The death of auction houses

   |  2 November 2012  |  AMA  |  Tweet  |  LinkedIn

George Town, 2 November 2012, Art Media Agency (AMA).

Artemundi Global Fund, investment fund dedicated to art, has recently announced in a press release the forthcoming “death” of auction houses, notably Christie’s and Sotheby’s. Progress is now overtaking auction houses and it would seem they can do nothing about it.

Indeed, the art industry is going through an evolution process, and auction houses are being left aside. Artemundi Global Fund describes them as anachronisms, maintained artificially by traditionalism. They represent the ancient protocol, ancient ways of functioning and creating a relationship between the buyer and the seller. Technological revolution endangers numerous companies from all sectors, and art industry is not being spared. For Artemundi, the auction house – an intermediary far too expensive, which requests at least a 25% commission – is like a snake bitting its own tail. As the Internet is killing paper press, it is now killing auction houses. They are becoming relics of the past, and it is neither the first nor last time  we have to deal with it.

Obviously, some may contradict Artemundi Global Fund’s conclusions, basing on the turnovers recently made by auction houses: they continue to make considerable sums. Nevertheless, the investment fund declares that by analysing them as a whole, on the global level, we may discover that this turnover, though it seems so very stable, is being sustained by non-viable sales. Results are rigged by record sales. Artemundi gives the example of the sale of Giacometti’s L’homme qui marche for $104,000,000, as well as Munch’s The Scream for $119,000,000. According to Artemundi, if the economic situation was more balanced, these records would never have been even possible. We talk here about “objects of desire”, “trophies” purchased by rich collectors, which does not in any way reflect the general state of the art market. Thus, Artprice indicates that 58% of the total turnover of the art market in 2011, matches only 1% of the lots, those famous trophies suffering from inflation. Only 1,680 lots achieved prices higher than $1,000,000, out of over 36,800,000 operations throughout the world: a negligible figure.

For Artemundi Global Fund, the future of the art market is already clear. Investment funds are flourishing: their value and number are perpetually increasing. Since the 1970s they did not transform into organised institutions. They work in synergy with all of the players of the art market, which auction houses did not learn to do. In addition, it is clear that access to artworks online is transforming the very structure of the art market, above all by its becoming more and more common. The Internet provides as well hudge amounts of information, allowing to create a transparent and competitive environment; these are other factors auction houses cannot fight.

Auction houses do not know what is indispensable now, they are blinded by self-preservation. They cannot be trusted then when it comes to valuating art works. The question raised by Artemundi is the following: how much time is remaining to traditional auction houses? They belong to the past, with no Internet and computers. Some have been by no doubt a significant meeting place for collectors and sellers, but this has changed. These intermediaries have no more chance to keep going, regarding the new ways of functioning where commission is  next to none. In the future, the art market will probably look more like New York Stock Exchange than eBay or Amazon, which is as well a big change.

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