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06/07/2012 01:35 PM

Online Rebellion

Dealer Tries to Liberate Art from the Elite

By

German art dealer Hans Neuendorf has been a pioneering maverick in his field since the 1950s. For the last 20 years, he has been trying to use the Internet to liberate the art trade from the cult of connoisseurship surrounding dealers, gallery owners and auction houses. It's been a rough road, but he refuses to be deterred.

Hans Neuendorf, wearing a white, open-collared shirt and dark suspenders, is standing at the window of his New York office, 23 floors above the construction site at Ground Zero. Neuendorf was there when everything collapsed, and he's there once again as everything is being rebuilt.

Neuendorf bites into a slice of quiche, his lunch. He is using white plastic utensils. He talks about that September day, 11 years ago.

He had come to the office early that day, in a building just a few minutes' walk from the Twin Towers. Everyone was told to clear the building, and people were shouting: "The towers are collapsing." But Neuendorf refused to leave his glass table. "No, the World Trade Center won't fall this far," he said.

It wasn't until the towers had collapsed, it became dark outside and the dust began coming in through the slanted windows that Neuendorf stood up -- to close the windows.

He ignored the announcement on the public-address system urging anyone left in the building to "get out now." Instead, he wrote in emails: "We haven't been affected."

At the time, he says today, he thought it would be safer on the 23rd floor than down below, where everyone was panicking. He doesn't say that it was hell, nor does he mention the poor people who were buried in the rubble. He also doesn't say that it was the day the world changed.

The way Neuendorf tells the story, it was just another day at the office, a day when he kept his cool.

No one but Neuendorf knows whether this is true, because no one else remained with him on the 23rd floor. But it's also safe to assume that Neuendorf wants to be perceived as something of a Bruce Willis of the art world, cool, fearless, perceptive and courageous -- in other words, as someone who merely gets up to close the windows when the world around him is falling apart.

Bringing Art Auctions Online

Neuendorf, 74, has been involved in the modern art business since the 1950s. He has had a lot of experiences and has made a lot of money, and he could easily have retired to his modern villa on the Mediterranean island of Mallorca, which was designed by an architect who has worked for Calvin Klein and Giorgio Armani. But he isn't interested in retiring. Instead, he sits in a New York office tower and has only one goal: to thoroughly reform the art trade that has made him rich.

"If I want to sell a car, I look in the Blue Book to see how much it's worth," says Neuendorf, referring to a popular US guide to used-car values, "and I'm rid of the thing in a week."

If Neuendorf has his way, paintings by the likes of Chagall, Picasso and Lichtenstein will be marketed like used cars, each provided with a list price that everyone can see and sold online to the highest bidder. His company, Artnet, has been in business for 20 years. "When it comes to art, Artnet has the most comprehensive global database," Neuendorf says, "and now it will also become the world's biggest auction house." He envisions it being larger and more powerful that Sotheby's and Christie's combined. Selling through Artnet is faster, more transparent and, most of all, more affordable, Neuendorf says.

Last year, Artnet hosted its first auction in which a Warhol work was sold. It was a green painting with blue flowers. The minimum bid was $800,000 (€640,000). An image of the painting was posted online for six days. The bids started going up near the end of the auction. When Neuendorf went to lunch, the highest bid was still $800,000. By the time he had eaten his sandwich, the Warhol had been sold to the highest bidder -- for $1.3 million.

The Currency of the Future

Neuendorf rests his foot against the glass edge of his desk. He gazes out the window, across the western edge of Manhattan and the gray water of the Hudson River, to an oversized clock in New Jersey. The hands of the clock have stopped.

He believes that his time has come, and the numbers back him up. When Lehman Brothers went out of business and, next to Sept. 11, the biggest disaster of the new millennium had come to pass, things were not looking good for Neuendorf. The financial crisis all but destroyed the art market, and prices continued plummeting for two years. But things started picking up again in 2010 -- and, suddenly, the sky's the limit. Last year alone, art sales worldwide amounted to €46 billion.

"A worrisome, idiotically high price," says Neuendorf, referring to the latest record in the art market, which was reached on May 2, when Edvard Munch's "The Scream" was sold at auction at Sotheby's in New York.

The hammer fell at $119.9 million. The buyer remained anonymous, but Neuendorf says that the only people capable of playing at this level are those "who have collected their money but haven't earned it: oil sheiks from Dubai, Russian oligarchs and hedge fund managers." For the rich, art appears to be what gold and real estate are for the not-quite-so-rich: a coveted form of investment, and a currency of the future.

Making a Killing in Art

Neuendorf is on the phone talking about Georg Baselitz. The well-known German artist is so wealthy that he lives on an estate on Bavaria's Ammersee lake that was designed by architects Herzog & de Meuron, a firm that usually builds things like the Olympic Stadium in Beijing.

"A count from Germany recently sold his Baselitz collection at Sotheby's in London," Neuendorf says. The count had apparently owned so many Baselitz works that he had lost track of where the paintings had originally come from. In his confusion, says Neuendorf, the count had called him and asked: Didn't you sell me eight of them once?

"Damn, that count had certainly stashed away quite a collection," says Neuendorf, clearly impressed.

His motions for his assistant and asks her to print out the results of the Baselitz auction. A few moments later, he is reading from a list of Baselitz's "Hero" paintings that were sold at auction. "Spekulatius" went for $5,195,000, "Big Night" for $3,845,000, "The Tree" for $2,855,000 and "Three Hearts" for $2,046,000.

Neuendorf smiles with both envy and admiration. "The count really made a killing," he says. But he deserved it, Neuendorf adds, because, after all, the count had held on to the paintings for 30 years.

Destroying the Aura of Exclusivity

The art market is not an open affair. It thrives on back rooms, knowing the right people and the well-placed, targeted indiscretion. Transparency or the sort of open indiscretion Neuendorf engages in is terrifying to the art world. It's considered cheap, plebeian and lowbrow.

Gallery owners or dealers usually control the prices, and they prefer to quote prices to potential buyers in private, often speaking in a whisper. The goal is to give the individual buyer the feeling of being elevated into a caste of select connoisseurship.

Neuendorf's Artnet destroys this aura of exclusivity. On his website, the only things that count are the work and the price. To the great annoyance of the entire industry, selling art in this way is essentially like shopping in a supermarket. What's more, potential buyers are increasingly showing up in backrooms with printouts from Neuendorf's Artnet that show an artist's worldwide prices, thereby polluting the cultivated atmosphere.

Sales and auction results for more than 4,000 artists are available on Artnet, giving the amateur collector the chance to become a competent player in the business. The site gives the buyer more power while simultaneously taking it away from the dealer -- which is exactly why so many gallery owners view Neuendorf as the enemy.

The Art World Meets Walmart

The global art trade has grown enormously in the last 30 years. Sales figures at art auctions alone have increased fivefold in the last decade. Art is no longer reserved for a small, educated elite; instead, it has become a status symbol, an indication of power and ego, an asset that can be hung on the wall. The £6.5 million (€8 million/$10.1 million) that a hedge fund manager from Connecticut paid in 2004 for a shark preserved in formaldehyde, by British artist Damien Hirst, became a frivolous symbol of the onslaught of new money in the art world.

At the same time, the art trade has become globalized. Wealthy Russians and Chinese are driving prices and expanding the geographical reach of a business that had been limited to Europe and the United States for decades. Buyers have now paid $106 million for a Picasso, $140 million for a Jackson Pollock, $100 million for a Warhol and $86 million for a Francis Bacon, the last of which was purchased by Russian oligarch Roman Abramovich in May 2008.

Artnet is partly responsible for these prices, says Neuendorf, because the site has given customers security. Still, Neuendorf's company is not doing as well as he would like. While the creators of Amazon and eBay are billionaires, Neuendorf has repeatedly had to finance his company with the sale of art treasures he accumulated as a gallery owner in the 1960s and '70s.

Neuendorf is fascinated by money. He likes to talk about art as a commodity and, if he had his way, he would sell artworks after the model of Walmart, the American chain of superstores that derives its strength from underselling everyone else in the market.

A New Market Is Born

Neuendorf rushes out of his office and hurries up Broadway to look at new office space in the legendary Woolworth Building, a castle-like skyscraper with a copper-green roof, a monument that Frank Woolworth, the first department-store king, had built 100 years ago near Wall Street. Neuendorf is a short man, and he quickly disappears into the crowd on the sidewalk. He likes tall buildings.

Neuendorf was born in Hamburg in 1937. He completed his first business transaction when he was only nine, trading the discarded felt boots of German soldiers returning from the war for a Christmas goose from a farmer. He collected half-smoked cigarette butts that American soldiers had tossed into the street, stole potatoes that had been left lying in the fields and searched for splinters from exploded bombs. Today, he boasts of having had "the biggest bomb splinters at the time."

Already a collector, Neuendorf became interested in art when one of his father's tenants moved out and left a suitcase behind. "Take a look and see if there's anything decent inside," his father told him. Neuendorf found a watercolor of sailboats, which turned out to be by the German-American painter Lyonel Feininger, and sold it for the hefty sum of 3,000 deutsche marks.

Suddenly, a market flared up that didn't actually exist in Germany. Modern art -- ridiculed, persecuted and banned by the Nazis -- was still on shaky ground in the nascent democracy. But Neuendorf had been infected.

He borrowed 300 deutsche marks from his father, hitchhiked to Paris, bought Chagall prints and then sold them for twice as much to dentists and lawyers. He opened his first gallery in the early 1960s, which consisted of three rooms in a ground-floor apartment in the shadow of a complex of 12 high-rises in Hamburg's Eimsbüttel district. Neuendorf was 26 and faced little competition in Germany, where there were only about a dozen galleries.

Cutting His Teeth in the Dealer World

The fashion photographer F. C. Gundlach still lives in the neighborhood. Gundlach, 85, is one of the people who modernized Germany, both culturally and socially, after World War II. His townhouse is filled with testimonials to this path. For lack of space, framed pictures are arranged like books on living-room shelves. He pulls out a picture with a red frame. "It's a Kippenberger," he says.

Gundlach says that Neuendorf is one of the people who brought Pop Art to Germany. "He was the first to be in close contact with those Englishmen and Americans," he says, "and he also knew how to handle these people."

Neuendorf and his brother drove a rented truck to Paris to see gallery owner Ileana Sonnabend. When they returned to Hamburg, they had three borrowed Rauschenbergs, two Lichtensteins, three Warhols and three Jasper Johns, all covered with a plastic tarp. Neuendorf exhibited the paintings in his gallery, but no one wanted to buy them. So he drove them back to Paris, crawling along the road at 60 kilometers an hour (38 mph), as highways had yet to be built on that stretch.

Neuendorf had a similar experience with David Hockney, although at least Gundlach had some use for his work. He used the Los Angeles painter's swimming pool works as backdrops when he photographed beach fashion for the German women's magazine Brigitte.

Neuendorf, undeterred, played chess with Hockney and paid his parking tickets. In Los Angeles, Neuendorf discovered the sculptor Robert Graham, who asked him to find him an apartment in London. He also wanted a black Porsche to drive around the gloomy city in. In exchange, Graham gave him two portfolios of his artwork to sell. Neuendorf used the proceeds to buy a brand-new Porsche for Graham, straight from the factory in Stuttgart.

Neuendorf was able to make a lot of money for the first time in 1969, when he bought some of Cy Twombly's works in Italy. The 11 rolled-up paintings were leaning against the wall, the larger ones priced at $2,500 and the smaller ones at $2,000 a piece. Neuendorf pushed them through the sunroof of a Fiat 500 and drove to the airport. He sold the paintings in Cologne for 20,000 deutsche marks each, driving up prices in the western German city's art market.

Neuendorf experienced a setback with his first German artist, Georg Baselitz, whose paintings were too big for his gallery's walls. Gundlach found exhibition space in a bunker in Hamburg. Most visitors felt that the so-called "hero" images were "dreadful." But a few did buy them, including Gundlach, who paid 12,000 deutsche marks for a Baselitz painting.

A Novel Plan, a New Location

When Neuendorf talks about his attempts to bring the panache of the '60s to Hamburg, his narrow mouth twists into a scornful smile. It was normal, he says, that "the moneybags didn't buy anything." He recounts how, at his first Warhol exhibition, the director of Hamburg's Museum of Art and Crafts dismissively crumpled the helium pillows that were floating around. Warhol was considered nonsense, Lichtenstein overrated and Baselitz unworthy of discussion.

Neuendorf had a novel idea. He established a fund, called it "United Artists" and asked acquaintances and wealthy businesspeople for an initial investment of 50,000 deutsche marks each. He told the investors that he would multiply the money and achieve annual returns of 10 percent. Since the clientele for artworks was so lethargic in Hamburg, his plan was to conform to the pace of the market and wait 10 years before selling anything.

By the end of the 1970s, Neuendorf had doubled his investors' capital. But dealing with his them had become too much for him. Now they too wanted to talk about art even though they knew nothing about it.

When the mayor of Frankfurt asked him to move his gallery to the city in the mid-1980s, Neuendorf finally had the appreciation and support he'd always wanted. He was able to design his own center, and one where modern art was taken seriously.

"Frankfurt was swimming in money," Neuendorf says. The city provided him with a gallery building and an apartment, and Neuendorf brought Sotheby's to Frankfurt. His goal was to "turn a very big wheel" in the center of West German capitalism, the realm of banks and the home of Germany's busiest airport.

Times of Boom and Bust

The economic boom shifted toward Japan, and Neuendorf seemed to have been proven correct. The banks, which had refused to lend money to art dealers in the past, were now calling him, anxious not to miss out on the wave. Neuendorf bought the entire estate of the French painter Francis Picabia, and he also made a large investment in Italian artist Lucio Fontana.

Neuendorf had done everything right -- or so he thought. But then the boom in Japan trickled away, Neuendorf could no longer make payments on his loans, and he was forced to sell his treasures for less than they were worth. "In that manner," Neuendorf says today, "I was forced to destroy a large portion of my assets."

The man who mediated between Neuendorf and the banks was Rudolf Zwirner. Today, Zwirner lives in a white villa in Berlin's Grunewald district. He used to be Neuendorf's business partner, and both men were among the organizers of the first Cologne Art Market in 1967, the event that would later turn into Art Cologne and serve as the inspiration for modern art fairs like Art Basel. Both men wanted to spur growth, to enlarge the art market.

Zwirner says that money has always fascinated Neuendorf more than art. Neuendorf would size up customers, he says, appraising their shoes, handbags and watches. And when he liked what he saw, he stepped on the gas.

"He had this thing about big money," says Zwirner says. Neuendorf rented a villa for the equivalent of €9,200 a month, and his wife took regular flights to Paris to have her hair done. But after his business failed in Frankfurt, Neuendorf realized it was time to make some changes.

Victim of the Internet Bubble

In the early 1990s, Neuendorf seized upon an idea that a collector named Pierre Sernet had explained to him at an art fair in Paris. Sernet had developed ways to electronically publish images of artworks and the corresponding prices.

The Internet didn't exist yet in its present form, and Sernet's company sent customers CDs containing software that was supposed to enable them to access the images and prices through their telephone lines.

This system was complicated and didn't work very well, but Neuendorf believed in the idea and invested millions. When the Internet revolution took off in the mid-1990s, he already owned 85 percent of the company. Still, Artnet couldn't seem to turn a profit. "My share was constantly being watered down through new increases in share capital," Neuendorf says, "and I still had to sell off art from my warehouse to compensate for the attrition."

But it still wasn't enough, so he eventually raised even more money by taking Artnet public. The stock was initially priced at €46 a share, and Neuendorf owned 1.6 million shares. He sold 9 percent of his shares for €6,624,000. It was a lot of money, and the first thing he did with it was to pay off the debts he had accumulated with his expensive lifestyle, which included sending his four children to private schools and owning a townhouse in Manhattan's upscale Upper East Side neighborhood.

The IPO had also made €26 million for the company. Neuendorf invested in new office space, new employees, a big marketing campaign and online auctions, which he hoped would enable him to compete with Sotheby's and Christie's. The motto of the day was to increase sales and secure market share -- and worry about the costs later. Within two years, the €26 million had been spent. Artnet also lost a dramatic share of its value after the collapse of Germany's Neuer Markt ("New Market") index for hi-tech stocks. In 2003, the stock was trading at only 25 cents a share.

Other Internet adventurers beat a retreat, landed in prison or immersed themselves in new companies. But Neuendorf stuck with his company, held onto his remaining 1,456,000 shares and hoped things would get better.

The share was priced at €3.50 four weeks ago and is now trading at €4.30. Things are going uphill, but slowly. Neuendorf still occasionally has to fall back on his collection to pay for his high living expenses.

"The inventory has been seriously decimated by now," he says.

An Undying Faith in the Future

Neuendorf is standing in a 3,000-square-meter (about 32,000-square-foot) gallery on W.19th Street, in Manhattan's Chelsea neighborhood. The gallery is owned by David Zwirner, the son of Rudolf Zwirner, the man who doesn't have very good things to say about Neuendorf. Since friendships in the world of art dealers are usually destroyed in the competition over hot artists, it makes sense that new generations are constantly on the rise. They keep business going, as is the case on this day in New York. Despite the animosity between his father and Neuendorf, David Zwirner believes the latter is one of the great pioneers of the German art trade.

Zwirner came to New York 20 years ago. He had learned to be a jazz drummer in Germany, but now, according to the magazine Art Review, he ranks ninth among the 100 most powerful people in the global art trade. Zwirner is seen as a tough negotiator, partly because he is familiar with the prices from Neuendorf's database. But, on this day, he is conspicuously charming because Neuendorf is exhibiting sculptures in his gallery by Robert Graham, the man Neuendorf bought a black Porsche for in the 1960s. In today's hot art market, the two men believe that they can even make money with a hard-to-sell artist like Graham.

Graham's sculptures are in small glass cases spread out across the concrete floor. He fashioned beeswax into tiny female figures -- lying in bed, riding potatoes, sunbathing on the beach, seemingly hovering in an endlessly idle world of drugs, Pacific surf and money. Each doll box costs about $200,000.

The Hollywood actress and Oscar winner Angelica Huston is standing next to a sculpture of a bare-breasted woman wearing a silver slip, pulling a potato behind her on a leash. She was married to Graham until his death in 2008. It was a happy time, she says, compared with the wild years she spent with fellow actor Jack Nicholson.

When Huston sees Neuendorf, she hugs him like an old friend. Forty years ago, the art speculator bought the beeswax sculptures from her husband for a few thousand dollars each; now he is selling them for a hundred times as much.

When Neuendorf disappears into a crowd of new arrivals, Huston says: "Robert didn't like a lot of people, but he loved Hans. He always felt he was like a baby brimming with confidence."

Neuendorf apparently hasn't changed much since then. The evening is filled with the lightheartedness of the 1960s, and he starts to believe in something again. He believes that his time will come, just as it has somehow always come. He believes that the Internet -- now that it's conquered the entire world -- will also take hold of the art market. And he believes that, when that happens, he will finally be rich -- really rich.

Translated from the German by Christopher Sultan

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