12.2 Auction houses

Auction houses have been pivotal in shaping the postwar art market. These institutions facilitate art sales, establish market values, and influence artistic production and reception. Their evolution reflects broader changes in the art world, including shifts in taste, collecting habits, and global economic trends.

From their 17th-century European origins to their postwar expansion, auction houses have adapted to changing markets. They've diversified offerings, expanded globally, and embraced digital technologies. Major players like Sotheby's and Christie's dominate, while regional houses and online platforms cater to niche segments.

History of auction houses

• Auction houses played a crucial role in shaping the postwar art market by facilitating the sale and distribution of artworks
• The evolution of auction houses reflects broader changes in the art world, including shifts in taste, collecting habits, and global economic trends
• Auction houses have been instrumental in establishing market values for postwar and contemporary art, influencing artistic production and reception

Origins of art auctions

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• Originated in 17th century Europe as a means to sell artworks and antiquities
• Emerged from estate sales and liquidations of aristocratic collections
• Early auction houses like Sotheby's (founded 1744) and Christie's (founded 1766) established in London
• Introduced competitive bidding format to art sales, creating a new market dynamic

Post-war auction house expansion

• Rapid growth of auction houses after World War II due to increased wealth and art collecting
• Expansion into new geographic markets (New York, Paris, Hong Kong)
• Diversification of offerings to include contemporary art, design, and luxury goods
• Development of specialized departments and expert teams to handle different art categories

Rise of contemporary art sales

• Shift in focus towards postwar and contemporary art in the 1960s and 1970s
• Introduction of dedicated contemporary art sales and departments
• Record-breaking prices for living artists (Jasper Johns, Andy Warhol)
• Emergence of evening sales as high-profile events for contemporary art

Major auction houses

• Auction houses serve as key intermediaries in the postwar art market, connecting sellers with buyers
• The dominance of major auction houses has shaped the global art ecosystem and influenced art historical narratives
• Competition between auction houses drives innovation in marketing, technology, and client services

Sotheby's vs Christie's

• Duopoly in the global art market, accounting for majority of high-value art sales
• Rivalry drives competition for consignments and market share
• Sotheby's known for pioneering contemporary art sales and marketing strategies
• Christie's recognized for record-breaking sales and strong presence in emerging markets
• Both houses expanded globally with salerooms in major art capitals (London, New York, Hong Kong)

Regional auction house networks

• Smaller auction houses cater to local and specialized markets
• Networks like Bonhams and Phillips operate internationally but focus on niche segments
• Regional houses often specialize in specific art categories or geographic regions
• Provide opportunities for emerging artists and collectors to enter the market

Online auction platforms

• Rise of digital platforms like Artsy and Invaluable for online bidding
• Traditional houses develop proprietary online bidding systems
• Emergence of crypto art auctions and NFT sales
• Online-only auctions expand reach to global bidders and lower-value lots

Auction house operations

• Auction houses function as complex organizations combining art expertise, business acumen, and client services
• Operations have evolved to accommodate changing market demands and technological advancements
• Understanding auction house processes is crucial for artists, collectors, and scholars engaging with the postwar art market

Consignment process

• Sellers approach or are approached by auction houses to consign artworks
• Specialists evaluate potential consignments for authenticity, condition, and market value
• Negotiation of terms including reserve price, seller's commission, and marketing plans
• Legal agreements drafted to outline responsibilities and expectations

Cataloging and valuation

• Research conducted on artwork's provenance, exhibition history, and market comparables
• Condition reports prepared to document artwork's physical state
• Specialists assign pre-sale estimates based on market analysis and recent sales data
• Catalog entries written to provide context, provenance, and artwork details
• Photography and digital imaging used to document artworks for catalogs and online platforms

Pre-sale exhibitions

• Artworks displayed in gallery-like settings prior to auction
• Provides opportunity for potential buyers to inspect lots in person
• Often includes special events, lectures, or tours to generate interest
• Curated presentations highlight key lots and create narratives around collections

Auction mechanics

• The auction process itself is a carefully choreographed event that combines tradition with modern technology
• Understanding auction mechanics is essential for participants in the postwar art market
• Auction results often have ripple effects throughout the art world, influencing gallery prices and artist reputations

Bidding procedures

• Auctions typically conducted by professional auctioneers who manage the bidding process
• Bidders can participate in person, by phone, online, or through absentee bids
• Increments of bids predetermined and increase as the price rises
• Paddle system used to identify bidders in the room
• Real-time online bidding platforms allow global participation

Hammer price vs buyer's premium

• Hammer price refers to the winning bid amount announced by the auctioneer
• Buyer's premium is an additional fee charged to the buyer, typically 20-25% of hammer price
• Total price paid by buyer includes hammer price plus buyer's premium
• Seller's commission deducted from hammer price, usually 10-15%

Reserve prices and guarantees

• Reserve price is the confidential minimum price agreed upon by the seller and auction house
• Lots that don't meet reserve are "bought in" and remain unsold
• Guarantees are financial arrangements where a third party or auction house ensures a minimum price
• Irrevocable bids are pre-arranged bids that guarantee a lot will sell, often in exchange for a share of upside

Role in art market

• Auction houses play a pivotal role in shaping the postwar art market and influencing art historical narratives
• Their activities extend beyond sales to include market research, publication, and cultural programming
• The transparency of auction results provides valuable data for art market analysis and valuation

Price setting and transparency

• Public nature of auctions creates benchmark prices for artists and art movements
• Results published and widely disseminated, increasing market transparency
• Auction prices often influence gallery and private sale prices
• Online databases of auction results (Artnet, Artprice) provide historical price data

Market trends and reports

• Auction houses produce regular market reports and analysis
• Data on sales volume, price trends, and emerging markets widely used by industry professionals
• Auction results serve as indicators of broader economic trends and collector preferences
• Annual reports highlight top-selling artists, movements, and geographic markets

Influence on artist careers

• High-profile auction sales can significantly boost an artist's market and reputation
• "Evening sale" placement seen as validation of an artist's market status
• Secondary market performance influences primary market prices and demand
• Some artists and estates work directly with auction houses to manage their market

Controversies and challenges

• The auction world has faced numerous ethical and legal challenges throughout its history
• Controversies in the auction sector often reflect broader issues in the art world and society at large
• Addressing these challenges has led to increased regulation and professionalization of the auction industry

Authentication issues

• Disputes over artwork authenticity can lead to legal battles and market uncertainty
• Auction houses rely on expert opinions and scientific analysis for authentication
• High-profile cases of forgeries and misattributions have damaged auction house reputations
• Development of more sophisticated authentication techniques (forensic analysis, AI-assisted connoisseurship)

Restitution claims

• Increased scrutiny of provenance for artworks with potential Nazi-era looting history
• Auction houses implement stricter due diligence processes for consignments
• Collaboration with international databases of looted art (Art Loss Register)
• High-profile restitution cases have led to returns and settlements for heirs of original owners

Market manipulation allegations

• Concerns about price manipulation through practices like chandelier bidding
• Investigations into collusion between dealers and auction houses
• Debates over the ethics of guaranteed lots and third-party guarantors
• Increased regulatory oversight and transparency requirements in some jurisdictions

Auction house innovations

• Innovation has been key to the survival and growth of auction houses in the postwar era
• Technological advancements and changing collector demographics have driven new business models
• Auction houses continue to adapt to maintain relevance in a rapidly evolving art market

Private sales departments

• Expansion of auction houses into year-round art dealership activities
• Private treaty sales offer discretion and flexibility for high-value transactions
• Blurring of lines between auction houses and traditional galleries
• Development of exhibition spaces and curated selling shows

Digital bidding technologies

• Introduction of real-time online bidding platforms
• Mobile apps for bidding and tracking lots
• Virtual and augmented reality tools for viewing artworks remotely
• Integration of blockchain technology for provenance tracking and digital art sales

Emerging market strategies

• Expansion into new geographic markets (China, Middle East, Southeast Asia)
• Tailored sales and events to appeal to new collector bases
• Partnerships with local institutions and cultural organizations
• Development of educational programs to cultivate new generations of collectors

Impact on postwar art

• Auction houses have played a significant role in shaping the narrative and market for postwar art
• The auction system has influenced artistic production, collection strategies, and art historical discourse
• Understanding the impact of auctions is crucial for interpreting the development of postwar art movements

Record-breaking sales

• Headline-grabbing prices for postwar and contemporary artworks
• Establishment of new market hierarchies based on auction performance
• Impact on artist reputations and market positioning
• Creation of "trophy" artworks sought after by high-net-worth collectors

Shift in collecting patterns

• Increased focus on postwar and contemporary art in auction sales
• Emergence of new collector demographics (tech entrepreneurs, emerging market billionaires)
• Trend towards cross-category collecting (mixing contemporary art with design, antiquities)
• Rise of investment-driven collecting and art funds

Globalization of art market

• Auction houses facilitated international art trade and cultural exchange
• Expansion of Western auction houses into Asian and Middle Eastern markets
• Increased visibility for non-Western artists in global auctions
• Development of regional art markets and local auction scenes

Future of auction houses

• The auction sector continues to evolve in response to technological, economic, and cultural shifts
• Adaptation to new market realities is crucial for the continued relevance of auction houses
• The future of auction houses will likely involve a balance between tradition and innovation

Adaptation to digital age

• Continued investment in online sales platforms and virtual experiences
• Integration of artificial intelligence for market analysis and client services
• Exploration of new digital art forms and marketplaces (NFTs, virtual galleries)
• Balancing digital innovation with traditional auction house expertise and personal relationships

Changing collector demographics

• Strategies to appeal to younger, digitally-native collectors
• Increased focus on contemporary and emerging artists to attract new buyers
• Development of educational programs and entry-level collecting opportunities
• Adaptation to changing tastes and collecting habits of millennial and Gen Z buyers

Sustainability and ethical concerns

• Growing emphasis on environmental sustainability in auction operations
• Addressing issues of diversity and inclusion in staffing and artist representation
• Increased transparency in business practices and provenance research
• Exploration of circular economy models and responsible deaccessioning practices