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How Two Companies Dominate The $67 Billion Art World - YouTube
Channel: CNBC
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That is up now one million seven
hundred thousand lots on gentlemans bid
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and selling for three
hundred and twenty thousand.
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Thank you, Rachel. 350
sold at eighty thousand.
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Thank you. 300's.
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The global art market was valued at
sixty seven point four billion dollars
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in 2018, the second
highest year ever.
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The United States, United Kingdom and
China are the three largest art
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markets in the world. Their sales combined
make up 84 percent of the
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global art market, with the U.S.
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capturing over half of that.
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So thank you very much, Cynthia.
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Woman in seven, the auction house is one
of the biggest drivers of the art
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market. SALES at public auctions
exceeded $29 billion last year.
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And then we have here a few
additions works that are coming up for
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auction. An Andy
Warhol cowl wallpaper.
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Great. Keith Haring from
the fertility series.
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Robert Rauschenberg and Kiki Smith, five
auction houses combined for over
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half of the global sales.
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And of those five, there are
two that far surpass the others.
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Christie's and Sotheby's, they account for
more than 40 percent of auction
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sales within this duopoly.
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It's a competition for total sales and
works of art while adjusting to
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economic and buyer trends.
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We're like a sports team
competing against another sports team.
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We've won the Super Bowl most years
and we compete in almost every single
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field at the very top.
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I'd say we're either number one or
number two in rare occasions in every
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field with names synonymous
with the art world.
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Success for Christie's and Sotheby's is
often more about standing out than
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being number one. Teeth
are always changing.
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Prices for individual works or artists
will change not just according to
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the market. But according to trends,
according to precedents and great
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examples. By and large, the
art markets really strong.
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So the process of consigning a
work is both simple and detailed.
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Either I reach out to a client or
a client reaches out to me given the
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value range that I
generally dealing with.
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I'm usually flying off somewhere to see
a work in person because it's that
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important. I usually will discuss a
proposal for sale with the client
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before sending them a contract.
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In that case, you're discussing how
are we going to sell it?
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Where are we going to sell it?
When are we going to sell it?
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What's the estimate going to be?
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There are a lot of different things that
we do and every work is different
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and every client is different.
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Then we go to the contract
is with a contract signed.
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Art is shipped to the
warehouse and prepared for auction.
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When it's brought to us, we look
at it critically in the warehouse.
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We assess the condition.
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We check to see if
the estimate is correct.
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We're in Phillips Warehouse
in Long Island City.
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This is our hub in our main housing
and work area for the New York office.
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This is the cataloging area of the
warehouse where every piece that comes
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in for sale is examined
out of the frame.
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All of the details are then input
into our computer system, which in the
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end ends up generating the catalog.
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And here we are in the
framing studio in the warehouse.
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And this is the area, as you can see
around me, where we've got just a lot
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of framing supplies and materials in
preparation for making sure that I
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would say ninety nine percent of the works
that we sell in a sale have a
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frame on them so we can get them on
the wall and have people see what the
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piece looks like. And a good example
of what we do with framing.
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This is a recently
framed piece by M.C.
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Escher, the wonderful and
popular graphic artist.
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The estimate for the Esher is 40 to
60 thousand, and we expect that to
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bring over the high side.
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There was one that came up for auction
a year ago and I believe it
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hammered at about eighty thousand.
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And another piece about the same
size, about the same time period.
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Wonderful etching by Pablo Picasso.
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And this is our photography studio,
also located in the warehouse where
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basically everything that would fit
on these walls is photographed.
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Whether it be sculpture, paintings,
prints, multiples, photographs or even
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three dimensional furniture objects with
each piece prepared for the
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public attention shifts to the exhibition where
art is on display to the
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public prior to auction.
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The exhibition is really important because,
you know, we draw on the
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resources of the
marketing department.
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Everything comes together.
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You've worked for six months to
bring these pieces to auction.
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They're on display
with beautiful lighting.
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You can stand in front of them
and talk to the clients about them.
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Ladies and gentlemen,
welcome to Christie's.
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Welcome back this afternoon for the Chinese
art from the Art Institute of
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Chicago sale.
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And then we have the auction.
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And that's, you know, the final test
of, you know, how great these things
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are, how much money are
they're going to make.
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And there's always a surprise.
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I'm going to start it straight in at
one thousand one, 10, 20, 30, 40, 50,
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160. Let's see how far that gets us.
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One hundred and sixty one. Seventy
one eighty one ninety two hundred
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thirty to forty. I also believe that
the auctioneer is really critical at
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this point. A great auctioneer can make a
big difference in the value of a
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sale. Now we get serious
today that the hundred.
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Thank you. 950 standard.
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1Million. Ebola. Only one eat in person
bitting is a huge part, but we
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also have very active telephone bits,
online beds and commission beds and
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online bidding is something that we're seeing
more and more of selling to
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you online in Hong Kong
at one hundred and ten.
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Thousand dollars they're wanting.
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Sold while live auctions bring excitement
and millions of dollars in
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sales. Choosing an auction house to sell
one's art is not always an easy
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decision. Christie's and Celebes
both have rich histories.
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Sotheby's was founded in London in
1744 as a bookseller in 1955.
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It became the first international
auction house after establishing itself
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in New York. It would also become
the first international auction house to
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sell in Hong Kong,
Russia, India and France.
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Until this year, Sotheby's was listed
on the New York Stock Exchange.
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A public company for 31 years.
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We're really celebrating a history of
innovation and being a forerunner in
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the industry and transforming the industry
over two hundred seventy five
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years. Sotheby's boasts offices in 40
countries and ten auction locations
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around the world. It offers about 250
auctions each year across over 70
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categories. Christie's was also founded
in London and arrived shortly
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after Sotheby's in 1766.
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Christie's is the largest auction house in
the world and one of the oldest
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art auction houses in the
world were headquartered in London.
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And we've been operating in New
York for about 40 years.
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Christie's has offices in 46
countries with 10 auction locations.
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Each year, Christie's hosts about 350
auctions across over 80 categories.
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It holds multiple records, including the most
valuable work to be sold at
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auction. A DA Vinci that
sold for over $450 million.
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It also sold the most
valuable private collection at auction.
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The collection of Peggy and David
Rockefeller, which achieved over eight
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hundred thirty five million dollars.
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Last shots at seventy one
million five hundred thousand.
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Year after year, Christie's and Celebes vie
for the top spot in the
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auction world with
Christie's topping sales.
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All but two years since 2008.
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The areas that create revenue
are primarily the paintings departments,
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first and foremost in terms of
value, postwar and contemporary art, which
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has been the great boom market of
the last 10 years, impressionist and
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modern art, which is the
favorite for many people.
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And what drives so much museum attendance,
Asian art and tried and true
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jewelry, watches and
other luxury goods.
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We're known for selling everything.
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But the leading grossing categories of
late have been impressionist and
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modern and postwar
and contemporary art.
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20TH Century art is definitely
in the headline generating sector.
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Equally were known for selling
jewelry, furniture and decorative arts
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wine. Broadly speaking, 20th century art would
be over 30 percent of our
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gross revenues. There's also Phillips,
the third largest London based
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international auction house founded in
1796 with a narrower focus.
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We've continued to focus on
20th and 21st century.
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And we have expanded further our geographic
reach and now have sales in
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Hong Kong, Geneva, London, New York.
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While total sales have yet to exceed
$1 billion, they've seen a one
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hundred twenty nine percent
increase since 2014.
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The auction world and the art
world generally is an increasingly
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transparent environment, which I
think is great.
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There is more and more data available
to everyone just as often as a
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client is calling me because they know
me dust and that's a privilege that
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I work hard for. There are clients
who are calling both sides and very
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often they tell us I think what
makes people choose one option, health
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versus another, is the combination of all
of the factors, the pricing, the
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marketing, the digital outreach, the client
base, the specialists and the
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ability to carry out the promises that
you make when you're bringing an
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object or a collection to market.
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I think focus is the
most important differentiator for Philips.
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We do focus very much on
contemporary lifestyle, on contemporary tastes
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and contemporary art. And as such,
we offer a slightly different feel.
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Our brand resonates differently.
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I think in the market then Christie's
and Sotheby's, we have a fresher,
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younger approach.
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The reason that people
choose Christie's is multi-fold.
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One can see the reputation of
the particular department more and more.
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Its the ability of the auction house
to tell a story globally to many
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different buyers all around the world
and through digital campaigns, tell
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different stories to
different cultures.
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And that is really the driver of
what's been selling collections for the
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last few years. On rare occasions, securing a
work of art comes down to a
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simple game of chance.
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In the early 2000s, there was
famously a consignment coming from a
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Japanese vendor with a wonderful collection
who had a very good
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relationship, both with the Christie's
representative and our competitors
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representative. And it was so difficult
for him to make a decision.
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Despite our drawing distinctions in
terms of performance pricing,
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distribution. Network
marketing abilities.
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He's still found himself unable
to make the decision.
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Ultimately told them that the winner would
be decided on a game of rock,
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paper, scissors, and each of the auction
houses had to send a delegate to
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do the Rock-Paper-Scissors for the
pursuit of this consignment.
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I think it's a terrible way to
choose an auction house because he wasn't
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evaluating the real reasons, but
just luck and fate.
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But it went their way. Fortunately,
this is not the norm.
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When you decide who is going to
sell something worth tens of millions of
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dollars where the variability between estimate
and ultimate sale price can
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be also a ratio of tens of
millions of dollars, perhaps it's a really
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significant decision.
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Securing art is not the
only challenge for auction houses.
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It's also about attracting talent as
competition has increased in the last
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decade. Well, I tell you,
it wasn't the case.
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I mean, this this movement of people
between the major auction houses did
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not happen at all.
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You know, for the beginning of my
career, you know, through the nineteen
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nineties, you were either one the
house or the other house.
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I think it's because the art business
has grown so dramatically in the
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last ten or fifteen years.
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Opportunities have changed so much as
the businesses have grown so much
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that we have alumni and friends
all through the art business.
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I have loved my job in all of my
career, but I wanted to be part of a
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changing organization that's continuing to
redefine what an art auction
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house is and how we can
continue to evolve the art industry.
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That was really exciting to me.
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And that's why I keep. The auction
houses must also meet the changing
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demands of the buyers.
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Buyers are getting younger and this
means engaging with buyers in ways
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they are comfortable digitally.
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Most interestingly, in the last year, we
also saw 11000 new buyers coming
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into Sotheby's. Of which 60 percent
of them came through online.
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So we're dedicating a lot of
effort and resources to innovating.
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Our online platform and the ways that
we reach out to clients online,
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Christie's and so the each had over
$200 million in online sales last
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year. The extraordinary thing about the
art market actually is that over
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the last 20 years, realistically, the
top, top, top clients haven't
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changed much. But below that are
in quite a way below them.
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Is this explosion of interest in
contemporary art worldwide from a much
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younger generation of people.
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The most obvious person being the
Japanese collector Mazower, who has made
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a fortune from fashion retailing on the
Internet and so is a very young
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age, is with us in the
market buying Bhasker at $100 million.
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And we would not have
seen that 20 years ago.
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The best indicator of what industry people
will come from is what industry
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is making the most money.
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We sell a luxury object for a lot
of money, so if it's bankers who are
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making a lot of money, our audience
base will grow in the banking
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community. If it's a great time,
Protec, we'll have more tech people.
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If it's a great time in real estate.
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We'll have more real estate people.
[855]
And the biggest driver of that then
isn't just what people in this country
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are doing, but what is
changing in the global economy.
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So we've seen enormous growth
from all over Asia.
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But despite growing global concerns,
the auction houses remain optimistic
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for the art market. The political
climate in Europe and Brexit creates
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some trepidation.
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The political climate in China and
Hong Kong create some trepidation.
[880]
And the tariff disputes
also create trepidation.
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That said, what we've seen is that works
of art are seen as a stable,
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constant store of value.
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They're personally edifying to
anybody who has them.
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They are good for the community when
people buy them for museums or create
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museums. All else being in flux.
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It seems like an island of stability
and calm in terms of people's desire
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to commune with works of art
and to live with them.
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The world is generally a much richer place
than it was a few years ago,
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and I think everybody
sees that trend continuing.
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I have to say that the trend is
for wealthy people to get even wealthier.
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The scale of the wealth in the
hands of people now is breathtaking and
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they are collectors and they will be
desperate to acquire iconic works of
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art.
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