In recent art world news, following strong sales in 2017, the international auction houses are said to be “feeling bullish” once again. Last Friday, Christie’s announced that it had sold about £5.1 billion or $7.3 billion of art and collectibles worldwide (up 26 percent from 2016) in 2017. Phillips saw a similar improvement over 2016 sales with auction and private sales of $708.8 million (up 25 percent from 2016) in 2017. As both auction houses are privately held, neither one disclosed a profit or loss. Publicly traded Sotheby’s will disclose its financial results for 2017 at month’s end.
The $450.3 million fetched in November for Leonardo da Vinci’s “Salvator Mundi” helped propel Christie’s auction sales by 38 percent along with 65 lots that sold for more than £10 million. Many of the auction house’s lots were supported by financial guarantees. The strong sales signify that the art market is surging.
Auction houses among the likes of Christie’s, Sotheby’s and Phillips have high overheads with business models that haven’t changed much since the 18th-century. A primary challenge is that they keep up with the upward trajectory growth of global wealth and earn money from it. Each auction house has its own unique strategy in doing so.
In particular, Phillips’ key selling category is 20th-century and contemporary art that raised $421.8 million at auction last year (or 60 percent of the annual total). Phillips complements its art auctions with sales of 20th– and 21st-century design, photography and prints, and generates further revenue by sales of watches and jewelry. Phillips has held just two online-only auctions in collaboration with Artsy last year.
In contrast, Christie’s attracts new buyers through its own well-established program of online-only auctions. Last year, Christie’s held 85 digital sales of luxury goods and lower-value collectibles fetching £55.9 million or about $80 million. Although this accounted for only one percent of annual total sales, it represented 37 percent of the auction house’s new buyers.
Last December, Sotheby’s announced that it had sold $4.7 billion of art and collectibles at auction in 2017 (up 13.1 percent from 2016). While this was below Christie’s auction sales of $6.6 billion, Sotheby’s has diversified into other areas, including financial services, art advice and managing artist estates, and image recognition technology. Sotheby’s upcoming financial results for 2017 will disclose the amount of its revenue derived from such 21st-century business models.
But for the moment, the 18th-century model of live auctions continues to do nicely [for the auction houses], tracking global economic growth.”
It remains to be seen as to how technology is going to change things, but it would seem that it could streamline and add efficiency to the art buying process and attract a greater reach of new buyers, particularly the future generation of art buyers and collectors.