Auction houses forced to postpone live sales turn to digital selling

New York

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, when it was estimated to sell for at least US$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 even possible for people to gather by then? Or cancel until 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 effect on the live-auction enterprise.

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"I'm thinking really seriously about what the online experience is for our clients," said Amy Cappellazzo, chairman of the fine art division of Sotheby's.

"In effect, we have been in the live theatre business. Now we're segueing into what is more like livestreaming. 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 catalogues, and to develop younger, non-traditional 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 US$2 billion.

Wishful thinking

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 maximise value," said Edward Dolman, the chairman and chief executive officer of Phillips.

"Once you get to a point where people see online sales maximising 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 reevaluate their need for prime real estate. Phillips' new Park Avenue headquarters, for example, was due to open in May, but construction has been halted.

"This is the stimulus the art market needed to move online," Ms McAndrew said. "Buying online isn't a collector's number one 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 online 20th century and contemporary art auction had a record number of participants, with bidders from 47 countries. Nearly half the lots from its April prints sale received bids in the first 24 hours.

However, the most expensive item offered in March topped out at only US$462,500, for a piece by Ed Clark.

Sotheby's 21 online sales since March 1 have totalled a healthy US$40.1 million, which may reflect the fact that the auction house's new owner is telecommunications mogul Patrick Drahi. Up to 50 per cent of the bidders in these sales have been entirely new to Sotheby's, the auction house said, and 50 per cent of all bids are being placed on mobile devices.

Giving digital a chance

"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.

The transition to e-commerce is buoyed by an emerging class of wealthy millennials. This group is 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 per cent of this demographic have bought works online.

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. NYTIMES