern art is exploding?
This would seem to violate the law of supply and demand
Maybe there is an answer that makes sense…
…that accounts for the sharp rise of modern art values since the 1980’s
…that accounts for the rise of branding
…that explains why modern art is moving away from the canvas
What is modern art?
Observe the action of modern artists
Modern artists deform reality by melting, misaligning, twisting, obscuring, and
dropping perspective
The various ways they do this can be organized into a taxonomy of modern art
Biologists organize animals by genus and differentia
Modern art can be organized by means of common forms and their permutations
A modern art form is the basic unit forPeak Art Theory
When the defining attribute of a modernist work is impossible to integrate on basic similarities
with other works, it deserves its own form.
The first artist who uses a modernist effect captures its formic value
The artist that is “first to the form” captures a place in history.
There are a finite number of forms.
Otherwise, we would not see similarities among artists or be able to differentiate innovators
from imitators
Formic value is not brand value.
If you want to own a piece of history, you buy for its formic value.
If you want to own something that others have owned, you buy for the provenance or brand.
Formic value and brand value are not the same…
Each gives a work intangible value separately
…but a work can acquire value on both
Back to the paradox…
Is the supply of new forms the same as the supply of modern art?
No.
Plotting the forms over time
Peak Modernism
1880 1930 1980
Picasso Warhol
Peak Modernism
95% of modern art innovation has already occurred!*
*Peak Modernism 1930± 50 years: 1880-1980*Few modernist forms found pre-1880 or post-1980
The decline of formic innovation would explain this:
Peak Modernism and Prices
1880 1930 1980
Supply is choked. That is the key factor.
That has price effects.
The Artist that introduces a new form is most prized—as reflected in prices.
Form Leaders
Records for Form leaders: $17M-$140M
MatisseManetMonet Van GoghKlimtPicasso
Renoir
PollockDe KooningRothkoWarholKandinsky
Two Facts
Most modern art forms arrived pre-1980
Works originating a new form only recently gravitated to the $10M mark
Why?
Insight of Peak Oil
Peak Oil Theory
Peak Oil says that ½ of the earth’s oil has already been consumed.
Peak Oil Chart
Consumptiondirection
*http://en.wikipedia.org/wiki/Image:Hubbert_peak_oil_plot.svg
Since oil is finite, and demand has ballooned, prices should skyrocket as the 2nd half
begins exhaustion.
The same pattern exists in the modern art market
Peak Modernism: Demand
Modern art carries no social stigma as it did in the 1880’s. More people than ever can afford modern art. Private collections are run professionally and gobble up art Tax-deductions abound for contributions to museums. Russia, Gulf-states, and China demand top art.
Peak Oil Feeds Peak Modernist prices
But the reason why art prices exploded, and not computer prices, is because formic innovations were exhausted.
Peak Modernism
1880 1930 1980
Picasso Warhol
Peak Modernism and Prices
1880 1930 1980
Summary
Most forms pre-date 1980
Market recognizes modernist productivity is exhausted
The post-1980 price surge in a low-inflation economy is justified
As the supply of new forms to market came to a trickle, prices of all forms jumped
But so did contemporary works because branding became an accepted substitute for
formic innovation
Formic innovation has to come to an end
Leaving standard formulas
That get ranked just like cola
Via branding.
Brands become a stand-in for forms, but that’s OK.
It is inevitable as modernism tails off.
Finding a new form is very hard today
But could an artist make a new and final form?
You have to take the basic principle of modern art to its
ultimate conclusion
What is its ultimate conclusion?
Modernism is an idea
that reality is trapped in a veil of appearancethat man cannot pierce
That was Kant’s idea.
Kant was a widely influential philosopher
Given Kant’s view, that reality is trapped in a veil, modern artists could either:
1. Present a view of a reality beyond the veil or
2. Smear out observed reality on the conviction that appearance isn’t important.
Either way, we get works that barely resemble our observed world.
Surrealism was meant “to contribute to the total discrediting of the world of reality.” 1
-Dali
“…none of us could use the figure without mutilating it.” 2
-Rothko
“The familiar identity of things has to be pulverized.” 3
-Rothko
That is why modern artists melt reality: to explore appearance, go beneath it, reveal it,
or simply obscure it, to emphasize Kant’s sentiment
Modernism is Kant
Modernism expresses Kant’s notion that appearance (perceptions) is all we have
Modern artists seek the noumenal at the expense of the phenomenal
To get a new form, then, take Kant’s ideas to their ultimate conclusion
INTRODUCING THE
NEWMENON™
Google’s Secret Edge (2007)
The painting is real but beyond the chains and veil
The desire to know Google’s Secret Edge hits the barrier that prevents one
from knowing it, which creates immediate tension
This is the closest you can come to Kant’s transcendental vision of appearance
shrouding an underlying reality.
A perfect representation of the modernist look with a contemporary hook
Integrity of Art
The more strongly you need or want to know an answer to the prompting Newmenon, the
more you will want to rip it open.
But, art is not meant to be ripped.
The Nemenon pits your respect for art against the inflamed desire to violate the veil.
This tension destroys the illusion of art’s accessibility.
Art is turned into a barrier.
Art is a barrier.
The viewer must respect the Integrity of the Newmenon and never peek! The owner
becomes the Guardian of its Truth.
This unites the collector’s integrity to the integrity of Art itself.
By working numerous levels of meaning at oncethe Newmenon is a tour de force of
modernist innovation
“intent makes the art”
Why is it a new form?
Plays on Kant’s theme. Painting is there (phenomenal), but not visible (noumenal).
But unlike anything by Picasso, Pollock, Dali, De Kooning, Kandinsky, Rothko, or Warhol
Uses a new technique. Combines the barrier with the concept art prompt, with intent to create tension, to leave everything to the observer’s power of visualization. Never done before.
Newmenon is a Mystery
The Newmenon never reveals, only suggests,
an answer to a tension question, a tension truth, a tension prompt.
This creates ecstatic tension: you want to know,
but can’t.
Truth is exclusive.
What is the Newmenon?
A new form that works the interplay between appearance and reality to the climax of the modernist sensibilities
How to Price a New Form?
Newmenon!
Negotiation and competition are the basic means of price discovery.
One can imagine a day when Microsoft fans decide it would be a coup to own Google’s Secret Edge.
While Google fans would be decidedly irritated by that prospect.
Valuation Under Competition
Imagine “Google’s Secret Edge” as a sort of mascot. Just as college students steal their opponents goat to “get their goat,” the banter of taking and defending the mascot would provide competitive auction energy.
Who knows where that might lead?
Only a bidding war could settle it
Pick a Starting Point
Here is another way to price art.
If a new form tends to be $10M in 10 years then we can identify a present value.
Present Value Simulation
10M/1.1^10=3.8m* 10M/1.02^10=8.2m* 10M/1.1^20=1.5m 10M/1.02^20=6.7m 10M/1.1^30=.57m 10M/1.02^50=3.7m 10M/1.1^40=.22m
10M/1.05^10=6.1m* 10M/1.05^20=3.8m 10M/1.05^30=2.3m 10M/1.05^40=1.4m
Shows:
10%, 5%, 2% discount rate for10,20, 30,40, 50 years
Present Value RANGE$3.8m—$8.2m
90% Venture Capital Discount
Fair Value$342,000-$738,000
Another way to value it is to take the best of the first 20 credible offers.
So, make a credible offer
If you don’t, you might be turning down the equivalent of an award-winning movie
role.
Regrets would abound.
If you would like to view Google’s Secret Edge
or leave comments, reviews, and read the artist’s own words:
Newmenon©2008-2009This document may be freely distributed, provided it
is unaltered. (version 12.02.09)
The preceding opinions are presented for educational purposes only. Art collecting entails
risks and collectors should do their own independent research before making decisions.
For full disclosure, Newmenon is pseudonym used by Lorenz Kraus.
Appendix
1. Dali quoted in:
The History of Surrealism, M. Nadeau, trans. R. Howard. Harmonsworth, UK: Penguin Books, 1973, p. 200.
2. Rothko quote from:
Abstract Expressionism, Davind Anfam, Thames and Hudson Ltd London, 1990, p. 143
3. Rothko quote from:Abstract Expressionism, Creators and Critics, edited by Clifford Ross, Abrams Publishers New
York 1990, Creators p. 168
What is a form of modern art?
A new presentation of the modernist idea using:• Drips• Smears• Fog• Fields of color• Melting of objects• Distortions• Line/color-focus excluding visual object
Modernist technique makes you ask “So, what is that?”
Formic Value
A form is a distinct category of modern art.
Forms use melting, smears, hyper-sized brush strokes, pure fields, dots, drips, and other such effects to deform reality.
The effect used is the basis of the form.
The first artist who uses a modernist effect captures formic value.
What the Peak Curve means for collectors:discovering a new form is very hard, but if
found is very prestigious
Peak Modernism indicates Modernist exhaustion, which explains why they
Moved away from paintingsTowards installationsNew media
In a word, exhaustion of canvas forms.
1980’s Price Surge
Top auction prices $3M early in decadeTop auction prices $30-60M end of decade
Price Surge occurs in a low-inflation economyExplained by Peak Modernism
Pricing a New FormPreviously recognized new forms have surged to the $10M
range. With that as a price target, a new form’s present value is a function of the time to reach it.*
• For art in 1950, that took about 40 years. • For art in 1960, that took some 30 years.• For art in 1970, that took 20 years.
*There is a declining time period for new forms to reach elite price levels, primarily because of form exhaustion from 1980 onwards. Of course, today’s market is more efficient at finding new forms, spreading the news, and competition is greater than ever for “trophy” art.
Newmenon In Development
• Wine Bottle Series: 50-piece $20,000 per piece (uses a material
never employed in art before!) • Hole Series: Memory Hole ($135,000), Bottom Rung Death Star Shaft
($125,000), and Bottomless Pit ($125,000), Singularity ($225,000)• And More Newmenon by Canvas
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END