The coronavirus pandemic has forced instant and extreme changes to the traditional auction house business. Powerhouses such as Sotheby’s and Christie’s, which have been around since the 18th century, have been forced to make considerable structural changes to the traditional business model, dissolving boundaries between traditional departments and categories, and investing in production companies to enhance the quality of online auctions.
Phillips has also embraced the challenge facing the brick-and-mortar auction industry to migrate all sales activity online, innovating with new tech infrastructures to find ways for simultaneous online bidding across the world. Together, Sotheby’s, Christie’s and Phillips have made significant changes in response to the pandemic which seemed to have paid off and are likely to become permanent fixtures of how auction houses do business in the foreseeable future, as the industry is forced to evolve in order to survive in the current market landscape.
Online sales have undoubtedly been one of the biggest shifts in the way in which auction houses have been doing business this year, and this move online is set to remain a key part of the industry’s business model moving forward.
While some of these changes were a long-time coming and have helped the industry transition into the digital world, other shifts within the auction business reveal a lot about the current state of the art market and the economic impact of coronavirus restrictions on the sector.
Online sales have undoubtedly been one of the biggest shifts in the way in which auction houses have been doing business this year, and this move online is set to remain a key part of the industry’s business model moving forward.
Investing serious time and money into seamless live-streamed auctions, Christie’s, Sotheby’s and Phillips doubled their rate of online sales from 2019 within just the first 6 months of 2020, collectively holding more than 131 online sales in the first half of the year and bringing in $186.4 million. These figures suggest that collectors’ attitudes toward buying art online are also evolving and adapting to the new way of doing business, a shift which has also benefited online-only auction platforms, like Artnet, which has recorded a 50% increase in new buyers.
While there are clear successes of this new online model (Banksy’s Show me the Monet sold for £7.4 million at Sotheby’s contemporary sale in London last month, marking the second-highest price for a Banksy sold at auction), there are still issues which require attention.
Sotheby’s livestream modern and contemporary October auctions from Paris and London illustrate the challenges of the new online model. Confusion for buyers was caused by the rapid switch in currency from euros to British pounds, and the delay on the screen of last-minute bidding provided the auctioneer with additional challenges. Although the auction house sold millions of pounds worth of art, the potential danger of an online sales model is that it will reduce paintings to numbers, stripping the connection that potential buyers can have with the art by viewing it in person and having a conversation with a specialist.
Banksy, Show Me The Monet (2005). Image courtesy Sotheby’s.
The new flexibility around sale timing and categories is another notable change to the auction house business model that is likely to have a lasting impact on the auction calendar.
With the suspension of dozens of scheduled sales during the lockdown, businesses have had to drop the six-month sale cycle in London, New York and Hong Kong, and adopt a much more fluid auction cycle which blurs traditional boundaries between categories and departments.
KAWS, Ups and Downs (2013). Christie’s.
We’ve seen a blending of genres and cross-category sales at the big three auction houses, including Sotheby’s summer auction, “Rembrandt to Richter”, Christie’s “Trespassing” sale, and Phillips’ first cross-category auction in Asia, “Refresh:Reload”, which were all well-received by the buying public, suggesting that the art market is a lot more flexible than people have previously imagined.
A renewed approach to sale schedules will mean a big shift away from the static business and selling model, towards a more versatile and open-ended approach, as buyers and sellers will not want to wait 6 months to do business if an auction is cancelled or rescheduled due to restrictions. We might also see auction houses building stronger relations with the telecommunications and media world as they attempt to create coherent and engaging narratives around cross-category sales which initially might lack a centralised theme.
Although the big auction houses have been secretive about the extent of their cutbacks, it is clear that significant changes and restructuring to the operating model have already been implemented. With auction house departments planning to merge, sales moving online, and the decrease in demand for in-person specialist consultations, corporate restructuring is inevitable and will change the way the business works for the foreseeable future.
Deep cutbacks on dining, entertainment and travel are further factors which imply that auction houses will be leaner operations moving forwards. We can also expect to see some unusual alliances made between galleries and auction houses continue to develop.
During the first global lockdown, Sotheby’s set up its own Gallery Network for blue-chip galleries, and Christie’s teamed up with a consortium of galleries based in France. With much of Europe in a second lockdown, it will be interesting to see if further alliances are made between art-market players, as auction houses battle to secure consignments and dealers struggle to access clients.
With auction house departments planning to merge, sales moving online, and the decrease in demand for in-person specialist consultations, corporate restructuring is inevitable and will change the way the business works for the foreseeable future.
The first lockdown era transformed the traditional auction business, forcing venerable houses to leap into the new digital world. Having adapted to the new reality with immense speed and determination, the auction industry is well set up to face the challenges of a second lockdown.
We can expect to see the auction business adapt for the long haul, with immediate changes becoming permanent fixtures in the way the industry does business. Something to look out for in 2021 is the use of pattern recognition by auction houses. Pattern recognition has not yet been effectively adopted by auction houses, but the implementation of data science techniques of tracking ‘likes/dislikes’ is something that will immensely benefit the business in targeting consumers, as the digital era continues.
About the Author
Katie Beeton is an Artist Manager, Art Advisor and Writer based in London with international art world experience at leading auction houses, galleries, advisories and publications. She is primarily interested in modern and contemporary practices, and holds a first-class Masters in Arts Politics from New York University, Tisch School of the Arts.