Gallery-hopping in Chelsea on a Thursday night or strolling through the booths of an art fair can be a masterclass in window shopping. For most people, the pieces on sale are simply impossible to afford or financially irresponsible to buy. Even for those with means, who would technically be capable of purchasing pieces at the lower end of the market, $1,000 to $50,000 can feel like a prohibitively expensive amount to spend all at once. But Art Money
, a company that launched in the U.S. during EXPO Chicago
, is looking to change the mental math behind buying a work of art.
Art Money offers buyers interest-free loans, allowing art buyers to pay off the price of a work over the course of 10 monthly installments rather than shell out the full price tag of the piece in one fell swoop. A $10,000 work becomes an initial deposit of $1,000 and nine equal subsequent payments.
Payment plans have long existed in the art world. But they’re rife with risk for the gallery. It’s routine to hear of payments stretching long past their initial schedule, leaving both artist and dealer in the lurch. Given their cost and the attention they draw, lawsuits aren’t generally a practical option to enforce delays or non-payment for most sales, particularly on the lower end of the price spectrum. With Art Money, galleries are paid within two weeks.
Payment plans also have drawbacks for collectors. Buyers may not be able to take a work home until it has been paid for in full. This is particularly the case for those who are new to collecting and thus don’t have a longstanding relationship and established trust with a gallery. (A notable 25% of the company’s loans thus far have gone to first-time collectors.) Art Money’s loans, however, allow the piece to be taken home with the buyer on day one. “It may sound trite, but it really is a win-win,” says founder and CEO Paul Becker.
Since launching, Art Money has partnered with a growing handful prominent New York galleries including James Fuentes, Cristin Tierney, and Galerie Lelong
. Becker said he’s designed the company to make it easy for galleries to say yes because it “doesn’t cost them anything unless they make a sale.” Art Money doesn’t charge galleries to partner but rather charges a set fee, framed in its agreements as a percentage discount against the total cost of any work sold using the service.
For buyers, signing up is as simple as visiting Art Money’s website, putting in some personal information, and waiting about 15 seconds for a credit check to run. The company’s algorithm looks at this and other basic financials to determine whether it’s comfortable with the risk exposure for the collector’s requested loan. “A lot of people say this is for people who can’t afford” to purchase art, said Becker. He reports that 90% of Art Money loan applicants have been well-qualified for the amounts they’ve requested. “It’s not about the money, it’s about the psychology of it, it’s about feeling responsible. Spreading out the payments makes sense, just as it makes sense with everything else you purchase in your life.”
In the U.S., the company currently offers loans from $1,000 to $30,000. The average amount of the over 500 loans granted since Art Money’s initial launch in Australia in April 2015 has been around $5,000. There have been zero defaults to date. Though Becker concedes that the inevitability that this will occur is “part of the risk we built into our business model,” and that the company then has immediate rights to repossess the work.
Becker expects the U.S. market to push its average loan size higher and notes that even blue-chip galleries have a significant stock of prints and works on paper that would be eligible for Art Money loans. Buyers can sign up at the time of a sale or be given a credit amount in advance to spend when a work strikes their fancy. The loaned amount can include shipping, framing, or any other service the buyer and gallery agree on. “We’re an enabler,” jokes Becker.
The benefits don’t mean galleries, often weary of change, are all rushing to adopt the service. “This is a new way to buy art,” said Becker. “It’s about culture change. This option has never been available.” Becker suggests that partner galleries integrate his company’s payment plans into their initial sales pitches rather than leaving them as a last-ditch attempt to close. “I say to galleries: There are two prices for every work now. $20,000 or $2,000 a month.”
Making art more affordable (or at least an easier cost to swallow) has significant potential to grow the number of buyers—something dealers are sorely looking for. According to the 2016 TEFAF report, some 73% of dealers said that growing their clientele is something they worry about. And despite what multi-million-dollar auction results might lead you to believe, the lower end of the market serviced by Art Money is where the majority of purchases by volume and value occur. According to the same report, 77.6% of all transactions in 2015 by volume (64.4% by value) were for works priced at less than $50,000, while 27.1% of sales, by volume, were for works priced between $1,000 and $5,000.
Art Money offers the potential to further expand and solidify this unsung segment of the market’s base. And ultimately, the company’s goal is a simple one, said Becker: “We want more people to buy art.”