The future of the art market: The role of Christie’s

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August 25, 2015 - Milan, Italy: Jeff Koons, Red Balloon Venus. Exhibition The Great Mother at the Palazzo Reale in Milan, created and produced by Fondazione Nicola Trussardi, in partnership with the Cultural office of the City of Milan. A total of 400 Art Works by 139 international artists, the iconography and the representation of motherhood in the twentieth-century from the avant-garde to present days. (Piero Oliosi/Polaris)

The quarantine measures imposed during the coronavirus pandemic, among other things, contribute to the emergence of unusual bidding formats and digital alliances in the art market. For example, the management of La Biennale Paris, the oldest art and antique exhibition in France having lost hope of opening a fair in the Grand Palais in early autumn because of COVID-19, made the unprecedented decision to organize the event as a series of disparate exhibitions. The highlight of the Biennale will be an online auction in October with the new partners of La Biennale Paris, the auctioneers of Christie’s.

Has managed to cooperate with 39 world-renowned dealers and Sotheby’s. In June 2020, bidders purchased 117 paintings and drawings by old masters and artists of the 19th century at the virtual auctions “Through the Dealer’s Eye” (The Dealer’s Eye: London and The Dealer’s Eye: New York).

In parallel, former Christie’s co-chairman Loic Guzer – it was with his direct involvement that Leonardo da Vinci’s painting “Savior of the World” went under the hammer in 2017 for a record $450 million – announced the launch of a private application Fair Warning, whose membership will be approved by Guzer himself. The essence of Fair Warning is that once a week at 5 p.m. Eastern time sharp, one piece of art will be sold here. Bidding will not last more than a few minutes. “You sleep, you lose,” The Wall Street Journal quoted Guzer as saying.

The future of the art market: The role of Christie’s
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Online bidding has plenty of advantages. From a dealer’s perspective, today’s auction houses and digital venues are creating an alternative version of the art fair and a new channel for promoting and selling gallery exhibits. Giants like Christie’s and Sotheby’s are giving customers access to works selected by some of the art world’s most notable specialists and gallerists. Not to mention the fact that electronic bidding is easier to administer than traditional bidding. According to auctioneers, confidence in online participation has increased markedly in recent months. For example, during the isolation, Christie’s was able to attract 30% of new customers.

Nothing is the same without an auctioneer

But there is one big flaw in the new realities – the absence of the auctioneer himself, without whom bidding has been unthinkable since the 5th century. (when the first mentions of auctions appeared) to the present day. The fact that even the most advanced and multi-functional online platform is not able to compete with the artistic presenter, building up the tension in the fight of collectors, admit it and the experts. “The personality of the auctioneer directly affects the course of the auction. A professional can increase sales, and incorrectly selected specialists, on the contrary, to disrupt them. Much depends on the style of the auctioneer. For example, for sales of memorabilia of famous musicians, we ask the auctioneer to collect bids at a fast pace – this makes the auction more exciting and awakens excitement in the participants. And for arts and crafts and vintage cars auctions, the auctioneer speaks to the audience in a more measured, gallery-like way”, explains Julien’s Auctions president Darren Julien’s subtleties.

Auctioneering is not without reason considered a special art that requires specialized education. Most auction houses train and improve the skills of their auctioneers in their own schools. At Christie’s, for example, the opportunity to take courses auctioneer given to employees every 3-5 years, and training takes about one year. During the selection process, more than half of the candidates are eliminated, another quarter – in the first months of training, says the president of Christie’s Jussi Pilkkanen. “It’s a very demanding activity, requiring full concentration for several hours. I once met a UN interpreter who congratulated me after a three-hour auction. He said his job is less stressful because the interpreters change every 20 minutes,” Pilkkanen said. – You don’t just have to be focused, you have to know the people in the hall, understand their needs to get them involved as much as possible. The auctioneer is also a kind of psychologist.

Mark Poltimore, Chairman of the Board of Sotheby’s in Russia, compares preparation for an auction to a gathering before a sporting event: “To overcome the excitement, we advise you to stretch a little before the auction, to relax your tense muscles – just like athletes. And when you take a seat behind the podium, stand firmly on both feet so that you don’t wobble, like when you’re rocking at sea. I have heard of auctioneers taking a bath before important evening bids, and many years ago I knew a colleague who emptied a glass of whiskey before every important auction. My trademark is to use the gavel my wife gave me about 40 years ago when I first started running auctions. I wouldn’t want to lose it.”

Auction guests have their own traditions, too. Some prefer to sit in a certain part of the hall, while others bid in their own secret way or use an auction spatula with a lucky number.

A mix of forms

A compromise between modern challenges and the charm of the classics has been so-called hybrid bidding, in which the auctioneer stands in an empty room in front of large screens and takes bids both online and from his colleagues who are in touch with clients who prefer to trade by phone. In June, such a scheme worked, for example, Sotheby’s. And it wasn’t the only one. “The ONE Relay auction, an international auction of twentieth-century art held in July, brought together auction rooms in Hong Kong, Paris, London, and New York. For lots exhibited in Hong Kong, customers from the United Kingdom fought, while Parisian collectors bought works presented in the United States, and so on,” says Pulkkinen.

The audience watching the digital auctions is impressive: the number of participants in Sotheby’s virtual auction was 5 times higher than the standard number of guests attending large evening auctions, which usually sell the most expensive and interesting lots. However, everyone agrees that to work without an audience with the same return as in front of several hundred spectators in the hall, many times more difficult. “Certainly customers bidding online has made the auctioneer’s job even more difficult,” Poltimore admits. “A good auctioneer is a showman, and he needs an audience to perform well. With new technology, auctioneers are left alone with an empty room, can’t see the faces of bidders, and can’t read the mood of collectors. Unfortunately, not all of us were able to adapt to the new conditions. Some are not as charismatic in a deserted room,” Julien explains.

The imperfection of the format also raises questions – virtual auctions sometimes resemble an elephant in a china shop. For example, at one point in Christie’s bidding for a Pierre Soulages painting in Paris, Pilkkanen of London said: “I’m selling it for…” but was soon interrupted by Paris-based auctioneer Cecile Verdier, who objected, “No! I’m not selling it!” And it took Sotheby’s nearly five hours to sell 62 lots, which is three times longer than the usual auction room bidding.

So a complete rejection of the usual auctions in the near future should not be expected. “In the future, we will see a combination of live and online bidding, with the latter probably playing a more prominent role, while the excitement remains the fate of the full evening auctions, – said Pilkkanen. – Traditional bidding will also take place in those categories that are problematic to fully translate online.

Auction houses: working from the inside

It is no secret that the behind-the-scenes life of the world’s major auction houses is no less interesting to the public than amazing art exhibitions or news from major museums.

Of course, today everyone can freely buy a masterpiece they like, but the art world is a special closed sphere, where the work of auction houses is a separate subject for discussion. And this topic arouses some trepidation among those who are not privy to it. But if you understand how are organized and on what principle do auction houses work, then everything becomes simple and clear.

What are auctions Auctions are a way of selling works of art on a competitive basis for buyers? The very first auctions took place in Ancient Rome, but their modern form is associated with the first book auction, held in the Netherlands in 1599.

Auctions are subdivided into: “English” (“ascending type”), “Dutch” (“descending type”).

An auction from England sets the minimum bid, which gradually increases during the auction, and the subject receives the highest price (this is how Christie’s and Sotheby’s operate). Auction from Holland, on the contrary, starts with the highest bid, then plays to the bottom. Whoever “intercepts” the first decreasing price, and the goods go to him.

Evaluation of works

Antiques, paintings, sculptures, and graphics are the basis of all art auctions. An auction house is a secondary market where art objects are resold. And the first time they are appraised and sold by galleries and art dealers. Auctions are only interested in works that have previously been recognized as works of art and proven to be “financially viable.”

The success of the auction is in the preliminary evaluation of the works. This is influenced by the fashionable trend, the author’s place in the art system, the genre in which the work is executed, the technique used, how rare the work is and how it is preserved, the “provenance”. Provenance is the legend of the object of art which indicates: authorship, date of creation, what collections the object was in, and where it was exhibited. The provenance is written in catalogs as a statement that the item is authentic. A unique provenance can have a significant impact on raising the price at auction.

Catalogs and Pre-Auction Exhibition

Every seller and buyer is instructed in detail. There is usually an exhibit opening a few days before the auction with the artwork then on display. For each event, a team of professionals prepares a catalog for sale or online viewing. It publishes information about the lots. A description of each item is followed by a price range called an “estimate”. It means the average market value of an object.

How to bid

Prospective buyers must register and receive a token. A client can either be present in person or can make a purchase in absentia, with the help of an advisor or by telephone, or by leaving a request in advance specifying the maximum price for a particular lot. Each buyer should carefully read the conditions of the auction, specified in the catalog. It should be borne in mind that the price in the auction room is less than in reality. First it is required to pay a commission of 7 to 25%. Sometimes the final price includes royalties. There are also taxes of the country where the auction takes place. All auctions where artworks are sold are divided into first and second categories. The first category includes the famous auction houses Christie’s and Sotheby’s. Tell us about their history and “kitchen” a little bit more detail.

Christie’s

Christie's, 1978
Christie’s, 1978

The first person who thought of entering the art market with the commission trade was James Christie Senior, a former naval officer. Already after his first transaction in 1766, he had a room in London, where a bidding room was set up. Soon after, high-ranking clients of the aristocracy and the royal family appeared, which brought the company to a leading position. The heyday of the firm came in 1848 when the revolution ushered in an “age of great sales. Christie’s brought the antique trade to perfection. The most significant auctions of the 18th and 19th centuries took place on his site. Of the early sales of interest to Russia is the collection of paintings by Sir Robert Walpole, which was purchased by the Russian Empress Catherine II and laid the foundation for the “Hermitage.” I’ll list the 2019 Top Lots: Jeff Koons’ “Rabbit” (1986) ($91 million), Robert Rauschenberg’s “Buffalo II” (1964) ($88.8 million), Paul Cézanne’s “Jug and Fruits” (1888/9) ($59.3 million), Andy Warhol’s “Double Elvis” (1963) ($53 million), Ed Ruscha’s “World Radio Pain Number 2” (1964) by Ed Ruscha ($52.5 million), and “Henry Geldzahler and Christopher Scott” (1969) by David Hockney ($49.5 million).

All of last year was marked by tectonic shifts in the marketing policy of major auction houses, which are taking lessons from the fashion world in interaction with Influencers and fashion-buying. 2018 was a watershed year. Sotheby’s, Christie’s and Phillips began working with new collections of young jewelers right “from the workbench”: items with zero provenance were first announced at the auctions of these giants. During the year there were radical personnel changes, interesting new names came to the attention of auction houses, and the number of collectors increased at the expense of young people.

The market’s potential was first evident at Sotheby’s special auction, which featured a collection of jewelry by Sean Lean, the British jewelry designer who worked with Alexander McQueen. In late 2017, there was an auction that featured catwalk jewelry from McQueen’s old collections. They raised more than $2 million, and actually galvanized the trend of collecting contemporary jewelry. Auction houses are still betting on the secondary market, but they are attracting young talents to promote it.

Phillips is the most active supporter of the new trend: over the past year this house introduced two interesting modern jewelers to collectors – Lauren Adriana and Ana Khoury, who previously showed her collections at the Weeks of haute couture in Paris. Khoury admits: the partnership with the auction house gave her access to an international audience. Sarah O’Brien, the head of international jewelry at Phillips, says that searching for interesting jewelers of the 20th and 21st centuries is a special mission of the auction house: “Working with modern jewelers gives us an opportunity not only to talk about the value of stones and design proven by time but also to show collectors jewelry that communicates with the world here and now. This is a product for people who want to live for the future and the present rather than the past.

In December, Christie’s in New York together with Italian Vogue presented the nonprofit Protagonist exhibition project: 14 designers who create jewelry from ethical materials. The exhibition opened almost immediately after the regular large-scale auction of Magnificent Jewels as part of Christie’s Lates – a soiree for the press, collectors and enthusiasts. Tailored to the trends of our time (the theme of responsible production triggers a maximum media interest), the project became a proper PR-enhancing position of the auction house in the field of jewelry trades.

The peak of the trend happened at the end of 2018. Sotheby’s curated the Fine Jewellery collection at its most prestigious December auction, inviting buyers from the conceptual London store Dover Street Market. Known for its selection of designers (including contemporary jewelry) who define the face of contemporary fashion, a week before the auction Dover Street Market presented a small selection of 16 lots in the store and a little more – in the exhibition halls of Sotheby’s for the pre-auction show. The result was a double-whammy: the auction house announced itself to a new and, as it turned out, relevant target audience, and Dover Street Market showed its buyers that its expertise was valued at the highest level. “We were very surprised to see how much the antique pieces in Sotheby’s collection resonated with our selection of contemporary designer jewelry,” says Mimi Hoppen, jewelry buyer at DSM. Sotheby’s plans are to expand its list of agents of influence and to reach new unfamiliar audiences. Those who know how to make money in the new digital world also need guides to spend it in the analog world.

 

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