New Art for the People: Art Funds & Financial Technology

27 Pages Posted: 17 Feb 2020

See all articles by Brian L. Frye

Brian L. Frye

University of Kentucky - College of Law; Dogecoin DAO Legal Scholarship Page; Rug Radio DAO Grifting Division

Date Written: November 10, 2017

Abstract

The art market is notoriously opaque and insular. On the primary market, only insiders have access to desirable works, and even basic information like price is typically confidential. And even on the secondary market, access is limited, and information remains scarce and unreliable. This cartelization and inefficiency often provides lucrative arbitrage opportunities to insiders with access and reliable information, even as they make it difficult for outsiders to profitably invest in the secondary market.

Financial technology (“fintech”) promises to transform the art market by providing access and information to retail investors. In theory, art funds could provide access to the art market by using crowdfunding platforms to sell shares in art portfolios, and use data analytics to identify promising art investments. Perhaps they could even create an “art index fund,” and enable retail investors to invest in the art market as a whole, rather than a particular artist or portfolio.

But in practice, fintech is unlikely to make art funds a wise choice for retail investors or most institutional investors. The promise of access and information is a chimera. Art world insiders typically have no incentive to give art funds access to the primary market, because plenty of private capital is available. Data analytics are useless without accurate information. And an “art index fund” would be like investing in lottery tickets, because only a vanishingly small number of works have any value on the secondary market, and even fewer increase in value. Unless the art market becomes more transparent, fintech probably has little to offer potential art fund investors.

Keywords: Financial Technology, Fintech, Art, Art Market, Art Funds, Art Investment Funds

Suggested Citation

Frye, Brian L., New Art for the People: Art Funds & Financial Technology (November 10, 2017). 93 Chicago-Kent Law Review 113 (2017), Available at SSRN: https://ssrn.com/abstract=3069241

Brian L. Frye (Contact Author)

University of Kentucky - College of Law ( email )

620 S. Limestone Street
Lexington, KY 40506-0048
United States

HOME PAGE: http://law.uky.edu/directory/brian-l-frye

Dogecoin DAO Legal Scholarship Page

Rug Radio DAO Grifting Division ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
147
Abstract Views
1,657
Rank
358,685
PlumX Metrics