How Two Companies Dominate The $67 Billion Art World

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. The auction house is one of the biggest drivers of the art market. Sales at public auctions exceeded $29 billion last year. Two auction houses—Christie’s and Sotheby’s— compete head to head each year capturing more than 40% of global auction sales.

Here is the transcript of the video by…

That is up now one million seven hundred thousand lots on gentlemans bidand selling for three hundred and twenty thousand.Thank you, Rachel. 350 sold at eighty thousand.Thank you. 300’s.The global art market was valued at sixty seven point four billion dollarsin 2018, the second highest year ever.The United States, United Kingdom and China are the three largest artmarkets in the world. Their sales combined make up 84 percent of theglobal art market, with the U.S.capturing over half of that.So thank you very much, Cynthia.Woman in seven, the auction house is one of the biggest drivers of the artmarket. SALES at public auctions exceeded $29 billion last year.And then we have here a few additions works that are coming up forauction. An Andy Warhol cowl wallpaper.Great. Keith Haring from the fertility series.Robert Rauschenberg and Kiki Smith, five auction houses combined for overhalf of the global sales.And of those five, there are two that far surpass the others.Christie’s and Sotheby’s, they account for more than 40 percent of auctionsales within this duopoly.It’s a competition for total sales and works of art while adjusting toeconomic 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 singlefield at the very top.I’d say we’re either number one or number two in rare occasions in everyfield with names synonymous with the art world.Success for Christie’s and Sotheby’s is often more about standing out thanbeing number one. Teeth are always changing.Prices for individual works or artists will change not just according tothe market. But according to trends, according to precedents and greatexamples. By and large, the art markets really strong.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 thevalue range that I generally dealing with.I’m usually flying off somewhere to see a work in person because it’s thatimportant. I usually will discuss a proposal for sale with the clientbefore 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 differentand every client is different.Then we go to the contract is with a contract signed.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 comesin for sale is examined out of the frame.All of the details are then input into our computer system, which in theend 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 lotof framing supplies and materials in preparation for making sure that Iwould say ninety nine percent of the works that we sell in a sale have aframe on them so we can get them on the wall and have people see what thepiece 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 tobring over the high side.There was one that came up for auction a year ago and I believe ithammered 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 wherebasically everything that would fit on these walls is photographed.Whether it be sculpture, paintings, prints, multiples, photographs or eventhree dimensional furniture objects with each piece prepared for thepublic attention shifts to the exhibition where art is on display to thepublic prior to auction.The exhibition is really important because, you know, we draw on theresources 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 ofChicago sale.And then we have the auction.And that’s, you know, the final test of, you know, how great these thingsare, how much money are they’re going to make.And there’s always a surprise.I’m going to start it straight in at one thousand one, 10, 20, 30, 40, 50,160. Let’s see how far that gets us.One hundred and sixty one. Seventy one eighty one ninety two hundredthirty to forty. I also believe that the auctioneer is really critical atthis point. A great auctioneer can make a big difference in the value of asale. Now we get serious today that the hundred.Thank you. 950 standard.1Million. Ebola. Only one eat in person bitting is a huge part, but wealso have very active telephone bits, online beds and commission beds andonline bidding is something that we’re seeing more and more of selling toyou online in Hong Kong at one hundred and ten.Thousand dollars they’re wanting.Sold while live auctions bring excitement and millions of dollars insales. Choosing an auction house to sell one’s art is not always an easydecision. 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 itselfin New York. It would also become the first international auction house tosell 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 inthe industry and transforming the industry over two hundred seventy fiveyears. Sotheby’s boasts offices in 40 countries and ten auction locationsaround the world. It offers about 250 auctions each year across over 70categories. Christie’s was also founded in London and arrived shortlyafter Sotheby’s in 1766.Christie’s is the largest auction house in the world and one of the oldestart 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 atauction. 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 eighthundred thirty five million dollars.Last shots at seventy one million five hundred thousand.Year after year, Christie’s and Celebes vie for the top spot in theauction 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, whichhas been the great boom market of the last 10 years, impressionist andmodern art, which is the favorite for many people.And what drives so much museum attendance, Asian art and tried and truejewelry, watches and other luxury goods.We’re known for selling everything.But the leading grossing categories of late have been impressionist andmodern and postwar and contemporary art.20TH Century art is definitely in the headline generating sector.Equally were known for selling jewelry, furniture and decorative artswine. Broadly speaking, 20th century art would be over 30 percent of ourgross revenues. There’s also Phillips, the third largest London basedinternational 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 inHong Kong, Geneva, London, New York.While total sales have yet to exceed $1 billion, they’ve seen a onehundred twenty nine percent increase since 2014.The auction world and the art world generally is an increasinglytransparent environment, which I think is great.There is more and more data available to everyone just as often as aclient is calling me because they know me dust and that’s a privilege thatI work hard for. There are clients who are calling both sides and veryoften they tell us I think what makes people choose one option, healthversus another, is the combination of all of the factors, the pricing, themarketing, the digital outreach, the client base, the specialists and theability to carry out the promises that you make when you’re bringing anobject 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 tastesand 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 manydifferent buyers all around the world and through digital campaigns, telldifferent stories to different cultures.And that is really the driver of what’s been selling collections for thelast few years. On rare occasions, securing a work of art comes down to asimple game of chance.In the early 2000s, there was famously a consignment coming from aJapanese vendor with a wonderful collection who had a very goodrelationship, both with the Christie’s representative and our competitorsrepresentative. 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 todo 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’tevaluating 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 ofdollars where the variability between estimate and ultimate sale price canbe also a ratio of tens of millions of dollars, perhaps it’s a reallysignificant decision.Securing art is not the only challenge for auction houses.It’s also about attracting talent as competition has increased in the lastdecade. Well, I tell you, it wasn’t the case.I mean, this this movement of people between the major auction houses didnot happen at all.You know, for the beginning of my career, you know, through the nineteennineties, you were either one the house or the other house.I think it’s because the art business has grown so dramatically in thelast ten or fifteen years.Opportunities have changed so much as the businesses have grown so muchthat 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 achanging organization that’s continuing to redefine what an art auctionhouse is and how we can continue to evolve the art industry.That was really exciting to me.And that’s why I keep. The auction houses must also meet the changingdemands of the buyers.Buyers are getting younger and this means engaging with buyers in waysthey are comfortable digitally.Most interestingly, in the last year, we also saw 11000 new buyers cominginto 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,Christie’s and so the each had over $200 million in online sales lastyear. The extraordinary thing about the art market actually is that overthe last 20 years, realistically, the top, top, top clients haven’tchanged much. But below that are in quite a way below them.Is this explosion of interest in contemporary art worldwide from a muchyounger generation of people.The most obvious person being the Japanese collector Mazower, who has madea fortune from fashion retailing on the Internet and so is a very youngage, 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 industryis making the most money.We sell a luxury object for a lot of money, so if it’s bankers who aremaking a lot of money, our audience base will grow in the bankingcommunity. If it’s a great time, Protec, 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 countryare 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 optimisticfor the art market. The political climate in Europe and Brexit createssome 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 createmuseums. All else being in flux.It seems like an island of stability and calm in terms of people’s desireto 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 andthey are collectors and they will be desperate to acquire iconic works ofart.English

2 thoughts on “How Two Companies Dominate The $67 Billion Art World

  1. Interesting article. I am quite surprised about the online activity in the art world, I thought it would mostly be face to face.

    1. Yes. More and more and for years now. Long before the Internet and live feeds there were call ins and secret phone lines. Both these auction house stopped fighting each long ago and have collaborated to reach absolute domination in the art auction world of presented and facilitating high scale, multi-billion dollar sales with out insight, tax trail, questions where the money comes from, and endless hype to raise the prices even higher. It is sad that we have traffic cop ready at the end of the month to make quota and catch anyone coming home from work, yet we let billions get traded daily and don´t see anything from it except press clippings.

Leave a Reply

%d bloggers like this: