E Business Final Paper

Brian Fraisse
ISM – group c

E-Business

A new way for the contemporary art market

« If you’ve ever wanted to buy a piece of work but have never had the financial means to, now’s your chance to get involved. Buying and selling shares in artworks has never been easier than on the My Art Invest exchange platform. »

My Art Invest

Table of contents list

Introduction of the company 3
An innovating e-business model diversified 4
The core target 5
Sourcing of artworks 6
An innovative internet platform : the new e-business model 7
Conclusion 10
References : 11

Introduction of the company

My Art Invest :

Tom Bastok David founded the company MY ART INVEST in January 2011 to open the market investment in contemporary art to small investors worldwide on the Internet.
The concept is to deploy :
• An online gallery offering world-rated artists, carefully selected, in February 25, 2013, 115 works have been uploaded and available to investors
• A place of investment in contemporary art reducing the entry ticket of this type of investment, by dividing each piece into 100 equal parts
• Establishment of management fees on the resale of shares of a work of art
The company holds a diversified its operations through:
• In direct art sale to individuals
• The deployment of an offer for companies (B2B)

The web site of the company is : www.myartinvest.com

My Art Invest is on an innovative positionning on the contemporary art market because actually if you want buy a contemporary art you should go in a galery and you should paid all the price. A lot of people who buy art, it’s people who have a lot of money and they put the art in their galeries or in their home but My Art Invest is focus on three activity for generate benefice, not just the sale of art…

An innovating e-business model diversified

My Art Invest is positionning on three differents activities for generate benefice :

Fisrtly the cession of part of artwork at individual investors.
A gallery on the internet offering world-rated artists, carefully selected.
A place of investment in contemporary art, with:
• A primary market (buying shares of artwork to My Art Invest)
• A secondary market (resale of works between members of the site)
• 104 works were on sale between the opening of the website (March 2011) and September 30, 2012
By reducing the input of this type of investment ticket:
• Each work is divided into 100 shares (or 1000 as part of a short-term development), bringing the entry in values between 4 € and 235 € on the first ticket market for an average of 35 € and average basket by buyer of 125 €.
• The value of the works currently on sale is between 400 € and 25,000 €.
• The shares can then be sold on the secondary market, named scholarship exchange, investors then having the opportunity to realize a profit on their purchase : they pay management fees for the sale and purchase of their shares.
• If at the end of a year of on-line keeps a picture of unsold shares, the investors acquired one or more are reimbursed up to the price they paid.
• At the end of five years following the sale of a work first market, My Art Invest meets the current owners of the shares and organizes its disposal (in all) on the real market.
It’s on this activitiy than i focus because the innovation is here cause the web plateform to put in link customers and artwork.

Secondly, the direct sale as art dealer:
• Customers of My Art Invest ask teams society choose for them works of art and buy their.

Thirdly, the development of an offering dedicated to major accounts

The core target

The concept My Art Invest is addressed :
For the "new market" dimension:
For small shareholders to diversify their asset classes by investing in art with an reasonable entrance ticket
For young art lovers assets to engage in investment through a fun and practical way

For the "tax exemption" dimension:
For individuals buyers to exemption from the ISF
For large carriers investment to the diversification of assets and the resolution of the issue of storage works
Purchase of works of art on behalf of large companies . An activity for large companies on the redevelopment of areas with a budget for the purchase of artworks. In fact, the major French and international companies see in contemporary art means an investment with lower taxation and a positive impact on their brand. Through the creation of dedicated structures such as foundations, they dress their spaces accessible to the public in contemporary art. My Art Invest has legitimacy among the creation of its innovative platform, which by its position to enable investors to make capital gains. Thus, the strategy of the company is based on the selection of works brought to appreciate in value. Similarly, the major market players support the French and international contemporary art is a key asset.

Sourcing of artworks

The sourcing of artworks t is done in the world My Art Invest has a network of galleries in the world:
Paris, London, New York, Los Angeles, Berlin, Switzerland, Japan
Artprice, a website which lists all auction sales rooms of the world :
Leader of the databases and indices of Art
- More than 27 million indices and auction results covering 450,000 artists
- Permanently enriches its databanks with information from 3,600 auction houses
- Publishes continuous trends Art Market for the main agencies and 6,300 press titles worldwide
- Diffuse to its 1.3 million members, standard ads, which now is the first global marketplace for buying and selling works of Art
- Artprice Images provides unlimited access to the largest Art Market in the world, a library of 108 million images or engravings of works of art from 1700 to the present day commentary by its historians.
Beyond its Standardised Marketplace, Artprice has the world's largest file Fine Art qualified customers. This client file (preserving logs customer behavior in accordance with the various directives) is in the art market, based on the success of cataloged auction since the birth of the art auction in Europe early nineteenth century. The selection of the artists referenced on the site responds to a detailed next slide and integrating rigorous process including
Rating defined by a gallery or auction house
Support the artist by an international gallery fame
Approximately 95% of artists selected follows this criteria

The selection of artists meets a rigorous process including analysis of the following criteria:
Period of artists: contemporary art / modern art
• Existence of a market listing auctions ?
If yes :
• What percentage of the rate of returns ?
• What level of rating ?
• Existence of records in sales room ?
• Existence of a listing in galleries ? Which ones ?
• In France ? In Abroad ?
• What price gallery ?
• Attendance at fairs ? Which ones ?
• Acquisition of works by collectors recognized ?
• What changes in prices over a period of 4/5 years prior to today ?
• What future projects ? Collaborations, exhibitions ...
• Are there any editions of prints ?
• For photography :
• What type of editions ? Only limited ? Multiple formats on an image ?

A summary of these criteria is achieved and comprehensive analysis helps stop decision on the selection of the artist.
An innovative internet platform : the new e-business model

According to Sotheby’s and Christie’s the market for the modern art is composed to 68% of public transaction of under 5 000 € transaction and the majority of artwork than My Art Invest sales are under 5 000 €.
The goal of this business model is to facilitate the purchase and the investment.
In contemporary art we could identify four businnes models :
Business models centred on innovative art :
This business model is principaly composed to association, so not to profit to the gallery, people whose composed this business model are student of shcool of fine art who want developp and create a new innovative practices with professors artist network and thus they create thier own new network. These collaborations include co-publication of catalogues, exchange of exhibitions or organization of joint exhibitions, and accommodation of artists in residence. All of this project have to goal to facilitate and help students for their futur professional life.
This allows to confront innovation versus tradition.

Business models centred on traditonal art :
This business model is principaly composed to dealer network. The goal is to facilitate the promotion of artist in local city, who don’t have and who is not connected with expert network. This galleries is made for offering local artwork at the customers and all of artworks are strictly selected. For the promotion of the gallery, the communication is minimal and the only examples are the flyers distribution by tourist centers. In France, the art market regional (outside Paris) is mostly composed by this business model.
This allows to confront artwork versus project.

Business model centred on the artwork :
The art gallery is at the center of the art economy and it’s the intermediary between the artist and the customer. In this business model, they is not expert and the price of the artwork is fixed by the gallery.
They are three types of gellery in this business model :
Point of sale gallery : it’s the intermediary in the art exchange and when the artwork is sold the artist takes the half part of the price and the gallery takes the other half part. The gallery represent the artist and the artist can be represented by many galleries. The artist is at the center of the value-chain Promotion gallery : it’s small gallery who are managed by people who are studie in art history and are worked for cultural institution. The network of the gallery is very complex because the gallery deal with musuem, regional office and the ministry of the culture for example. Mostly of those galleries are young and have difficult to survive cause the finance side.
Springboard gallery : it’s the not for profit variation of the promotion gallery. The gallery was often create by teachers, holders or former. The gallery is a part of the institutional network. These galleries are often the first step in the career paths of fine art graduates.

Business model centred on the project :
This model is focus on one artist and the goal is not to sale artworks and obtaining the financing for the artist. The only limite is the time and the space each new project. These project are mostly financing by sponsoring, public financial bakers and associations.

My Art Invest is founded on a new business model based on e-business. The project is a platform who put in link artits and buyers. My Art Invest use an other site to facilite the selection and than the selection will be of good qualitiy. The platform is a market place for people who want invest in the art and don’t want or don’t have the space to stock the artwork in their home. It’s an innovative platform because You can buy just one part of the artwork like part of the capital of a company. You can keep your part or wait to the value of the artwork increases and sale your part(s). So the transaction model of My Art Invest is based on the same system than the stock exchange system : a system based on the speculation. That the principal function of My Art Invest.

To explain more precisely the business model i will make the business model canvas :

Key partners : gallery and website specialized in art (to fixed price of artwork) it’s a good partnership because it’s the first website than you can buy just some part of the artwork for investnment
Key activities : the purchasing, because you should find the best artwork at the best price
Value proposition :
My Art Invest deliver to the customer a new means to buy artwork, they need to customer who want invest in art and who don’t have space to stock the artwork
Customer relationship :
My Art Invest should have a trustly relationship for than the customer buy the artwork
Customer segment :
People who have money to spend, to invest in art but not enough for buy the fully artwork
Key resource :
My Art Invest needs to have good suppliers to buy artwork because it’s the product than My Art Invest sales
Distribution channel : by the website for buy artwork and the warehouse or own gallery of My Art Invest to stock the artwork
Cost structure : the maintenance of the website and the purchasing of the artwork
Revenue stream : the customer of My Art Invest pay for the simplicity and clear means to buy artwork and stock it, customer pay by internet by card That a company needs to be sucessful at short term are the attractivity for the customer, the investor and here the artist and the galleries the agility and here My Art Invest is agile by the innovation of the concept and the business model (the platform) the ability to be efficiency, buy a good artwork to sale it in a minimum time
The main features of the platform :
• The website has been online since www.myartinvest.com March 7, 2011. He had three versions since its launch, the last line in December 2012.
• The latest version is developed by computer, based on a specification co-authored by teams My Art Invest and Dominique Amphonesinh of the agency Moscoo.

Operation :
• On all tools with a web access :
• Computers : all web browsers
• Smartphones
• Tablets,
• Automatic resizing

Features :
• Managing first contract,
• Managing the secondary market (stock market exchange)
• Management of accounts of members of My Art Invest
• Presentation of works / artists
• Forum : allows members to exchange
• Blog : powered by Team My Art Invest
• Social Networks

Back Office:
• Extraction for accounting,
• Concordance for items of mail,
• Monitoring of the historical per unit / investor / work
• Credit Management investors.

Dominique Amphonesinh of the agency Moscoo, operates in the following manner:
• Support teams in formalizing the specifications of the Web platform
• Council planning and design of the website,
• Server maintenance

The internet platform is the core of the business model of My Art Invest.
• It has been specially developed for the activity of the company by a team of subject matter experts.
• However, version 2 (online February-November 2012) has experienced operational problems that have disrupted its activities
• Thus, the performance of sales in the primary market for the year 2012 are significantly reduced.
• Version 3 was launched in early December 2012 and was very well received by members My Art Invest.
• The site has indeed recorded :
• 1900 visits on launch day
• 500 to 700 visits per day during the first week
• 50 000 € turnover in the first week

Conclusion

My Art Invest is very innovative for the customer as well as the supplier (artists) or galleries because they propose a new way to buy artwork, a new experience with the purchase of the artwork by part. I think My Art Invest is positionning on a new market place, you can do investment in art, easly and quickly. They are more and more people who are target by this new concept, more and more people want invest but don’t know how and in what because buy a fully artwork is very expensive but with My Art Invest, people can invest in many artwork for not a lot of money. I think My Art Invest has created the market of the sharing of artworks, and they positionning on a niche market.

References :

EBSCO Source :

Moureau N, Sagot-Duvauroux D. (2012). Four business models in contemporary art : International Journal of Art Management

Moureau, N., and D. Sagot-Duvauroux. 2010. Le Marché de l’art contemporain, 2nd ed. Collection

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Agnello, Richard J. "Investment Returns and Risk for Art: Evidence from Auctions of American Paintings." Eastern Eco- nomicjournal. Vol. 28, No. 4 (2002), pp. 443-463.