Tuesday, 16 March 2010

Art as Art; Art as Income Stream; Art as Collateral

It is unusual when a photography collection becomes the focus of a publicized debt workout. It is for that reason that we have been following for some time the financial woes of the well-known photographer Annie Leibovitz. Leibovitz is perhaps most famous for the picture that appeared in Vanity Fair magazine of a largely exposed and pregnant Demi Moore, and that of John Lennon and Yoko Ono in a conjointly curled position, apparently only hours before the singer's tragic death. The story itself makes for interesting reading regarding the interplay between art and finance.

In July 2009 the artist was sued by Art Capital, whom she owed a large sum of money in repayment of a loan. In particular, the artist had allegedly refused to cooperate in the sale of certain of photographs (as well as various pieces of real estate), which presumably had been offered as collateral for the loan. That segment of the legal saga was resolved in September 2009, when Leibovitz paid an unspecified amount in exchange for regaining control of these assets, in exchange for which the lawsuit was dropped and the loan was extended.

Now, as reported in Bloomberg.com on March 13, under the title "How Leibovitz Found New Partner for $24 Million Debt, Archive", a new financial actor has come on stage to assist Ms Leibovitz. According to the report, an LA-based private equity firm called Colony Capital reached agreement on March 8 with Art Capital. In its place, the artist has entered into a new agreement with Colony Capital. The details of the new arrangement were not revealed, but the report suggests that Colony could see income from both the sale of the artist's current photographs as well as enabling Leibovitz to renew her artistic endeavors and thereby to get a cut from revenues received from sales of such future photographs.

One can only speculate how much pressure there might be on Leibovitz to create a new portfolio of photos, sooner rather than later, that can attract purchasers in an amount that is consistent with the financial arrangements between Colony and herself. After all, as noted in the article, "Colony is the business of making money .... They've got to structure it in a way that they are compensated." Will she be more creative, or less creative, than usual, or will not not matter?

If so, it gives rise to that question the question of how financial exigencies will affect the creative impulse of the artist, especially if there is a misalignment between the artistic and the financial timelines. Moreover, one wonders how the market for her photos might be affected by this news. The artist's dealer claims that her individual photos sell for between $8,500 and $50,000. If so, can those prices be maintained in a situation where there is a perception that their sale is driven by external factors framed by the restructuring arrangement?

After all, while the commercial world has its own dynamic, it is still a market. When one adds to that the overlay of the financial restructuring of the artist's debt, as reported in the article, the way that the market for her photographs, at least for the near term, will play out can hardly be predicted.

Prices Go Up; Prices Go Down

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