Thierry Ehrmann: A huge difference: unlike an AirBnB member, an ARTPRICE member cannot be substituted by another member. In fact, ARTPRICE members are extremely well defined (qualified) from a commercial perspective (logs, Big Data) which allows us, in strict compliance with European and American legislation, to know what they are looking for, possess, or wish to sell in terms of art (fine art). Even if the leading three auction houses in the world combined their databases, they wouldn't be able to simultaneously achieve such a deep level of information or compete with the number of members that ARTPRICE has. To answer your question about a comparison with AirBnB, their members are substitutable because they are homogeneous. In the case of ARTPRICE, our members are not interchangeable because they are heterogeneous. It is therefore obvious that the value of ARTPRICE is much higher than that of AirBnB based on the specificity ("qualification") of its members.
Trading And Ipo: It may be helpful to briefly overview the two main activities of ARTPRICE's business: the first, that we are most familiar with, is that of providing all information regarding the art market, along with all indices, statistics and price levels; and the second axis is the Standardized Marketplace. Can we talk about the first historical activity?
Thierry Ehrmann: Yes, we come with a considerable advantage over a pure start-up because we have the position of world leader in art market information with over 3.2 million "qualified" members and more than 30 million indices and statistics. Moreover, we are the only group to produce highly reliable data covering a very broad input base with highly-targeted surveys. Our methodology is built around the analysis of repeat sales. This method consists in following the history of an artwork, leaving no room for doubt, and calculating its price index over time. Previously the main method used was the comparison method, which, in the Art Market, gives extremely poor results. To construct this perfectly legal monopoly, we had to buy almost all of the historical companies operating in the publishing sector of the Art Market, i.e. all the companies that produced the price guides, artists' biographies and descriptive catalogs (catalogues raisonnes) in Europe and the USA.
For example in the USA we acquired Sound View Press, America's leading publisher of art price guides, artist biographies, including the famous Who was Who in American Art. Sound View Press, which includes forty funds, was created in 1973 by Peter Hastings Falk who is still with us today.
We also acquired the US fund Signatures & Monograms from Caplan & Creps and the American Bayer database on the Anglo-Saxon art market from 1700 to 1913.
In Europe, we acquired about thirty funds including the famous Enrique Mayer Guide (1962-1987), the H. Mireur Dictionary of Art Sales (1700-1900) and the Franck Van Wilder publications. We also purchased 450,000 manuscripts and auction catalogs that our historians have fully updated for 18 years by standardizing hundreds of millions of data. Today, after the work conducted by ARTPRICE, an artwork possesses a veritable I-D that allows it to participate in dematerialized trading because you can be certain that it is indeed what it pretends to be, which of course reflects exactly what Clayton Christensen said.
Trading And Ipo: Can you tell us now about your Standardized Marketplace, which, according to our analysis and research, was set up in 2004.
Thierry Ehrmann: Yes, since 2004, we have created and protected under Intellectual Property rights the first standardized fixed-price marketplace in the world via, on which, every day, buyers and sellers alike can find between 70,000 and 90,000 works of art with an average price of around $11,000.
This standardized fixed-price marketplace was completely redesigned to be combined with our standardized auction marketplace that we launched in 2012 and which, the day it opened, had more than 500 million dollars' worth of artworks for sale. At that moment, the Council of Voluntary Sales, the French auction market authority that is strongly resisting the disruptive economy, gave a major press conference during which it indicated its intention to initiate a lawsuit against ARTPRICE for having launched its Standardized Auction Marketplace.
In the end, it turned out to be completely false and the Council of Voluntary Sales was forced to admit that there is no lawsuit against ARTPRICE. It's pathetic, but that is France.
Nevertheless, the Council of Voluntary Sales continued to harass ARTPRICE with recurrent public statements such as "the internet giants ARTPRICE and Ebay have created confusion among consumers", and this harassment has contributed to our decision, announced at ARTPRICE's AGM, to move our standardized fixed-price and standardized auction marketplaces to the United States. Between them, the Asia-Pacific region and United States account for more than 75% of the global art market, and we expect this figure to rise to 80% by 2015.
Trading And Ipo: Can you remind us of your share price when you launched your online standardized auction marketplace in January 2012?
Thierry Ehrmann: The market is highly instinctive and was paying a fair price. It reached EUR 67 after an increase of EUR 50 and four times the turnover of the entire freefloat of 63%, i.e. more than twice Artprice's entire capital. We therefore have an extremely reliable reference price and the market had priced in the reality of our online offer and not that of a business plan. This is why the IPO of Artmarket.com will use very real market data based on models that have already been validated. We believe we can offer, in the light of independent studies, exponential growth, a perfectly legal monopoly on the standardization of art market data and the certainty that in 2012 we achieved our goal, a goal that was blocked by France's morbid fear of disruptors and particularly by the "non-transparent oligopolies earning privileged position profits" as described by Clayton Christensen.
Trading And Ipo: Do you see the IPO of Artmarket.com in New York as some kind of revenge?
Thierry Ehrmann: You cannot fight against fear and stupidity. I am pragmatic like most Americans, I go where the market goes and where the authorities allow me to do my business and where investors are willing to pay a fair market price. The market will be very happy to buy a phenomenal growth rate, as described by all the independent market research on Artprice, with the additional security of a world leader that has benchmarked all of its models and owns a perfectly legal monopoly built on innovation, hard work, external growth and intellectual property rights.
Trading And Ipo: Artmarket.com is obviously the ideal generic that all art and economics journals have dreamt of possessing. Is that because it refers to the Art Market?
Thierry Ehrmann: Yes, our acquisition of that name allows us to come up at the top of any Google search involving "Art Market" out of a total of 425 million results. Recall that Artprice's parent company Server Group, has been on the Internet since 1987 and we have always filed or acquired generic domain names. As a trained lawyer, I consider that a generic name does not infringe the rights of any third parties, wherever we may be in the world. I usually explain that Anglo-Saxon generic domain names are more powerful than global brand names that will inevitably encounter obstacles in certain countries. ARTPRICE has also blocked potential infringers by owning Artmarket.net that will be our dedicated intranet to the 4,500 Auction Houses that have been our partners for many years. Artmarket.org will publish news from our news agency Art Market Insight. These are key assets that are already generating a very substantial volume of traffic.
Trading And Ipo: Clayton Christensen describes how the disruptive economy is establishing itself as "the cruel and brutal rule of the continuity of capitalism." Can you explain the art market from that angle in a few words?
Thierry Ehrmann: I often say that the art market is like the financial market, but ten times more cruel and intelligent because its players have mastered all the rules of the financial markets since many of them started off in the financial sector. According to historians, the art market is the oldest market in the world.
Trading And Ipo: Why have you decided to move to New York?
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