How art gets generated.
Auction houses are vying for supremacy with art dealers by holding more exhibitions, and adjusting their business models accordingly.
For years now, the major auction houses have been going head to head with art dealers as part of their ongoing battle for supremacy. They have increasingly been throwing their considerable weight behind private treaty sales, in direct competition with galleries, and this part of their business has been growing strongly. Now they are ratcheting up the competition with another foray into dealer territory: private selling shows.
These are very much like what you would see in a gallery, and their number and global scope is increasing fast. Sotheby’s inaugurated what it calls a “dedicated private sale exhibition gallery”, called S|2, in its York Avenue headquarters in New York last year, and has held six exhibitions there since. In September, the art adviser Josh Baer, who runs the Baer Faxt newsletter, organised a show of 26 works by Californian artists at S|2. This month, in its Rockefeller premises, Christie’s unveils a show of paintings by artists working in New York in the 1970s. It has been organised by Robert Pincus-Witten and includes work by Susan Rothenberg, Richard Artschwager and Jo Baer—coincidentally, the mother of Josh Baer.
The increasing importance of all of this is illustrated by the announcement earlier this year that Christie’s chairman of post-war and contemporary art, Amy Cappellazzo, is taking on an “expanded role” in private sales; she says that “other top people in the firm are also focusing more on this aspect of the business”.
If the auction houses are putting more emphasis on this source of revenue, it is because income from classic auctioneering has fallen—at least at Sotheby’s, which reported a decrease of 42% in net income in the first half of 2012, and perhaps also at Christie’s (which is not a publicly quoted company like Sotheby’s so does not have to disclose its accounts). Both houses are constantly exploring new ways of making money, and Christie’s is also bolstering its online-only platform, with a sales gallery on the web. Last December, part of the Elizabeth Taylor sale was conducted online, and some of the works from the $100m sell-off by the Warhol Foundation will also be treated this way.
Christie’s notes that it has always hosted art exhibitions—even as far back as 1761, when members of the Society of Arts showed at “Mr Christie’s” in London. Phillips de Pury has held 25 selling exhibitions since 2005. But the number of selling shows at all auction houses has stepped up since 2011. According to Caroline Sayan, the international managing director of private sales at Christie’s: “We see them as an opportunity to use our space, which is not always busy with auctions, and as a way to engage clients throughout the year.”
As for online sales, she says they are a “marketing platform” used as a way to “reach a larger audience”. Christie’s is keen to connect with a younger demographic, which is more comfortable buying online, particularly in the contemporary art field. Its “private sales online gallery” this season offers works in the $250,000 to $1m range. Sotheby’s does not have a comparable venture, but Alex Platon, its head of private sales, says: “We are working towards this.”
Sotheby’s and Christie’s are clam-like about how much they are earning from these selling shows, refusing to separate them from their private sales totals. Sotheby’s reported $513m in private sales in the first half of 2012, making commission revenues of $41.5m on them. Christie’s says private treaty sales made £413.4m ($665m) in the first half of 2012, an increase of 53% on the same period last year. In both firms, private sales now represent more than 18% of turnover.
Platon says that private selling shows are “growing fast”. “We are putting more resources and more time into them, and this is bearing fruit,” he says. “We will continue to invest in this area.” Asked why the firm is so reluctant to give prices, he says: “In these shows, we operate along the same guidelines as dealers”—and it must be admitted that art galleries are often as tight-lipped. And, Platon says, “we have more flexibility on commission when working in the private sales arena”.
One question that could be asked is whether these new selling platforms will eviscerate the core business of auctioneering. Sayan says that the material offered online is “fresh, well-priced and attractive”. So why not put it into auction? “Our clients have differing needs; we discuss it with them, they make the choice,” she says. Platon defends the shift in platforms. “It’s absolutely not true that they cannibalise the market. The market is big enough.” Asked what will happen if the market shrinks, he says: “We will readjust.”
Art dealers are resigned if by no means thrilled by all of this. James Roundell, the chairman of the Society of London Art Dealers, says: “This does cause a lot of disquiet, but the art market is not static, and this is all part of how the auction houses have diversified over the past 15 years. What is confusing for buyers is a lack of transparency over who they are actually dealing with when they buy from an auction house today—is it acting as an auctioneer, an agent, an owner of a work of art or a dealer?”
Lucy Mitchell-Innes, the president of the American Art Dealers’ Association, notes: “The auction houses still have had no impact in the primary market, which continues to be about the relationship between artists and their gallerists, who nurture the careers of their artists and service their needs. An auction house may have a broad reach, but it is certainly not as deep.”
“The market has been expanding so much, and some of the major dealers have expanded as well. The art market is an industry like others; it’s a competitive situation,” Amy Cappellazzo says. “The internet has transformed it. I realised some time ago that we are not an auction house, we’re an art business: being just an auction house is old-fashioned.”
By Georgina Adam. Market, Issue 239, October 2012
Published online: 17 October 2012
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