The art market forum: Are auction houses moving onto gallery turf?
By Antonia Carver

Over the past few years, the line between the activities of galleries and those of auction houses has become increasingly blurred. In spring 2007, Christie's bought London contemporary gallery Haunch of Venison, and in New York held an auction of Geneva dealer Pierre Huber's collection. For the first time, old masters fair TEFAF Maastricht included galleries owned by auction houses alongside dealers. Sotheby's has employed dealers as consultant curators for some of its auctions and curated selling shows, the latest being the sculpture exhibition 'Beyond Limits' at Chatsworth House, UK, fall 2007. Meanwhile, the competition for first-rate Arab and Iranian contemporary art between galleries, dealers and auction houses has intensified.

Bidoun explores this theme with a panel of gallerists, artists, auctioneers, collectors, and others involved in the art market, aiming to generate debate and further research into emerging art markets in the Middle East.


Antonia Carver, Bidoun: How significant is the blurring of the line between the primary and secondary markets?

Georgina Adam, editor at large, The Art Newspaper: We are currently looking at great changes in the art market. The market is divided between the Sotheby's/Christie's duopoly, which dominates the upper end of the market, and a fragmented group of dealers – who can only consolidate by joining together to do art fairs. The auction houses have the financial strength and international networks that many dealers lack, and with prices rising, this also disadvantages [the dealers].

Caroline Clough-Lacoste, fair manager, Art Paris and Art Paris Abu Dhabi: Let's not forget that Anglo-American auction houses do not use "experts" but employ specialists in order to provide total security for their clients. Consequently, specialized galleries have become linked directly to auction houses in order to offer their clients, or collectors, what they believe to be most suitable to the taste of the market. We are entering a commercial era.


Antonia Carver: What is your involvement, as auction houses, in the primary market?

Jussi Pylkkänen, president, Christie's Europe: Our acquisition of Haunch of Venison allows us to meet the demand [for private acquisitions] through a wholly owned subsidiary that is separate but complementary to the secondary auction market. In fact, this subsidiary merely formalizes for us the well-established practice in the auction world of brokering private treaty sales.

In more general terms, auction houses work with colleagues across the art market, including, in some rare cases, artists. The fast-paced growth of contemporary art, as well as the productivity of artists, has meant that sales reflect this expansion and more very recent works are offered at auction as well as through galleries.

Matthew Weigman, worldwide director of sales publicity, Sotheby's: Primary market activities at Sotheby's have primarily been event-driven – for example, a gallery could not emulate the marketing Sotheby's provided with the [Damien Hirst-designed restaurant] Pharmacy Auction (October 2004).

Practically speaking, auction houses still only represent a small proportion of the primary market, and dealers wield great power. Ultimately, what we are seeing is that it is artists who have the power – they're the ones in the driver's seat making decisions about whether they sell through dealers or at auction.


Antonia Carver: What about if we look at the primary/secondary question in global terms, regarding emerging markets?

Bijan Khezri, chief executive officer, Artist Pension Trust:
I don't feel there has been a real shift in the market. For multiple reasons, the predominance of auction houses has increased. In particular, in emerging markets such as the Middle East, there may not only be a lack of supply of "secondary" artworks but also the gallerist may use the auction house as a way of contextualizing and exposing primary artworks, as is increasingly the case in India.

[But] the rise and preponderance of the contemporary art market is certainly a phenomenon that will give rise to a new set of dynamics. In a market that has lacked both liquidity and transparency, trust and confidence is critical. Whatever erodes trust will damage the art market in the long term.

Hammad Nasar, gallerist, Green Cardamom, London: The line between primary and secondary markets in the emerging art world, particularly the South Asian markets, which I am closest to, was never very distinct in the first place. What we see happening with Pierre's sale or the Haunch of Venison acquisition looks like disruptions from a Euro-American perspective but fits right into how the market currently operates in India or China.

Bijan Khezri: China is a market where the boundaries never really existed and where the artist is also gallerist and dealer at the same time.


Antonia Carver: How will galleries fare, given the convergence?


Claudia Cellini, co-director, The Third Line, Dubai: If the gallery is meant to support or regulate the supply (through selection/curating), and the auction house is further supposed to offer either a) bargain prices or b) the choicest pieces, then I worry about the quality and credibility should they control both processes.

Andrée Sfeir-Semler, founder-director, Galerie Sfeir-Semler, Hamburg/Beirut: Art auctions profit from what the galleries do, and while "difficult" pieces can sell badly, easy figurative works go for high prices. Of course, we do also profit – auctions can push prices up for our artists and confirm their value. They also bring art as a "society factor" to a much bigger circle of collectors, but in this process art can become a bourgeois sign of wealth and belonging to a certain milieu.

Hammad Nasar: For galleries that do not deliver much more than a distribution/sales function for the artists they work with, this is an existential crisis. Should they focus on even fresher artists that the auction houses can't reach, or should they get into bed with one or more of the auction houses? And if so, do they act as principal — buy from artists and sell on through auction, a questionable but common enough practice — or as a fig leaf for auction houses to allow them to maintain the rhetoric of not going directly to artists?


Antonia Carver: Haunch of Venison was not selected for Frieze this year, and fairs such as Art Basel have said they won't accept galleries owned by auction houses. Would you?

Caroline Clough-Lacoste: Regarding Art Paris, for the moment, no.

John Martin, director, Art Dubai: Auction houses have no direct involvement in Art Dubai [formerly the DIFC Gulf Art Fair] – it would be a conflict of interest - although we can imagine that sales will coincide with the fair in future years.


Antonia Carver: What does the auction houses' involvement in the primary market mean, potentially, for the Middle East?

Georgina Adam: In general, new buyers tend to be more comfortable at auction; they see it as more transparent, and other people bidding reassures them. But as more people start collecting, the market can broaden and more dealers appear. What is essential for the emerging art market in the Middle East is an institutional infrastructure in the form of museums and art schools, and this is something the state can provide, either directly or by encouraging private collectors to exhibit their holdings.

John Martin: The auction houses play an important role – they are the new kids on the block when it comes to contemporary art, but they were here at the beginning in Dubai. Collectors benefit most from building up a relationship with a gallery but should use both galleries and auctions, for different things.

Fereydoun Ave, artist and director, Ave Gallery, Tehran/Dubai: In the Middle East, the auction houses are, on occasion, sourcing directly from contemporary artists. For some artists, they are selling the same work available in the galleries - and so attempting to replicate the galleries' work, but without their longer-term investment in the artist.

Auctions are one-off events, and when they become the only outlet for an artist whose work has risen in price beyond his collector base, it's precarious. And for the galleries, it's unethical and unfair. The question seriously needs to be asked: What are auction houses for? What is their role in today's market?

William Lawrie, specialist, modern and contemporary Arab and Iranian art, Christie's: The Middle East tends to feature gallerists rather than dealers, and very few work in the secondary market. We all have overlapping clients and works of art – it's inevitable, but our relationships can be complementary rather than competitive. It's much more clear-cut with older work, but by definition, much of contemporary art is primary, and we're going to have a lot more of this blurring. The scene here has become more competitive, but the galleries have benefited since the auction houses became more active in the region.

Most of the work in our third auction in Dubai, on October 31, was from private collectors, mostly from Europe and the US. We now have stringent criteria for the contemporary work – it must be unique, something the galleries couldn't provide.

Nathalie Khoury, director, Galerie Sfeir-Semler, Beirut: [In Beirut] while we're a reference for collectors and curators, we don't compete with dealers or auction houses. There's a buzz around Middle Eastern artists, but the auction houses aren't interested in [contemporary Lebanese] work yet, partly because it tends to raise sensitive political issues.


Antonia Carver: So is no work of art "too new" for the auction houses now?

William Lawrie: No - as long as it's one of a kind.

Hammad Nasar: The auction houses are now testing their role as a distribution platform – there are examples of works by artists fresh from art school, without a local solo show under their belts, who make their debut in the international art world at a contemporary auction. This creates distinct challenges for all participants.


Antonia Carver: Where does all this leave artists?

Georgina Adam: Experience shows that if there is a downturn in the market, and [the work of young artists] suddenly stops selling at auction, it happens in the public arena and can trigger a lack of confidence, both among buyers and for the artist.

Claudia Cellini: The new feeding frenzy around Iranian artists is like the creation of a "pre-primary" market. I feel like the primary market has to be the joint risk of gallery and artist, through the exhibition, to an initial collector-base/audience.

Hammad Nasar: For artists, at least the sought-after ones working in easily sellable media, this blurring of boundaries brings into focus what they get from their galleries apart from sales. Auctions can do that better – usually at higher prices with lower commissions. But artists cannot and should not expect a market mechanism to be looking out for them and managing their careers. The lure of financial gain and international recognition by appearing in the same catalogue as their past heroes can be an intoxicating mixture.

Bijan Khezri: Artists understand that auctions are double-edged swords. And the gallerist who anonymously plays the auction market to either protect or build price momentum for certain artists is not representing the artists' interests either. Record-breaking prices usually increase the artist's media visibility, and in the eyes of the new-rich art buyers, that may equal prestige. But essentially, it remains the high standing of the gallerist that forms the basis for the auction's pull, not the other way around.