An exhibition of Banksy’s artworks, “Kids on Guns” and “Winnie the Pooh” at Bonhams auction house in London. Work by artists born after 1945 generated $17.2 billion in auction sales last year, up 39 per cent from 2012. The recent contemporary auctions in New York, meanwhile, generated more than $1 billion in sales. Image Credit: Reuters

A few years ago, Carlos Rivera was a virtual unknown, even in the art circles where he earned his living. He was just another gallerist, running a West Hollywood outlet called Rivera Rivera, mostly putting on photography group shows.

Now, however, Rivera is making waves with his ArtRank service, which makes “buy” or “sell” judgements on contemporary artists, in the same way that stockbrokers rate shares. For $3,500 a quarter, ArtRank’s clients get snappy some might say brutal investment advice based on information such as past sales, studio output, upcoming shows and posts on Instagram and Twitter. The service, which he says uses complex algorithms developed for investment banking, is limited to 10 subscribers at a time; when Rivera threw the list open in April, there were, he says, more than 80 applications.

Many artists have been appalled to find themselves on ArtRank’s list, even if the verdict is favourable. One young New Yorker in the “buy now” column calls her inclusion “terrifying”. “People should spend less time worrying about art prices and more about world politics,” she said.

One can only imagine how Walead Beshty and Mark Flood are feeling, given they are all rated “sell now”. This doesn’t necessarily mean prices are expected to fall, just that rises may be running out of steam. As for this year’s art darling, the Colombian Oscar Murillo, he gets the even more damning “liquidate”, alongside Jacob Kassay, Lucien Smith, Sterling Ruby and Parker Ito, all of whom have experienced massive spikes in their prices.

When ArtRank appeared earlier this year, many thought it was an in-joke or a cruel commentary on the art world, especially since it was originally called sellyoulater.com. Now it’s seen as further evidence that art and finance are converging, stoking anxiety that speculators (or “flippers”) are in control of the market. It’s one thing to buy and sell huge holdings in the likes of Andy Warhol or Jean-Michel Basquiat, critics say, quite another to gamble with those whose careers have barely begun. Art reputations take years to develop and moments to ruin; consume the young and you consume the future.

Flipping art has “definitely become some kind of a financial sport,” mega-collector Mera Rubell lamented earlier this year. “It’s painful to see.” Since February, when Bloomberg published a report about collectors bulk-buying emerging artists with the goal of quickly reselling at a profit, there’s been talk of an art bubble. Work by artists born after 1945 generated $17.2 billion in auction sales last year, up 39 per cent from 2012. The recent contemporary auctions in New York, meanwhile, generated more than $1 billion in sales, leaving even informed market players scratching their heads. “I don’t know what money means any more,” said Asher Edelman, founder of art financing company ArtAssure.

“I’m not endorsing speculation,” Rivera insists. Still, fears that the market is out of control are unlikely to be calmed by his claim that his previous venture, a fund investing in both emerging and established artists, grew from $700,000 in 2011 to $12 million in 2013, partly by buying into the likes of Robert Rauschenberg and Cy Twombly. Only too happy to put his side of the story, ArtRank’s 26-year-old founder pulls up at Hollywood’s 101 diner on a Ducati. He’s been driving fast through rush-hour traffic. Exhilarating, no doubt but, like investing in art, a gamble.

Rivera, who was born in Argentina and studied technology at university, says his site is a legitimate, data-driven advisory service. “It’s difficult to get an objective perspective,” he says. “That, as much as possible, is what I hope to do with ArtRank add a level of transparency.”

Rivera got into the art business after the financial upheavals of 2007-08, when wealthy people were parking money in art rather than risking it, say, on office developments in Beijing. “Historically, art does well coming out of recession,” he reasoned. “It’s S-W-A-G, right? Silver. Wine. Art. Gold.” As the market expanded, it became obvious to him that collectors lacked the data to make informed investment decisions. “Just because an artist’s work has gone from $400,000 to $450,000 to $500,000, to then assume it’ll go to $550,000 would be unintelligible to financial markets,” he says.

With contemporary art focused on a handful of star names, he says, ArtRank is simply an effort to quantify what the market’s players do all day anyway which is talk, often about money. “What do you think a gallerist does?” he says, stripping off his biker jacket. “I should know I’ve run a gallery. There’s nothing to do except gossip.”

He also believes the art market cannot sustain its current rate of growth without broadening the base of collectors. The obvious place to look is the new class of super-rich technocrats, people who made their fortunes in data-crunching and want art, or their understanding of it, to conform to that view not as a proposition fashioned by self-styled elites in New York and London.

Further down the ladder, young collectors who may want to enter the market feel shut out. “People don’t know about emerging-market artists without a great adviser, and you don’t get a great adviser unless you’ve got millions of dollars to spend. I’m not asking for $50,000 upfront like a top art adviser.”

All that ArtRank’s subscribers get for their $3,500 a quarter is a three-week head start before Rivera makes the ratings publicly available on its website; nonetheless, one US collector, LA-based Rolando Jimenez, describes it as “an essential tool if you want to evaluate your emerging art-collecting ventures as a serious investment”. According to Rivera, the film producer Stefan Simchowitz was so impressed by ArtRank that he tried to buy a stake in it. An unabashed art flipper, Simchowitz famously invested $50,000 in 34 Murillos early in the artist’s career, selling one last September for $401,000.

Rivera says he understands why artists are angry about being gambled on, but he insists everyone is culpable: collectors for flipping the work; galleries for forcing collectors to buy lesser work in addition to pieces they really want; artists themselves for churning out work made by teams of assistants. With dealers wanting new work from new artists to meet demand from new collectors at new and ever-expanding art fairs (90 per cent of art at Frieze New York sold in the first two days), there’s no time to waste.

“The more contemporary art is seen as an instrument for investment, the riskier it becomes,” warns Kathryn Graddy, a professor of art market economics at Brandeis University in Massachusetts. The market is demanding more art, she says, “but it is one thing to encourage art, another to organise a market because the thinking is everybody will want the same hyped artists.”

ArtRank isn’t the first service to offer market insight (the pricing database Artnet Worldwide springs to mind, alongside ArtTactic, the market trends firm that recently estimated the art market is controlled by 150 people with resources to spend $20m on a single work of art); it’s just the first to rank artists as starkly as a stock-pick. But perhaps its arrival was inevitable. Many people will tell you that the 10-year boom in contemporary art has created a market that behaves like an unregulated stock market. Rumour has it that some collectors, like angel investors in tech start-ups, are placing artists on retainers and paying a bonus for works completed.

At the same time, some artists are protesting about the system they’re being exposed to. At Christie’s last month, Untitled (Fire, Red/Black U), an inkjet piece by the New Yorker Wade Guyton, fetched $3.5m. Guyton’s response was to print off multiple copies of the image from his original disk and post photos of them on Instagram. Others are musing remedies ranging from refusing to produce commercial work, to joining collectives, or showing work in mobile exhibitions unconnected to the art establishment.

It may be no more than a gesture, but it speaks of an honest search for meaning in a business that has lost its cultural cool. Rivera sees the trends the chewing-gum colours, the canvases with their stretcher bars exposed, the souvenirs from performance art and wonders about originality. “Sometimes it’s kind of a joke,” he admits and offers some age-old advice: buy what you really like. “If you made a $150,000 bonus last year, but know nothing about the art market, don’t go to Sotheby’s or Phillips to bid $50,000 on a Parker Ito you know nothing about. The only person who benefits from that is the speculator who bought it for $3,000.” Instead, he suggests, “go on ArtRank and find five artists under $10,000. If you spend $6,000 on a work at a gallery, the artist and the gallery each get half.”

Pulling out the keys to the Ducati, he adds: “The concern is that we’re ranking people but we all rank people anyway. Look at the Oscars. Look at athletes. Artists can grow and outperform, too. We’re just a gauge of their abilities.”

— Guardian News and Media Ltd