The global art market was valued at $67.4 billion in 2018, the second highest year ever. The United States, United Kingdom and China are the three largest art markets in the world. Their sales combined make up 84% of the global art market, with the U.S. capturing over half of that. The auction house is one of the biggest drivers of the art market. Sales at public auctions exceeded $29.1 billion last year.
Top Auction Houses of the World
Five auction houses combined for over half of the global sales.
- Poly Auction
- China Guardian
And of those five, there are two that far surpass the others. Christie’s and Sotheby’s, they account for more than 40% of auction sales. Within this duopoly, it’s a competition for total sales and works of art while adjusting to economic and buyer trends.
We’re like a sports team competing against another sports team. We’ve won the Super Bowl most years and we compete in almost every single field at the very top. I’d say we’re either number one or number two in rare occasions in every field.
With names synonymous with the art world, success for Christie’s and Sotheby’s is often more about standing out than being number one.
“Prices for individual works or artists will change not just according to the market but according to trends, according to precedents and great examples. By and large, the art market is really strong.” Brooke Lampley, Vice Chairman Sotheby’s.
Art to Auction
“So the process of consigning a work is both simple and detailed. Either I reach out to a client or a client reaches out to me given the value range that I generally dealing with. I’m usually flying off somewhere to see a work in person because it’s that important. I usually will discuss a proposal for sale with the client before sending them a contract. In that case, you’re discussing how are we going to sell it? Where are we going to sell it? When are we going to sell it? What’s the estimate going to be? There are a lot of different things that we do and every work is different and every client is different.” Brooke Lampley
When the contract is signed, the art is shipped to the warehouse and prepared for auction. When it’s brought to us, we look at it critically in the warehouse. We assess the condition. We check to see if the estimate is correct. We’re in Phillips Warehouse in Long Island City. This is our hub in our main housing and work area for the New York office.
This is the cataloging area of the warehouse where every piece that comes in for sale is examined out of the frame. All of the details are then input into our computer system, which in the end ends up generating the catalog. And here we are in the framing studio in the warehouse. And this is the area, as you can see around me, where we’ve got just a lot of framing supplies and materials in preparation for making sure that I would say ninety nine percent of the works that we sell in a sale, have a frame on them so we can get them on the wall and have people see what the piece looks like. And a good example of what we do with framing. This is a recently framed piece by M.C. Escher, the wonderful and popular graphic artist.
The estimate for the Esher is 40 to 60 thousand, and we expect that to bring over the high side. There was one that came up for auction a year ago and I believe it hammered at about eighty thousand. And another piece about the same size, about the same time period. Wonderful etching by Pablo Picasso. And this is our photography studio, also located in the warehouse where basically everything that would fit on these walls is photographed. Whether it be sculpture, paintings, prints, multiples, photographs or even three dimensional furniture objects.
With each piece prepared for the public attention shifts to the exhibition where art is on display to the public prior to auction. The exhibition is really important because, you know, we draw on the resources of the marketing department. Everything comes together. You’ve worked for six months to bring these pieces to auction. They’re on display with beautiful lighting. You can stand in front of them and talk to the clients about them.
Ladies and gentlemen, welcome to Christie’s. Welcome back this afternoon for the Chinese art from the Art Institute of Chicago sale. And then we have the auction. And that’s, you know, the final test of, you know, how great these things are, how much money are they’re going to make. And there’s always a surprise.
While live auctions bring excitement and millions of dollars in sales. Choosing an auction house to sell one’s art is not always an easy decision. Christie’s and Celebes both have rich histories. Sotheby’s was founded in London in 1744 as a bookseller in 1955. It became the first international auction house after establishing itself in New York. It would also become the first international auction house to sell in Hong Kong, Russia, India and France. Until this year, Sotheby’s was listed on the New York Stock Exchange. A public company for 31 years.
We’re really celebrating a history of innovation and being a forerunner in the industry and transforming the industry over two hundred seventy five years. Sotheby’s boasts offices in 40 countries and ten auction locations around the world. It offers about 250 auctions each year across over 70 categories.
Christie’s was also founded in London and arrived shortly after Sotheby’s in 1766. Christie’s is the largest auction house in the world and one of the oldest art auction houses in the world were headquartered in London. And we’ve been operating in New York for about 40 years. Christie’s has offices in 46 countries with 10 auction locations. Each year, Christie’s hosts about 350 auctions across over 80 categories. It holds multiple records, including the most valuable work to be sold at auction. A DA Vinci that sold for over $450 million. It also sold the most valuable private collection at auction. The collection of Peggy and David Rockefeller, which achieved over eight hundred thirty five million dollars.
Year after year, Christie’s and Celebes vie for the top spot in the auction world with Christie’s topping sales all but two years since 2008. The areas that create revenue are primarily the paintings departments, first and foremost in terms of value, postwar and contemporary art, which has been the great boom market of the last 10 years, impressionist and modern art, which is the favorite for many people and what drives so much museum attendance, Asian art and tried and true jewelry, watches and other luxury goods.
We’re known for selling everything. But the leading grossing categories of late have been impressionist and modern and postwar and contemporary art. 20th Century art is definitely in the headline generating sector. Equally were known for selling jewelry, furniture and decorative arts wine. Broadly speaking, 20th century art would be over 30 percent of our gross revenues.
There’s also Phillips, the third largest London based international auction house founded in 1796 with a narrower focus. We’ve continued to focus on 20th and 21st century. And we have expanded further our geographic reach and now have sales in Hong Kong, Geneva, London, New York. While total sales have yet to exceed $1 billion, they’ve seen a one hundred twenty nine percent increase since 2014.
The auction world and the art world generally is an increasingly transparent environment, which I think is great. There is more and more data available to everyone just as often as a client is calling me because they know me and that’s a privilege that I work hard for. There are clients who are calling both sides and very often they tell us.
I think what makes people choose one option, health versus another, is the combination of all of the factors, the pricing, the marketing, the digital outreach, the client base, the specialists and the ability to carry out the promises that you make when you’re bringing an object or a collection to market.
I think focus is the most important differentiator for Philips. We do focus very much on contemporary lifestyle, on contemporary tastes and contemporary art. And as such, we offer a slightly different feel. Our brand resonates differently. I think in the market then Christie’s and Sotheby’s, we have a fresher, younger approach.
The reason that people choose Christie’s is multi-fold. One can see the reputation of the particular department more and more, its the ability of the auction house to tell a story globally to many different buyers all around the world and through digital campaigns, tell different stories to different cultures. And that is really the driver of what’s been selling collections for the last few years.
On rare occasions, securing a work of art comes down to a simple game of chance. In the early 2000s, there was famously a consignment coming from a Japanese vendor, with a wonderful collection who had a very good relationship, both with the Christie’s representative and our competitors representative. And it was so difficult for him to make a decision. Despite our drawing distinctions in terms of performance pricing, distribution network marketing abilities, he’s still found himself unable to make the decision.
Ultimately told them that the winner would be decided on a game of rock, paper, scissors, and each of the auction houses had to send a delegate to do the Rock-Paper-Scissors for the pursuit of this consignment. I think it’s a terrible way to choose an auction house because he wasn’t evaluating the real reasons, but just luck and fate but it went their way.
Fortunately, this is not the norm. When you decide who is going to sell something worth tens of millions of dollars where the variability between estimate and ultimate sale price can be also a ratio of tens of millions of dollars, perhaps it’s a really significant decision.
Securing art is not the only challenge for auction houses. It’s also about attracting talent as competition has increased in the last decade. Well, I tell you, it wasn’t the case. I mean, this this movement of people between the major auction houses did not happen at all. You know, for the beginning of my career, you know, through the nineteen nineties, you were either one house or the other house.
I think it’s because the art business has grown so dramatically in the last ten or fifteen years. Opportunities have changed so much as the businesses have grown so much that we have alumni and friends all through the art business.
I have loved my job in all of my career, but I wanted to be part of a changing organization that’s continuing to redefine what an art auction house is and how we can continue to evolve the art industry. That was really exciting to me.
The auction houses must also meet the changing demands of the buyers. Buyers are getting younger and this means engaging with buyers in ways they are comfortable digitally. Most interestingly, in the last year, we also saw 11000 new buyers coming into Sotheby’s. Of which 60 percent of them came through online. So we’re dedicating a lot of effort and resources to innovating our online platform and the ways that we reach out to clients online.
The extraordinary thing about the art market actually is that over the last 20 years, realistically, the top, top, top clients haven’t changed much. But below that are in quite a way below them. Is this explosion of interest in contemporary art worldwide from a much younger generation of people. The most obvious person being the Japanese collector Mazower, who has made a fortune from fashion retailing on the Internet and so is a very young age, is with us in the market buying Bhasker at $100 million. And we would not have seen that 20 years ago.
The best indicator of what industry people will come from is what industry is making the most money. We sell a luxury object for a lot of money, so if it’s bankers who are making a lot of money, our audience base will grow in the banking community. If it’s a great time, for tech, we’ll have more tech people. If it’s a great time in real estate. We’ll have more real estate people. And the biggest driver of that then isn’t just what people in this country are doing, but what is changing in the global economy. So we’ve seen enormous growth from all over Asia.
But despite growing global concerns, the auction houses remain optimistic for the art market. The political climate in Europe and Brexit creates some trepidation. The political climate in China and Hong Kong create some trepidation. And the tariff disputes also create trepidation. That said, what we’ve seen is that works of art are seen as a stable, constant store of value. They’re personally edifying to anybody who has them. They are good for the community when people buy them for museums or create museums. All else being in flux. It seems like an island of stability and calm in terms of people’s desire to commune with works of art and to live with them.
The world is generally a much richer place than it was a few years ago, and I think everybody sees that trend continuing. I have to say that the trend is for wealthy people to get even wealthier. The scale of the wealth in the hands of people now is breathtaking and they are collectors and they will be desperate to acquire iconic works of art.