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Interview with Hans Neuendorf and Thomas Eller


From left to right: Thomas Eller, Hans Neuendorf and Marek Claassen

AfN: We are in the headquarters of Artnet.com in Berlin, and this is an interview between Artfacts.Net, Vernissage.tv and Hans Neuendorf, founder of Artnet.com and Thomas Eller, editor of Artnet Germany. Hello Mr. Neuendorf; Hello Mr. Eller.

Mr. Neuendorf has recently received the Medal of Honor from the National Arts Club in New York, and Artnet.com has just announced an exclusive collaboration with Art Basel. We want to take this as an opportunity to congratulate Mr. Neuendorf for these achievements and to talk about the career of Hans Neuendorf and Thomas Eller, about online services, auction houses, galleries, art fairs and about the current development in the contemporary art world.

To start with you, Mr. Neuendorf: It is said that you've been one of the first one's importing American pop art to Germany as a gallery owner, that you've been co-founder of the first art fair in the world, and that you've been the first one introducing an online database system with pictures. Can you tell us what is driving you being cutting edge? And where does all that creativity come from?

Hans Neuendorf: I was very frustrated as an art dealer, over many years dealing with the insufficiencies of the art market. There was no price transparency; clients didn't know what to pay. Was the price too high? Was it too low? Everybody used old auction catalogues and the results, and we kept sometimes large libraries of these in order to find out prices but they're not alphabetical, so it was a very simple thing to introduce an alphabetical online-service for art prices.

AfN: But even the platform of dealing art in a fair was completely new at that time. Had this something to do with transparency as well?

Hans Neuendorf: Yes, it was the first time that clients, collectors, actually had an overview of what was being offered at the market.

AfN: And this is, until now, the main place for galleries to sell art, isn't it?

Hans Neuendorf: Definitely. Art fairs have proliferated all over the world, and Artnet - if you want to look at it that way - is an international art fair online, insofar as it does deliver an overview of the art market and galleries. I mean there are over 1,500 galleries. That's about - I think - five times as many as in the Art Basel.

AfN: Speaking of Artnet, what is your role in Artnet.com are you still active in daily business?

Hans Neuendorf: Yes, I am. I'm CEO of Artnet.com. I live half in New York, half in Berlin, and I am running the business. All the leading people are reporting to me...

AfN: So you are still in charge.

Mr. Eller, you've been successful as an artist. I will never forget the little self portraits mounted on board my friends used to collect or these huge bottles in motion, photographies mounted on aluminium. How did it come that you dedicated a major part of your lifetime to Artnet.com?

Thomas Eller: When I first met Hans Neuendorf in New York, where I've lived for eight years, and he offered me to bring Artnet to Germany, I thought it was a great challenge, especially since all the rules in the art world had changed very much over the last 10, 15 years when I was active as an artist. And I saw a good reason in expanding what I already did - mainly thinking about art and trying to figure out why it had proliferated so much, and what different things are in the market by then. So in a way as it is, we kind of share the same problem: The market has grown to an extent that you don't really know how to judge it, mainly from the point of price transparency, but also from a critical point of view. There is virtually no art criticism left, and I think I had some very good suggestions on how to run a magazine, and how to start creating new parameters in order to understand the critical aspect of art much better. So I thought it was a great challenge, and I was also looking forward to coming back to Berlin. It's a good city. After eight years of New York - a city that is only concerned with the market aspect of art - I saw much more creativity in Berlin, and that's why I like to be here, to live in this environment.

AfN: You recently received an award - the "Käthe Kollwitz Preis". Did your artist career suffer? Did you do like Hans who stopped with his gallery and dedicated his whole life to Artnet.com? Did the same happen to your artistic career or are you still working?



Artnet Office in Berlin

Thomas Eller: It's funny. I mean I am working here more than fulltime. This is really not a job that you do on the side.

Hans Neuendorf: He's a full time artist and a full time operator!

Thomas Eller: It's funny enough that the minute I showed up here people remembered and included me in a couple of things, and - of course - to be awarded a prize is a great thing, and I would not turn something down like that, but this is not something that can be sustained but I am very energetic, and I want to change a couple of things.

AfN: Speaking about changes: Since the seventies the auction houses aggressively expanded into the core business of the galleries: that is dealing directly with the collector of contemporary art.
Sotheby's and Christies are controlling literally the art market. Mr. Neuendorf, you've been a gallery owner and the majority of your current income is by serving the galleries' needs on-line. What do you think, will it come to a show-down between the galleries presenting themselves in mega fair events and the auction houses engaging more and more in contemporary art?

Hans Neuendorf: Well, that's not a thing of the future. If there's a show-down, it's already there. But I have to say that the large auction houses are far from controlling the art market. They control 15%. The galleries and the aggregate are a much larger component of the market. Furthermore, the galleries have the knowledge. It's the galleries that form the connection between the collector and the artist, and therefore, the galleries are the most important players in the art world. In term of inventories for example; the galleries have a huge inventory of art works, they have a lot of money at risk which auction houses do not have, so I think the galleries are the most important players in the art market. However, we also need the auctions because there is no mechanism that is as successful in determining the level of value for any artwork as a free auction bidding process.

AfN: ...and it's transparent...

Hans Neuendorf: Exactly, and that's the basis of our art price database because only auction prices are public, and we publish them. Insofar everybody knows what the value is.

AfN: So where is the show-down then? It sounds more like shaking hands.

Hans Neuendorf: Absolutely. They are all in each other's pocket. They work together, and it's a very beautiful cooperation. We need both elements in the market.




Hans Neuendorf


AfN: Mr. Eller, you as an experienced artist, and Mr. Neuendorf, you as an experienced gallery owner, are representing the primary market. Both of you are also representing an on-line network whose subject is transparency. Can you explain to us what transparency means for both of you? And why does transparency help the galleries?

Hans Neuendorf: Well, transparency - first of all - is not the only goal we have. What we are striving for is the efficiency of the market; that means not only price transparency, but also a market overview which we are giving to the galleries' network, and also a transaction platform which makes it possible to sell art works at short notice and at low commissions. This is something that we have not achieved yet, and that's why we are introducing auctions on our own platform, online-auctions for art. In other words, efficiency of the market is a possibility for collectors and dealers and the auction houses to work more effectively together, and to have a low transaction cost.

Thomas Eller: One cannot really underscore enough the vision that you had when you first started Artnet at a time when the technology was not even there to present all those things online. The market was much smaller, and at the beginning, I guess, Artnet was facing a lot of resistance by the galleries and by the auctions houses because they all thought, if there's too much knowledge, it's becoming problematic for them. The opposite is true...

Hans Neuendorf: It's true for every market in the world. I mean, why should perfectly normal standard rules and use of information in any market - be it real estate or be it the stock exchange or be it manufacturing - why should that not apply for the art market?

Thomas Eller: Effectively everybody found out that the market actually had grown, and there are a lot of people who attribute that to the advent of Artnet. Since we are providing this information, everybody had a better basis for negotiations meaning: Artnet builds trust in a community where information was scarce. So the more people build this trust, the more people enter the market, and that's pretty much what we've seen in the last ten years.

AfN: Wasn't there a saying in the art world that in muddy water you catch the biggest fish?

[Everybody is laughing.]

Hans Neuendorf: Some dealers still think that that's their business. Buy for too little money from a little old lady and sell it for too much to a stock broker. I don't think that's a business. I think that's luck. Occasionally, it happens, but I think an efficient market is bringing high turnover and low margins.

Thomas Eller: It also makes room for a lot more artists. A lot more artists can enter the market and become active and still make ends meet and proliferate in that kind of environment. So it's not only about the big fish. I mean that's what everybody is talking about, the big prices that are being realised, but there a lot more people in there now who don't have those record prices but there's a market for them now, and that's also something that has been achieved.

AfN: If you would picture the subject of transparency, or efficiency, in the primary art market as a road from A to B. Where do we stand? And what lies ahead of us?

Hans Neuendorf: We haven't even reached the half point. We have done a lot with the market transparency, with price transparency and market overview, but we have not achieved everything. Still dealers do not relinquish their prices to be published before the fair, so that's a big minus because I think the market would improve enormously, and dealers would profit enormously if that was the case. So we're working on that. And we have not achieved yet either to bring more artists into the market. We must not forget that - among all the talk about very successful artists and very high prices - there is a very large number of artists who have no access to the market, and many galleries cannot afford to bring them access to the market because their rents are too high, their costs are too high, so they have to have a minimal level of price in order to even start. And all that stops the market… I think that is where online can help a lot because it doesn't cost us very much to publish these artists. Which is why we are now publishing artists' works catalogues, we are publishing monographs, also on artists who are not very famous.

AfN: I see… What do you think, then: how many artists are there worldwide?

Hans Neuendorf: I don't know, but I know that - in the US alone - there are over 40,000 artists coming from art schools every year. So I think there are hundreds of thousands of artists. In any case: a much larger number than there are galleries.

Thomas Eller: I'm always saying that there are more artists alive right now than ever existed before in history.

AfN: To come to the online business. Artnet.com announced its second attempt in conducting online auctions. Besides the huge problems with fraud, online sales seem to be tempting. With its "eBay live auctions", eBay tries since several years to get a foot into the market. Artprice.com rocked last years with the launch of its Classified Ads System. In July, Christie's launched Christie's LIVE making on-line bidding possible.

Artnet is a gallery network and now wants to run auctions that seem as a contradiction. Can you explain us how you want to enhance gallery business on the one hand and being an auctioneer on the other hand?

Hans Neuendorf: Well, I can easily explain that. The auction business failed several times with several people: eBay failed in 1999, Artnet failed because we ran out of money, Sotheby's failed - and certainly lost some of the highest amount of money into this business - but I think we all made mistakes. Particularly Sotheby's made one mistake by charging the same amount as commission as they do in the regular auctions. And that is the big problem. I think online auctions can be helpful because we do not have to charge as a high commission as regular auction houses. I mean some auction houses charge up to 50%! So if you have an art work that's worth 5,000 Euros, if you want to sell it at an auction, 2,500 go the auction house, and that's all costs! They're not even very profitable doing that. I think if we are charging 10%, and we can do that compatibly when we do online auctions, it's a huge improvement of liquidity in the market. And the main culprit of a non-functioning art market is liquidity. So we are creating liquidity. That is the advantage for the galleries. The galleries are sitting on large inventories...

Thomas Eller: ...and it's faster, too. The turnaround time is faster.

Hans Neuendorf: Yes, much faster.

AfN: It is also said that when the auction houses, in the seventies, jumped into the contemporary art market, they did it with evening sales, and we know how evening sales are: it's an event. But where is the event online? Or isn't this necessary?



Thomas Eller

Thomas Eller: I think there are different kinds of logics behind different markets. If you go back to art fairs for example: Art fairs are also events but we have the largest gallery network online. You know, some people need the event, and then, if there are different ways of also proliferating art works, people are looking for different channels and also for different types of art works. I mean, in the evening sales you try to drive the market to new record heights but as we said, the market is much wider. It is not only steep. There are lots of art works that are being turned down by the auction houses because they can't make that profitable for them. So there is no place for those art works right now to enter the market. We are adding an additional slot for that, so that art works by artists that are not fashionable right now, can also find their market. We actually create many more markets for them.

AfN: But how do you prevent fraud? It's such a huge problem for eBay.

Hans Neuendorf: The main advantage that Artnet is offering, and this is a difference from the time when we tried auctions before. We are offering all the information that a buyer would need with each lot. So, first, we offer a comparison of the price with the price database, we are offering information about the price development - so, charts and graphs showing how the price for that particular artist developed over time. We are also offering the market overview: with just one click you get to the gallery network and you see which other artworks are currently available in 1,500 galleries worldwide. And we are offering artists works catalogues and all other type of information that one could possibly need. So if you are bidding on the network you do not need to know anything. You can still comfortably buy something online; plus when you bought it and receive it, if you don't like it you can still give it back.

AfN: Who is the seller? Anybody?

Hans Neuendorf: Yes. We decided to have, originally, only galleries and enable them to sell their inventory online, which is a big advantage because many galleries have inventories with items that is not what they would like to represent and they would like to get rid of it. So we are offering a quick service for liquidity. So that's very good, but there is also a large number of collectors who want to sell something and who have been hesitant to give it to auctions because it's going to cost them thirty to forty percents. So I think we are servicing both constituencies.

AfN: You said that you are giving all the information on the relevant bid so that one knows that it is an artwork within a larger "oeuvre", but don't you lose clients with you auction system? I suppose this is free information that you would otherwise be selling, isn't it?

Hans Neuendorf: Yes, the information is for free, but I don't think that it will damage our other business. Why should it? It is actually advertising our other services. This information is not only useful when you take part in an auction, but you also need it when you research prices, etc. You need it all the time. I think the availability of information, of broad information, about the market, creates trust. And trust creates business.

AfN: Speaking about your business and the gallery business, this year you've started transporting an art fair into cyberspace by implementing an interactive floor plan equipped with photo and basic information of each booth. Next year you want to create an equivalent for the Art Basel. It is obvious that you can not put every art fair into cyberspace. But why exclusively Art Basel? And how does this go with transparency?

Thomas Eller: No, I mean, at one point I started talking to Sam Keller of Art Basel and it became very clear that he was the person with enough vision to make this deal happen. We were happy that it is exclusive, because that really enables us to place this as something of importance. So it was in his interest and actually also in our interest to say this is a strong union between two market leaders, basically, and we agreed on doing that. And I think we agree that this is going to become a very strong tool that equips galleries to… Basically, we extend the duration of the fair, so that two more months after the fair so that this tool enables them to have a better connection to the dealers and give them a link to re-visit the art work. Collectors that remember an art work, but do not know what the name of the gallery was, can navigate the floor plan. You always remember exactly where, in which neighbourhood you found that artwork and you can go back there, click, and you have a photo of the actual booth in the fair and then you can go deeper into the inventory of the gallery. I think it is a great service

AfN: So if this succeeds, you will do it and offer it for other fairs as well?

Thomas Eller: Right now we have a deal and I think it is very good for both partners. We will see what the future brings.

AfN: We've had a short insight into gallery versus auction business but left the producer aside. Yesterday I had a short talk with a gallery owner asking him about an artist that was mentally not very well, not in a good condition. I asked him if I should talk to the artist trying to bring him back on track. The gallery owner than said: "Don't bother, there's enough creativity around".

In the light of a recovering art market, do you think that there is a cornucopia of talented artist and that the market can grow limitlessly? What's the future like?

Hans Neuendorf: I think it is a wonderful time for artists. There is a lot of money around; there is the ambition and the willingness on the part of collectors to spend money on art. It is in some ways the ultimate luxury and many people can participate now. So in other words, it is a good time for artists.

AfN: So they should not have mental problems? They should be happy about what's happening?

(laughs)

Hans Neuendorf: If we look at the artists as a group, they are not participating as much as the other groups. I think there are many, many artists who have no connection to the market and Artnet is opening the spectrum of artists who have access. This is one of our goals. Artists also have the highest existential risk of the groups because they cannot switch from one merchandise to the next. As the dealers, they have to stick to their own thing. So I think we have to take care of artists.

Thomas Eller: That bothers me a little, what you said about this artist. That obviously the gallery is obviously not really committed to the artist. But, you know, most galleries actually are. They try to drive their artists' careers. Only if they do that can a gallery be successful too.

Hans Neuendorf: That is very true. One forgets, among all the talk about money and particularly in the press about record prices, that galleries are really idealists. These people don't do it for the money. There are easier ways to make money than open a gallery! These people are idealists and they have their ideas, they fight for the art they believe in, for the artists. And I think that it is a great achievement. They play a very important role in the market.

AfN: The artists or the gallery?

Hans Neuendorf: The gallery. But the artist as well, without the artist…

AfN: …nothing would happen! Yes. Even we would have no subject to talk about!

Dear Mr. Neuendorf and Mr. Eller, it was an honour talking to you. Thank you.


This interview can also be viewed as a video on Vernissage.tv: Part 1, Part 2 and Part 3

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