Summary: We are developing a piece of hardware that will authenticate fine art through advanced imaging. The machines will be sold to museums and institutions and galleries so that they may become authentication centers for their communities. A centralized database based at either government agencies or neutral institutions will then serve as a centralized repository for most fine art that is sold at prices of $300 and up. The goal is to move countries towards recognizing fine art as an asset class through third-party-neutral history of ownership documentation. Currently, Provenanced Gallery 1.0 is an open source CRM for art galleries that includes a POS and full accounting- as well as a designer’s market that allows dealers and designers to transact business at below retail prices. Provenanced 3.0 will add unquestioned authentication procedures into the mix.
One of the goals of Provenanced.com is to organize the lower-to-mid tier of the fine arts and antiquities markets in order that they may eventually become recognized assets in the tax structures of the countries within which we operate. The proposal is to state that if a piece of art is authenticated and then provenanced with a neutral-third party firm such as Provenanced.com, it becomes eligible as a recognized asset. To back up valuations with strong market data where there is no organized effort, Provenanced.com released Provenanced 2.0 in Q4 of 2012 and is scheduled to release Provenanced Gallery 1.0 in July of 2016. Provenanced Gallery 1.0 is a POS, CRM, and accounting package that runs on the Apple, Microsoft, Linux and Android platforms. Replete with Android applications, it can be used to run all gallery operations. Integrated into the system is a designer’s market capability that allows clients to click a checkbox and automatically have inventory listed in a wholesale market where the commissions are only accessible to dealers and designers. Clients of dealers can view pieces from a public interface that does not include the wholesale discount. The benefit to dealers is that they are not only exposed to standard pricing from a centralized market for pieces similar to that which they carry, they are also able to extend the range of offerings that they can provide clients should the clients not find what they are looking for in their
Geographic Markets: Global. Current Point of Sale application supports Spanish and English languages fully. French, Chinese, and German are additionally supported in the 2ndary Market.
Targeted Audience: Fine Art and Antiquities purchasers of works that range from $300 to $100,000 in price.
Key Competitors: Artnet.com, National Fine Art’s Title Registry, Organic Networks of Gallery Owners
• Known throughout the fine art, antiquities, and rare book and map worlds
• Offer a free product that will increase exposure and sales for clients
• Most patrons of the arts understand rationale and are supportive
Competitive Environment: When Provenanced.com was conceived in 2006, the concept of provenance for well-known artists was well-established. The problem was that for pieces that were purchased outside of auction or top tier galleries in the largest cities in the world, there was no neutral third-party service that would take on ownership history on a long term basis. The sales staff that was assembled to sell Provenanced.com therefore relied heavily upon marketing support from headquarters to both educate the marketplace and provide marketing information.
A great deal of the competition in the marketplace initially was inertia. Many dealers found it easier to stick to the internal systems that they had been using. Gradually, Provenanced.com led the market in the direction that made it a much easier environment to sell into today. Partly as a result of its marketing work, academics in New York visited galleries with graduate students to audit internal provenancing systems and pronounced them woefully inadequate. Deloitte, a large accounting firm began having yearly conferences talking about fine art as an asset class. And both Christie’s and Southeby’s, auction houses that Provenanced.com’s online application interfaced with, followed Provenanced.com’s lead and started posting information about object provenance online for their customers.
Artnet.com is not a direct competitor. Most of the art that is listed as a pricing reference on their site sells for above $100,000. If anything, they have proven to be a useful ally in uniting the market from top to bottom from a pricing standpoint so that more structure can provide more opportunity for investors.
National Art Registry started out as a company that sought to provide greater support to artists and owners that had authenticity concerns. Their online databases augment tags that are intended to remain with the artwork. American Registry does not break provenance out, but includes several standardized object description fields that help it achieve a form of provenance that can be added to by the dealer.
Today, with the advent of the Provenanced POS, the rules of the market have changed again. The point of sale system is not directly competed with by any of the market players. In support of the assertion, The New York Times published an article last year shortly before the release of Provenanced POS 2.0 that lamented the ease with which American Registry allowed anyone to create certificates that could potentially be used to try and confer authenticity of the work. The designer’s market has a competitor in Artnet.com, although Artnet has chosen its gallery network and the average sales price of the painting remains far above our goals. Regional organic networks of dealers that are also artists are another minor force that do compete when they perceive any loss of
control due to the designer’s market centralized approach.
Provenanced 3.0 does not start out with any competition either.
Key Success Factors: Setting up a geographic network of solid IT people is important to the success of Provenanced’s reach. Working with hardware designers and manufacturing to perfect a design and get through manufacturing within the allotted development window is also key.
Similarly, achieving gallery owner adoption of the existing Provenanced product directly is important. The target for the first year is 50 galleries. As Provenanced.com was partnered previously with almost 60
galleries, it will not be a greenfield endeavor.
Risk: When Provenanced.com was originally under development in San Diego, the office that is was developed in was later found out to be being eavesdropped upon by no less than 7 different parties.
One of the parties was discovered when a developer for Provenanced came up with a great feature idea late in the afternoon and stayed late that night coding it and blending it in to the unreleased application. The next morning, it occurred to him that it was a horrible idea and so he stripped it out of the application functionality, chalking it up to working long hours to make the product a reality.
The next update of one of the market player’s web applications a few weeks later included several features that were at that point unique to Provenanced.com. One of the features was the feature that defied all logic and had thus been immediately stripped from Provenanced.com’s application. It became obvious that someone had made inroads into Provenanced’s hosting provider in Florida, a fact that was confirmed later.
The environment hasn’t changed. 80% of our competitors are actually quite good at respecting unreleased information as they are too in a role that requires that they retain the utmost confidence of owners of art. It is the remainder of the competition, especially when better funded, that remains an x-factor. It should be noted that the competitor that utilized unreleased features fromProvenanced, ended up going out of business last year after they became embroiled in litigation related to authentication.
With Provenanced 3.0 security risks exist, although the solution is self-evident in terms of design and implementation.
We’ve managed to mitigate security risks in Provenanced Gallery 1.0 by using trusted and secure hosting services and splitting the information store. Provenanced 3.0 will be ultra secure, with the data store separated so that no one repository contains a complete set of information. There will be two levels of authentication. Quick, which entails visiting an institution to authenticate a work of art against one of the pieces of the database and full, which entails reassembling all of the pieces from different repositories to form a complete check against the work of art.
As far as product development is concerned, the POS and Market are live and ready for our sales campaign to kick off in the end of May. Provenanced 3.0 is underway in the design phase with team hiring on deck.