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Auction houses are central focal points of the art market, places of wealth and knowledge that for years have functioned as the best places to buy and sell art. Rooted in tradition, the largest ones such as Christies, Sotheby’s, Bonhams and Philips have been around for years, all founded in the 1700’s.

As such they represent an older model of how the art market operates, and only recently are adapting to the digital pressures of the 21st Century in hosting online auctions for example. Don't miss our latest article dedicated to the Top 10 Most Expensive Paintings Ever Sold. However, the breadth of knowledge housed within the walls of an auction house, due to the extensive experience and research of the specialists who work there, makes them unique and hard to replace even with the ever-increasing depth of online resources.

 

Christies 2013 with Francis Bacon "Three Studies of Lucian Freud", courtesy ChristyElizabeth

 

Let’s look at some specific areas of auction houses, to go behind scenes and see how they operate.

Firstly, auction houses do much more than organise auctions. The auxiliary services centred around the selling, collecting and valuing of the objects being sold through auction are hugely important in and of themselves. As these services are often, by necessity, done behind closed doors they garner less attention that the glitzy high-profile auctions, but they provide crucial advice to all parties invested in the art market. These services include the brokering of private sales between clients who want to sell their wares with more discretion, valuation services of anything from private estates to corporate collections to museum artefacts, tax and inheritance advice, fine art storage and transportation, and trust and estate planning.

Read more about the current relationship blockchain technology has with the art market here...

At the centre of all these services lies the notion of value – of knowing how to estimate value in art, how to translate that into its maximum financial value and to manage that financial value to the bespoke requests of a trusted and respected client base. It all feeds back to the specialist staff of an auction house relying on their knowledge and experience to be able to know that initial value of the art, and then conveying that to other, more managerial, financial specialists.

 

Qi Baishi, "12 Landscape Screens" 1925, courtesy TheValue.com

 

The levels of investment and money surrounding the art market have only boomed over the past 50 years, and as such for many years prior to this many auction houses globally did normal, reasonable trade just like any other business. Since this boom, however, Sotheby’s and Christie’s have managed to capitalise on the rising costs of modern and contemporary art and cement their duopoly over the other auction houses. Only recently has another auction house broken into the top 10 most valuable paintings sold at auction, Poly Auction Beijing, selling a Qi Baishi work “12 landscape screens” for $140 million.

The continued success of Christie’s and Sotheby’s is self-sustained by the rising value of modern and contemporary artworks at auction, and therefore the rising cost of their own auxiliary services, consolidating their own market leadership. Even though other auction houses like Bonhams have a consistently successful spread across other sectors of the auction market, like classic motor cars, jewellery and watches, their failure to match the sky-rocketing prices in their own post war and contemporary arts sector means that they are unable to compete with the big two.

 

Andy Warhol, "14 Small Electric Chairs", 1980, courtesy artnet

 

Looking towards the future of auction houses, their glorified position as a gateway through which the secondary art market must pass to gain accreditation is coming under threat from platforms embracing the most cutting edge of new technology. For people looking to avoid the necessary fees that are added on during the auction process, such as the buyer’s premium (which Sotheby’s created in the 1970’s as a means of covering costs for an off-site auction and has since risen to 25% of the hammer price), new platforms that can securely facilitate peer-to-peer trading using blockchain technology are trying to democratise the art market. Last year, Andy Warhol's "14 Small Electric Chairs" became the first multi-million pound artworkto be succesfullly tokenised and distributed to willing buyers through a new blockchain-powered platform called Maecenas.

 

Stay Tuned on Kooness magazine for more exciting news from the art world. 

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