Auction Houses in the Evolving Art Ecosystem

Phillips is opening its first gallery space in Asia in Hong Kong on March 26 in the St George’s Building in Central, where its Asia headquarters is.
Jonathan Crockett
Phillips opened its first gallery space in Asia in Hong Kong last year in the St George’s Building in Central, where its Asia headquarters is.
Collectors Yusaku Maezawa has 408k followers on instagram.
Jonathan Crockett in action during an auction.
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Writing exclusively for CoBo, Jonathan Crockett of leading auction house Phillips discusses the evolution of the art market into the complex entity that it has become today – drawing comparisons to living organisms within an ecosystem. And is 2019 a year of threats or opportunities – or could it be both?

TEXT: Jonathan Crockett
IMAGES: Courtesy of the artists and Phillips

Jonathan Crockett

 

The word Ecosystem has expanded in usage in recent years, to encompass technological platforms and systems: billions of interactions taking place within an artificial environment. iOS vs Android for example. It has often struck me, however, that the truest definition of ecosystem, that of a biological community of interacting organisms in a physical environment, is an ideal way to understand and explain today’s art market.

What I see is a self-sustaining co-existence of beings, each with its role to play. The art world has its primary market, where galleries have taken on the role and responsibility of promoting and developing young artists. The primary market has its own multi-layered organic structure, with galleries of varying sizes, varying stages in their own development and maturity, active in their own respective fields. My own expertise is in the secondary market, where the auction house operates. Analogous to the natural world, one organism depends on the other, and even results from the existence of the other: the auction house wouldn’t exist without the galleries, who wouldn’t exist without the collectors of course. Museums, academic institutions and above all artists are integral. Each being is interconnected, and that’s how this art ecosystem operates.

Like all living beings, there are roots and antecedents, which are important when it comes to assessing how the market has changed over the years. Somehow, it is only in looking back, that the scale of the evolution becomes clear. Most of the international auction houses have their roots in 18th or 19th century England, such as Sotheby’s, Christie’s, Phillips and Bonham’s. Over that time, there has been a need to change. The Darwinian idea of survival of the fittest applies in our world too: there is a need to adapt, because profit is a key driver of survival. From the earliest origins of auctions, up until about 50 years ago, most sales were the result of distress, including divorce or debts at cards, and above all death. Estate sales of prominent people, either from the nobility or government were landmark events in the art market calendar. Over time, art began to be seen more as an investment in its own right, and the buying and selling of art to make a profit took hold. This was a seismic shift within the ecosystem, which radically altered the nature of auctioneers. They became more competitive, more agile, morphing into modern corporations rather than being seen as gentlemen’s clubs. Societal changes helped too: what used to be an exclusive world became an inclusive one. Nowadays, clients do not need to be members of the nobility to take part in an auction, either as seller or prospective buyer. Even great wealth is no longer a pre-requisite; we sell works priced in the hundreds of pounds, not just thousands or millions.

To continue the theme of evolution: in the art ecosystem, one aspect of this natural phenomenon is innovation, and also succession. Our founder, Harry Phillips, was originally a clerk to James Christie, who set up Christie’s. Interestingly, Harry remains the only auctioneer who ever managed to hold an auction in Buckingham Palace – he was an innovator, and much of our distinctive style, we inherited from him. Succession is a factor in the primary market too, particularly when the founders of a gallery reach an age when they must either hand over to the next generation, or close up shop. In some galleries, there is no logical successor, and so the gallery closes down.

 

Phillips opened its first gallery space in Asia in Hong Kong last year in the St George’s Building in Central, where its Asia headquarters is.

 

Of course, closing down is to be avoided, but how critical is growth? In evolutionary terms, to what extent will size or scale be the means by which we identify the winning species in tomorrow’s art ecosystem? It seems to me that what we might call mega-galleries will be a growing force. This is a trend across other industries such as retail, where the supermarkets have irresistibly grown market share against smaller competitors. Expansion is certainly on the agenda: many galleries and auction houses, have expanded into Asia in recent years for example. However, I do not believe that size alone is what defines success. In whichever part of the art ecosystem one operates, one needs a competitive edge – that’s the key to survival. One can still be a leader in the market and stay quite small and focused. That is actually where we position ourselves, at Phillips.

There have been changes over the years, but some facets of the market remain very similar, even if they don’t seem so at first glance. Our founder, Harry Phillips, once auctioned off the collection of Napoleon Bonaparte. Not a man of royal blood, but a dynamic, decisive leader, who had his own glamour and appeal even among his former enemies and rivals. Nowadays, publicity continues to play a role in creating interest in the market, and it’s often the collectors who are at the vanguard. Collectors such as Yusaku Maezawa are skilled influencers on social media, posting images of themselves with their latest acquisitions, creating a distinct buzz and energy.

 

Collectors Yusaku Maezawa has 408k followers on instagram.

 

An enduringly central feature of the art market is the importance of the artist themselves. Within an auction house, we tend not to work directly with artists. We have a gallery space in Hong Kong, London and New York, so there are occasions where we do partner with the artist directly, or, more often, the gallery which represents them. Generally, there is a process which artists have to go through before they feature at auction, and again, it is reminiscent of the process of selection in the natural world. It wouldn’t be fair to say that the artists who become successful are always the most talented – just as in nature, there are other factors too. In the case of the art world, good PR, being selected by the right gallery, and luck may play a role. Of the many artists creating good work, a few will form partnerships with young galleries in the primary market, of these only some will be taken on by mid-sized galleries, and only the fewest will find themselves among the artists at a blue-chip gallery. There is a thinning out at each stage of the process. Artists reaching the auction houses have jumped through a lot of hoops. The knowledge that this thinning-out process has taken place gives confidence to collectors, encouraging them to buy. Sometimes, the primary market sells out quickly, and buying at auction provides collectors with a second chance to acquire a favourite artist.

Visitors to auction houses are often attracted by the variety which we offer – from millions of artists, we are able to present a variety of the most renowned. Those working at auction houses tend therefore to be generalists, rather than the specialists in particular artists that you will find in the galleries.

 

Jonathan Crockett in action during an auction.

 

Turning to the future – like the natural environment, our existence cannot be taken for granted. There are competitive challenges, with many auction houses chasing the same objects. There are existential threats too: looming in 2019 are events whose repercussions may not yet be fully understood: Brexit is one, the US-China trade negotiations is another. There will be other threats which we cannot yet see, but which will come.

When I consider our business model, however, I have a lot of confidence. I think there will always be a demand for high quality art and luxury goods. In times of economic uncertainty, I believe these represent buying opportunities for the longer term. We have seen in the past how, in adverse conditions, the price of art can plateau, before rising again significantly when the market returns to growth. Collectors who act in these times are then regarded as people of foresight and vision, vindicated by events that followed. At times like these, uncertainty provides opportunity.

 

 


 

Jonathan Crockett is Head of 20th Century and Contemporary Art and Deputy Chairman, Asia, at Phillips Auctioneers, Hong Kong, having joined in May 2016. In his role, he is instrumental in spearheading the company’s art and design initiatives in the region. He works closely with Phillips’ global leadership team, and has helped to build up the company’s brand to become a premier auction house in its categories in Asia.

Jonathan has over 20 years of experience in the fields of Asian and Western art. He studied Chinese language and art history at university in London and Oxford and lived in Beijing from 1997 to 1999. Starting his career at Christie’s in London in 2003 he worked in the field of classical Chinese art at Sotheby’s before turning his attention to the then burgeoning and now dynamic Asian market for international modern and contemporary art. In 2009, he left Sotheby’s to establish his own art advisory business based in Hong Kong which he ran from 2009 to 2013, working with individual collectors, auction houses, and galleries to broker sales of Asian and Western contemporary art. In 2013 he returned to Sotheby’s as a Director and Senior Specialist of Contemporary Asian Art in London during which time he was instrumental in the sale of Zeng Fanzhi’s The Last Supper in October 2013 which sold for HKD180,440,000, a world record for any living Asian artist which still stands today.

Since starting at Phillips in 2016 he has led the company’s Art and Design initiatives across Asia, overseeing the rapid expansion of a pan-Asian team from scratch that is now comprised of over 50 staff across Asia from its regional HQ in St George’s Building, Hong Kong, to Jakarta, Seoul, Singapore, Shanghai, Taipei and Tokyo. Today Phillips is already considered a premier and the most innovative auction house in its categories in Asia. Jonathan is in his sixth auction season at Phillips having already brought to market five highly-successful series of sales in Hong Kong, with each season seeing records broken, including most recently, in May 2018, setting the top price ever paid for a Zao Wou-ki work from the 1970s with the sale of 04.01.79 for HK$69,850,000. Jonathan also contributes significantly to Phillips sales in London and New York, a notable highlight was consigning Peter Doig’s Rosedale, which ended up selling for US$28,810,000, setting a world record for any living British artist. He has just this week concluded another exciting series of sales including overseeing the addition the company’s inaugural day sale of 20th Century & Contemporary Art and Design in Hong Kong, which included the largest ever offering of Design works in the region.

In his role at Phillips Jonathan works closely with some of the most important and influential art and design collectors, curators, artists and art dealers in Hong Kong, across Asia and the rest of the world, and constantly travels to maintain these close personal relationships, as well as to attend international art fairs, exhibitions, biennials and auctions. He has an extensive and unrivalled network within the art and design community in Hong Kong, and is a keen supporter of charities and non-profit art programmes.

 

 

 

 
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