In response to Covid-19, Sotheby’s, Christie’s and Phillips are stepping up digital selling, but the prices don’t yet come close to those in the auction room.
Francis Bacon’s 1981 three-part oil painting, “Triptych Inspired by the Oresteia of Aeschylus,” was supposed to feature in Sotheby’s marquee contemporary art evening auction in New York on May 13, where it was estimated to sell for at least $60 million.
That live auction clearly won’t be happening now, in light of the coronavirus. But Sotheby’s has yet to announce what it plans to do with its May sales instead: Hold them online? Postpone them till late June, as its competitors, Christie’s and Phillips have — assuming it’s possible for people to gather by then? Cancel till the world is less upside down?
Like companies all over the world, auction houses now find themselves in uncharted territory, trying to find a way to keep their businesses afloat even as the future of buying art looks as if it may be forever changed.
With workers being furloughed and headquarters lying empty, some art professionals say the current necessary switch to online sales — also underway at galleries — could have a lasting impact on the live auction enterprise.
“I’m thinking really seriously about what the online experience is for our clients,” said Amy Cappellazzo, chairwoman of the Fine Art division of Sotheby’s. “In effect, we’ve been in the live theater business. Now we’re segueing into what is more like live streaming. The truth is, that revolution has been underway for some time.”
Art market veterans agree that the pandemic has accelerated changes that were underway — an effort by auction houses to build up private and online sales; to reduce costly and cumbersome catalogs; and to develop younger, nontraditional customers.
“People who can change, adapt and innovate will be the ones best able to move forward,” said Clare McAndrew, an art economist who puts out the annual Art Basel and UBS Art Market Report. “The online segment could be a big winner here.”
Auction houses have been trying to adjust quickly, though the uncertain trajectory of the virus makes it difficult to solidify plans. The most immediate question is the spring auctions, which anchor the art market calendar, along with the fall sales in November; last May, the five-day series of sales at Sotheby’s, Christie’s and Phillips raised a combined $2 billion.
Both Christie’s and Phillips have consolidated their New York Impressionist, Modern and contemporary art sales into one week of 20th-century auctions scheduled for the end of June that will also absorb the London June sales. The Hong Kong sales have been pushed to July, though that, too, may be wishful thinking.
Could the live auction ultimately become a relic of the past? Still unclear is whether people will be able to travel or gather for in-person auctions as soon as this summer — and, if not, whether auction houses would try to sell those big-ticket works of art in an online auction, where the prices are usually lower.
“For certain higher-priced objects, the jury is still very much out on whether an online-only sale without opportunity for proper viewing can truly maximize value,” said Edward Dolman, the chairman and chief executive of Phillips. “Once you get to a point where people see online sales maximizing or exceeding value, that would be the tipping point; that’s when you’ll see our business going broadly online.”
The pandemic also raises questions for auction houses’ costly overhead. If the auction world becomes more virtual, houses will have to re-evaluate their need for prime real estate. Phillips’ new Park Avenue headquarters, for example, was due to open in May, but construction has now been halted.
“This is the stimulus the art market needed to move online,” Ms. McAndrew said. “Buying online isn’t a collector’s No. 1 choice; it won’t replace the excitement and sense of community of an auction. But online sales will help relieve the cost pressures of live events.”
All of the auction houses have added online-only sales across several categories for April and May and are already seeing results. Phillips said its March 4 20th century and contemporary art auction had a record number of online participants, with bidders from 47 countries. And nearly half the lots from its April prints sale received bids in the first 24 hours. However, the most expensive item bought by an online bidder in March was a KAWS piece, which topped out at only $350,000.
Sotheby’s 21 online sales since March 1 have totaled a healthy $40.1 million, which may reflect the fact that the auction house’s new owner is the telecommunications mogul Patrick Drahi. Up to 50 percent of the bidders in these sales have been entirely new to Sotheby’s, the auction house said, and 50 percent of all bids are being placed on mobile devices.
“The art market — after resisting for so long — has been forced to give digital a chance,” said Thierry Ehrmann, chief executive and founder of Artprice, an auction-result database in France.
Even old school collectors seem to be getting more comfortable bidding online, because right now that is their only option. “I’ve seen a lot of clients I wouldn’t have expected interested in the technology,” Ms. Cappellazzo said. “Your palms are sweaty, you’re hoping it’s your bid — it’s a bit like a video game.”
Christie’s has increased its online-only auctions in April and May from nine to more than 20 events, which are estimated to raise at least $20 million.
“This crisis is a moment of truth for online sales,” said Guillaume Cerutti, Christie’s chief executive.
The transition to e-commerce is buoyed by an emerging class of wealthy millennials who are spending more than six times the amount of their parents’ generation and have few qualms about buying art online, according to the Art Market Report, which also indicated that 92 percent of this demographic have bought works through the web.
Others point out that seasoned collectors — especially those in distant parts of the world — already buy some artworks sight unseen, trusting the reputation of established auction houses, condition reports and their own connoisseurship.
Whether those online sales can start including multimillion-dollar masterpieces is still unknown. Before the pandemic, the May sales were expected to be strong, given first-rate material like the Anderson collection of postwar American art at Sotheby’s, valued at $55 million, which includes pieces by Mark Rothko and Clyfford Still. The Macklowe Collection has postponed its decision about how that trophy material will be sold.
The idea that collectors will feel comfortable bidding tens of millions of dollars on an investment like the Bacon triptych — especially if they haven’t seen it in person — still seems unlikely.
“I’m not an online fan,” said Adam Lindemann, a prominent collector and dealer. “I want to see the real thing if I can.”
Sotheby’s was encouraged by the online sale of a rare photogram by László Moholy-Nagy for $524,000 and of Irma Stern’s oil on canvas “Grape Packer” for $531,309. Phillips is asking $1.5 to $2 million for David Hammons’s “African American Flag” in its new private sale viewing room, but such prices have yet to be tested in a public online auction forum.
“I suspect, if this lasts six to nine months, people will become more relaxed about buying online at a higher level,” said Guy Jennings, managing director of the Fine Art Group, a London-based advisory company.
But auction houses have a huge amount of ground to make up with online sales, which in 2019 made up just 9 percent — about $5.9 billion — of the $64 billion in total art market sales (for smaller auction houses with sales under $1 million, that figure is larger — 23 percent).
Many experts say online auctions can’t replicate the high drama of an auction room, nor replace the revenue required to sustain personnel-heavy operations like Sotheby’s, Christie’s and Phillips.
“The auction itself is high drama — gladiator sport,” said the dealer Brett Gorvy, a former Christie’s executive. “When we get back to a degree of normality, it will return.”
Mr. Gorvy also emphasized that sellers need auctions to gauge where the market is; sporadic private sales don’t provide enough information on whether prices have fallen as a result of the virus.
“There is nothing publicly to test the market — no fairs or auctions,” he said. “It’s holding up business. People don’t really know at what price to trade.”
Postponing sales are not just a matter of pushing them back on the calendar. Consignments involve complicated contracts that stipulate not only the date on which an artwork will be sold but how it will be marketed, where it will appear in the catalog and other minutiae.
If the sales don’t happen as scheduled, sellers could decide to withdraw their consignments. Similarly, auction houses that have promised sellers a certain minimum price could pull out of those guarantees.
Auction houses are trying to balance the interests of waiting for the best time to obtain the highest prices and needing to sell soonest to keep the lights on.
Even if auction houses can manage live sales by June, experts say, collectors may not be in the mood to conspicuously lay out large sums for art, when many have lost their loved ones and may still be worried about their own physical and financial well-being.
“This insane thing turned the world inside out — everyone is affected at some level,” said Mr. Lindemann, the collector. “We have to be careful to temper self-interest and think how we can help out. Promoting and chasing sales at this time just feels wrong.”
