The lockdown boom in an empty room
Auction houses have enjoyed a stellar pandemic, but could their online success prove a curse?
This article is taken from the May 2021 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issue for just £10.
Bonhams, according to a beaming Colin Sheaf, group deputy chairman, has had one of its best years ever. This is a surprise when one considers that auctioneering is one of the oldest of all trades, whose basic idea — get a crowd of people together and flog them something at the highest price — had not changed much since the selling of slaves under the Roman Empire.
But Covid has reset the ground rules. Nobody could gather in auction rooms; the paddle with a number on it to identify the buyer became as obsolete as the strigil. To begin with, sales were postponed, lots were withdrawn and takings plummeted. But with an adaptability that belies the crusty image of the great auction houses, the aesthetes-pretending-to-be-businessmen crammed a decade of technological change into nine months.
To the men and women taking the sales, the new world has its demands. There is nobody in the room, and I’m told it’s exhausting to orchestrate the bidding of people on the internet and telephone who cannot be seen. The issue of “latency” — the fractional time lag between the buyer clicking on his computer mouse and the information being relayed to the auctioneer’s screen — remains problematic. Sales have lost their element of theatre. No longer can the occupant of the podium use charm and stagecraft to tempt wavering bidders to up the price.
But the pool of people wanting to buy has increased. “They’re sitting around with time on their hands,” says one wielder of the gavel. “Buying at auction is home entertainment.” Distance has been abolished and buyers could now come from anywhere in the world, from Korea (South) to Kazakhstan.
Previously obscure local businesses have suddenly been able to reach a national if not global audience
“We just had some amazing sales,” says Orlando Rock, chairman of Christie’s UK. “They can be livestreamed across several salerooms, with Modern British in London seamlessly taking over from Contemporary in New York before potentially handing onto Hong Kong. They’ve been 100 per cent sold, at an average of 2.5 times the low estimates.” New works-on-paper records were set for van Gogh and Augustus John, while Sir Winston Churchill’s Tower of Koutoubia Mosque fetched more than £8 million, a record for the artist previously known as prime minister.
This is in itself an extraordinary development for an industry whose reach appeared to have become cramped by Brexit. But in some ways the home demographic brings even gladder news. Auction houses, oozing elitism and snobbery, had long sought a younger audience. They realised that their traditional clientele, tottering along to pre-sale champagne receptions in their diamonds and furs, were not being naturally replaced, and they wanted to refresh the gene pool by reaching the young thrusters of software, biotech and finance.
These are people who may not naturally wear ties and could have been brought up on Beyoncé, not Bach. They needed an introduction to the joy of collecting — but how to hook them? New collectors’ events and after-work sales, held at a time when they were able to attend, were not cutting through.
But the pandemic brought an answer to that. Live bidding online.
Now anyone can take part without embarrassment. No need to fear the appraising glances of those haughty maidens on the reception desk. You can wear pyjamas rather than pinstripes if you want to. Or if you’re at work, it’s easy to change screens for a shot of the excitement that comes with this form of retail selling. More than 60 per cent of visitors to the Christie’s website are people who were previously unknown to the company; they translate into a third of the online buyers. Not surprisingly, since Christie’s is crème de la crème, its operation is slick.
But the action is equally brisk at the other end of the market. Unlike most glossy magazines, which have seen readership and advertising plummet in the course of this century, the Antiques Trade Gazette played a blinder by founding the online auction site www.the-saleroom.com in 2006. It provides a platform for auction houses which lack the prestige and resources of big names. These previously obscure local businesses have suddenly been able to reach a national if not global audience, boosted by the closure of the country’s antique shops. So when the website was launched on the stock market earlier this year, its sale price leapt by a third on the first day, lifting the company’s value from £600 million to £800 million.
Anyone can take part without embarrassment, you can wear pyjamas rather than pinstripes
Online technology in this as in other areas of life has gone from freshly-hatched egg to gliding swan in record time. Expectations of buyer resistance by the top auction houses led them not only to put dozens of images of each object online but accompany them with video and “augmented reality” — a high-powered zoom function which allows viewers to zero in on the surface of a painting or ceramic pot at a far higher level of detail than would be possible with the naked eye. “We were pleasantly surprised,” says Stefan Pepe, chief technology and product officer for Sotheby’s.
Clients bid large sums on the basis of what they saw online, supported, in the case of the biggest auction houses, by an authenticity guarantee. Even without a guarantee, Francis Bacon’s Triptych Inspired by the Oresteia of Aeschylus of 1981 sold for $74 million ($84.6 million with fees) at Sotheby’s last summer.
It could be that guarantees aren’t so important to the new global buyers more interested in the look of the thing — and the status it confers — than stuffy considerations like provenance. They are well served by a gizmo that allows clients to upload the details of their drawing room to see how the Matisse being offered would look on their walls. In internet terms, innovations like this have the much-valued quality of being “sticky” — they keep users on the site for longer, making them more likely to bond with the content and come back.
But hold on. What has been a boon for auction houses during Covid could, in the longer term, prove a curse. If Sotheby’s, Christie’s and the-saleroom.com can do it, why not other players? Anyone can set up a cool website. Modern buyers don’t always care about famous names and brand reputation. Russian oligarchs use eBay to buy giga-yachts.
In 2000, a collector paid £1.1 million for a baseball card showing Pittsburgh Pirates star Honus Wagner produced by the American Tobacco Company at the turn of the twentieth century (only 200 were printed: Wagner dissociated himself from the sponsor since he disapproved of smoking). There is a lively trade in furniture and works of art at the lower end, the sellers often being small dealers for whom the cost of a shop is now prohibitive. How long before the value of the objects sold on eBay goes up and such sites challenge the traditional auction houses, with their expensive premises and staffs of experts?
Until now, the razzmatazz that accompanies a sale such as the Rockefeller collection, which Christie’s toured around the world before selling for a record $835 million in 2018, has been part of the auction house’s stock in trade, along with blockbuster catalogues in many volumes and the schmoozing of potential buyers. But when the buyers are scattered around the world, poring over screens rather than books, however sumptuous, these traditional tools of salesmanship become useless.
For auction house old-timers, the last three decades of the twentieth century were a golden age
Neither buyers nor sellers will find it worth the high premium (27.5 per cent on the first £2,500 of the hammer price, in the case of Bonhams) that auction houses charge for their services; there is no buyer’s premium on eBay. Instead, eBay charges a flat fee to list their items. The percentage of the final value charged by eBay is 9 per cent in the case of art and antiques, compared with more than 20 per cent when auction houses charge their standard fee (although they rarely do so for big-ticket items: it’s a competitive market).
For auction house old-timers, the last three decades of the twentieth century were a golden age. “When I opened the Sotheby’s auction house in Paris in the late 1990s,” remembers James Stourton, who stepped down from his role as chairman of Sotheby’s UK in 2012 and now writes about collecting and other subjects in the arts, “I felt like Alexander the Great Conquering the East. Nobody could stop me.”
The inaugural sale in the swish rue du Faubourg Saint-Honoré premises, opposite the Elysée Palace, was typical of the riches that could be picked — its subject was the fabulous collection formed by the dazzling party-giver and man of taste Charles de Beistegui, famous for a roof terrace on the Champs-Élysées decorated as a room with a fireplace by Salvador Dalí and a spectacular masked ball in 1951, signalling to European high society that postwar austerity was over.
Before Christie’s Paris, there had been the Impressionist boom of the 1980s, fuelled by Japanese buyers. After them came the Russians, then the dot.com billionaires. Although the prices being fetched by Old Masters were put in the shade by the sales of contemporary art in New York, London could — and still does — occasionally pull a Raphael or a Rubens out of the bag; works by both sold for more than £40 million in the 2010s.
But the old hegemony has been broken. “It’s like the end of the Roman Empire,” says Stourton. “There are still the pageants and circuses but the edges are being nibbled away by…”. He does not say barbarians but the word hangs in the air. “I’d say we were in the equivalent of the fourth century AD.” Not long to go.
As we have seen on the High Street, trends that were in evidence before 2020 have been exacerbated by the pandemic. Auction houses have been one of the many British industries to struggle to meet globalisation. A generation ago, so many antiques and works of art had been assembled by British collectors over the centuries that sales, even at the leading auction houses, could be cosy affairs — not always, admittedly, to the health of the trade. The principal buyers would be a group of ten or 15 dealers who knew each other and the auctioneer and bought either on their own behalf or that of a client; few people thought of leaving a commissioned bid at the desk.
The City of London was still creating home-grown collectors. When Moscow, Mumbai and Shanghai became the new centres of wealth, buyers made friends with their own local dealers and, in any case, the new billionaires were different, with a ring of agents to protect them. Auction houses found them unreachable. They could not form the relationships with buyers that were the lifeblood of the old system. At the same time, they squandered the loyalty of sellers. This was another aspect of globalisation because both Christie’s and Sotheby’s were bought by international investors. The money men did what they always do and analysed the profit centres, finding that 80 per cent of profit came from high-value sales, particularly of contemporary art. Their strategy was therefore to focus on these sales and axe the departments that sold the stuff of granny’s country house — English school watercolours and tapestries. This reached its culmination with the closure of Christie’s South Kensington, which sold what might be termed the diffusion range: objects that were not quite good enough for glamorous King Street.
For all the hype and smashed records, the margins on the sale of works of art at auction are pitifully small
This policy backfired. “You can’t say to an old-fashioned collector that we’d love to sell your Impressionists but you can take your scabby porcelain dinner service elsewhere. We used to offer a package,” says Stourton. Part of that package were the valuations which clients would constantly require for insurance or probate. To do them required a full team of experts, capable of assessing Hepplewhite and longcase clocks as well as Monets and Damien Hirsts.
Clients bonded with their auction house favourites and, when they came to sell their treasures, did not negotiate on fees. It isn’t like that now. The disappearance of the middle stratum from both Sotheby’s and Christie’s explains the rise of previously second-division players such as Bonhams. Now the internet has put even their position in jeopardy, as rivals emerge from provincial centres for whom geography is no longer a constraint.
The fact is that for all the hype and smashed records, the margins on the sale of works of art at auction are pitifully small. Hence the lengths to which auction houses will go to secure sales on profitable terms that, in the late 1990s, included collusion. (In 2001, a New York court found former owner of Sotheby’s Alfred Taubman and chief executive Dede Brooks guilty of price-fixing with Christie’s.)
London has the added problem of Brexit, whose complexities eat up professional fees and, in a fast-moving market, cause delays. Significantly, since Covid as much as 80 per cent of Christie’s turnover has not been through auctions at all but private sales. These are made between seller and buyer, without the publicity attracted by auctions. Who wants the world to know when they’re flogging the family silver? Who wants the taxman to ask where the money has come from when buying? Better to keep the whole transaction out of the public eye.
But this comes at a cost. Once, the boys and girls who went into salerooms learnt from each other, as well as the huge number of objects that passed under their noses, having been brought in for valuation by the public. There was an incentive to cooperate for the good of the firm. Now, with commission at stake, they have good reason to keep their contacts to themselves. And from having been trained in the dark arts of dealing by Sotheby’s and Christie’s, it’s only a small step for them to set up as dealers on their own. The auction houses are breeding the ravening beasts of the future who may devour them.
The Roman Empire, in Stourton’s terms, hasn’t fallen yet and may have some time left to run. But the days when young people could enjoy a civilised life, earning enough to keep body and soul together and perhaps considerably more as they ascended the ranks, have gone.
The auction houses are breeding the ravening beasts of the future who may devour them
It is now more ruthless and less fun. The viability of offices, theatre and the shops has been brought into question by Covid — could salerooms be another victim? The costs of a central London premises look heavy, when the same job could be done in a warehouse on an industrial estate in Corby. Orlando Rock certainly hopes it won’t come to that: “Great art tends to stay together in the hands of interesting people, and they gravitate towards each other.”
The elite will continue to function as elites always have. That is a comfort for those of us who have enjoyed some memorable parties in Christie’s Great Rooms over the years. I hope for the sake of London’s glory as a great world city, not to mention the display of opulent invitations on my own mantelpiece, that the tumbrils of revolution can be kept at bay. But I’m not sure I don’t hear them turning.
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