The auction market, and in particular the salerooms of the two major auction houses, Sotheby’s and Christie’s, have long been a proving ground for the marketplace maturity of every kind of specialty commodity, including fine art. Auction houses have aggressively expanded their secondary market role in recent years, in their unrivaled capacity to match buyer and seller; and as the legacy segment of secondary sales has narrowed, they have veered ever closer to the primary market. The convergence has been pressed from the opposite direction by primary dealers and private seller-collectors eager to test the marketplace for their artists.

The other factor driving the volatility of the market (and chasing some of these artists) comes from the buyer side. There is a great deal of new wealth entering the market from different sectors of the economy and different countries.

There are few in Los Angeles better positioned to observe all sides of this market, particularly from the auction house vantage point, than Andrea Fiuczynski (pronounced FEW-CHIN-SKI), who, before her appointment only a year ago as Sotheby’s West Coast Chairman, spent the preceding 26 years with Christie’s as a specialist and director in New York and Berlin, and finally as Christie’s Los Angeles president. With extensive experience as an auctioneer in New York and Hong Kong as well as Los Angeles, Fiuczynski is herself a charismatic presence in the saleroom. As chairman, she is also tasked with oversight of a much larger dual project: strengthening the brand in all these new sectors, both geographic and commercial, up and down the West Coast (and by extension the Pacific Rim), building both auction sales and private sales portfolios, as well as its extension into online commerce.

Andrea Fiuczynski, Sotheby’s branded auction.

My interview with Fiuczynski came only a few days before the house announced the Board’s appointment of Tad Smith as Sotheby’s CEO; but her emphasis on certain aspects of the business seemed in harmony with (then) Lead Independent Director, Domenico de Sole’s brand-building strategies. Two words kept coming up: profitability and technology. Although revenues at the house are at a high mark comparable to pre-market crash peaks, profits have lagged behind. Fiuczynski seems determined to leverage all the digital and online tools at her disposal to return the house to peak profitability.

Our discussion took in a broad view of the global and local art worlds far beyond the auction house duopoly or the larger secondary market. The setting was THE Blvd at the Beverly Wilshire, where we had a light tea. On a gray but warm day Fiuczynski was herself in gray; casual, but elegant as always.

Our conversation began casually. I mentioned February’s impressive contemporary sales results from London, and moved on to some of the Board and management convulsions that had shaken the house in recent months. It wasn’t clear to me what board members like Dan Loeb of the Third Point hedge fund or activist shareholder Mick McGuire of Marcato Capital stood to gain by their demands for a dividend or asset liquidation in advance of Sotheby’s e-commerce roll-out.  

ANDREA FIUCZYNSKI: I think it’s very clear-cut and it doesn’t apply strictly to Sotheby’s, but to the duopoly of both auction houses, whether shareholders of a publicly traded company or the owner of a privately held company. Everyone’s goal is profitability, and staying not just on trend, but ahead of trend. The art business is booming, there’s a lot of extraordinary development to be maximized out of the market. Beyond the straight bricks and mortar auction business, there are so many components to our portfolios at both houses, whether private sales or online e-commerce. There’s a lot at stake.

ARTILLERY: Do you think private treaty sales are seriously impacting primary and secondary market gallery business?
One has to keep in mind how private clients like to buy. There are clients who enjoy their relationships with top dealers or their gallery directors, who just want to go primary to primary and are prepared to pay the premium for that service. I would think that given [the auction house’s] database of unsuccessful under-bidders and knowing what people’s wish-lists are … is certainly a new level of competition. But whether it has a huge impact is unknown, because both houses are fairly new to delving into that level of private sales.

Is the auction market expanding relative to the gallery or primary market? Are there more bidders for emerging contemporary art in the auction segment of the market?
There are definitely more bidders in the emerging market especially as we expand into e-commerce. The auction market has never been more accessible than the past ten years, with the auction houses removing the sanctimony of the saleroom. Certainly we have made huge inroads into reaching the next generation of the new collector—whether it’s the next generation of venture capital, Hollywood; the next generation of mainland Chinese, Indians; and especially on the West Coast—looking at how to cultivate the future sellers that will be the stronghold of our business. You can browse our catalogs on line, request condition reports—all of it from your office, your iPhone or iPad—without having to set foot in the auction salerooms. And once clients have understood and established working relationships with specialists or their art advisors, it becomes so accessible and so much more manageable. Beyond the evolution of print paper catalogs, everything is accessible digitally and online. So I do think that has made a huge impact as to the overall global reach.

Sotheby’s has hosted or co-hosted events here in Los Angeles, in Silicon Valley and San Francisco and elsewhere, introducing audiences sometimes relatively new to the art world to art collecting generally and the auction house in particular. How successful have these events been in bringing new collectors into the marketplace and more specifically, business to the house, whether in sales or consignments?
We have been very successful, not just in attendance. What we do in our various event locations is to consider and curate the type of demographic that will actually be interested and will come. Then we track who actually turned up, who expressed interest in which works, left bids or registered to bid online, and who actually bought. When we go back for the next round or season, we can see who transacted among the people who were new to Sotheby’s or were invited guests or friends of guests, etc. So there’s a continuity. Inevitably there will always be events that will be purely for branding and awareness building. But the obvious goal is to not just meet new clients, but to transact with them, whether they are buyers or sellers. It’s important that we don’t outpace ourselves especially for the emerging collector or a new collector. A new collector might not immediately buy an oil on canvas, but a work on paper, an existing, very established artist, or they might contemplate risk with an emerging artist.

Left to right: Andrea Fiuczynski with guests Burt Levitch and Christine Steiner at a Sotheby’s Los Angeles reception featuring highlights from the Fall 2014 sales in New York, September 9, 2014.

Are these new collectors actually showing up for auctions (whether in person or by phone)? Or are they becoming a part of the pool that bids internationally?
Some do show up. Others are pleased to have previewed and seen the works of art in their hometown and don’t need to show up in New York when the works actually hit the block, because they’ve seen what they’re going to bid on from San Francisco or LA or from London or Hong Kong or elsewhere in the world, because highlights are toured around the world in advance of the auctions. With the private selling exhibitions that we launched in Silicon Valley and will continue to launch up and down the coast, the works of art are for sale there and then. But the beauty of technology is that one can bring the comfort level of a fully rounded service to new clients so that they understand if they wish to purchase something but can’t see it in person we can send them a condition report which they can get online, we can send additional images of the work. The whole point is to ensure that the buyer has an excellent experience from start to finish, to actual receipt of the item, so that they become repeat clients.   

And they’re bidding?
Online, by phone, by proxy—by sending their art advisors.

Where are the really serious new players coming from? 
There’s a lot of new wealth coming out of Mainland China, coming out of India, coming out of the tech sector, also in Hollywood; but there is still a lot of American wealth, a lot of very established collectors. You look at the top buyers: the Giacometti that went to Steve Cohen [in Sotheby’s November postwar and contemporary sale in New York], or Leon Black for the Munch [referring to Munch’s The Scream that Black, a New York financier, collector and connoisseur, purchased for a record $120 million at Sotheby’s May 2012 modern auction in New York]. A lot is dictated by what’s on offer. The buyer of the Turner that we just sold for a world record [just under $45 million] in December went to a different buyer demographic than the buyer for the Van Gogh we sold in November [$62 million] that went to a collector in Mainland China [Huayi Bros. chief Wang Zhongjun]. A lot of it is dictated by what the material is and who’s interested. And our responsibility toward the vendor is to ensure that the obvious traditional collectors aren’t the only ones aware of it, but to make sure that we’re connecting to all these new sectors of wealth, to entice them to begin a collection.

What kind of contemporary art are they collecting? And what is getting cycled onto the auction block?
There’s no single answer. You have collectors who are very comfortable in hunting emerging artists or who only want to focus on emerging California artists or artists who only work in Los Angeles but have a global following and reputation, versus those collectors who only go with name-brand, established artists who are still living but who have already hit records in the primary and secondary markets. And then you have clients who are completely comfortable with their own tastes, who will buy what they like regardless of who the artist is. Our responsibility remains the same regardless whether the artist is emerging or established. It’s to buy the best. There’s nothing more challenging when it comes to selling, then when you have a collector that has bought top names, but mediocre works by the top names.  

How much of this do you think is pure speculation—a kind of betting on a collectible/commodity that simply happens to be escalating rapidly in price?
The numbers don’t lie. There’s definitely a type of collector who collects on spec because it’s like a hedge fund [or] a stock. It is a commodity. They’ve gone on record, they’re known to the market. Some are passionate about the works themselves, others are passionate about the art of the business. We definitely see a trend in that type of collector that didn’t exist ten or fifteen years ago. And there’s no criticizing it, because all houses welcome all collectors without question; but certainly in the thirty years I’ve been in this business, there’s been an increase in that type of speculative buyer because the return is greater than on real estate or stock.

What part of this is simply cyclical? Or, conceivably, a passing fashion?
My answer is two-fold. I would say it’s completely cyclical, but the players are different, the stakes are different—whether we’re looking at collectors or these new buyers [speculatively] collecting a commodity glamourized by fashion—because fashion and trend are definitely involved. Looking back over the last 30 years, remember 2001, 2008; look at what happened in 1991. There are different segments of the market, different sectors that carry a market. They dictate the prices, they dictate the long records; then for whatever reason the market collapses. The stakes are completely different now—and not just higher. The criteria are different.

We hear a lot lately about the expanding role/involvement of art advisors and consultants in creating markets for emerging contemporary artists—sometimes effectively functioning as market-makers. Have the art advisors or consultants contributed to this acceleration of the cycle driving emerging contemporary work into the auction marketMy answer to that would be: the power of money. There are still very informed buyers. And whether or not one hires an art advisor, the client still has the final say, and has to approve the final deal. So have they contributed to how much the market for emerging artists has escalated? Possibly to a certain extent, but at the end of the day, the power is with the informed buyer whether the buyer is driven by trend, a high demand within a certain segment for one artist or another; there’s a little bit of that jockeying for position.

A lot of people in the auction business have left to become art advisors themselves or to take on a much broader role—to become agents, curators,  such as Simon de Puryor, Amy Cappellazzo and Aaron Schwartzman at Art Agency Partners. What is your own impression of art advisors’ and consultants’ role in the contemporary market?
The auction business is a very intense business. Certainly there are those who thrive in the density of the auction business and working internationally with its extraordinary talents. This is what has kept me in the business for all these years. Even though I’ve switched houses, I deeply enjoy the intense passion, palate and expertise of all of my colleagues, regardless of what the expertise is in—from rock ‘n’ roll memorabilia to antiquities. I’ve enjoyed every aspect of it all because of the great trust involved—and not just the role of the specialists. But there are colleagues who have felt that they’ve maxed out their time within the big teams and are much better suited to a more autonomous role, potentially with a greater slice of the business—many colleagues at both houses who have gone on to become advisors or opening up advisory businesses or their own galleries.

Or as agents—like Joshua Roth at UTA—projecting the artist’s reach… into worlds beyond the fine art world into Hollywood, media, and so forth. Do you see them also impacting the flow onto the auction block?
It remains to be seen. To me it seemed such an obvious development—Josh Roth’s departure from a traditional law firm into this [agency] was a niche that needed to be covered. Beyond actors, musicians, who’ve always had agents—when you look at top athletes, chefs—here are performers, for lack of a better term, who need an agent to help place them. We see the artist as the rock star, as the top chef, as the MVP. So in my opinion this is a very obvious development for artists. As to the second part of your question, whether or not this will impact the auction market or the primary market remains to be seen.  

What about the risks to the emerging artists? Is there a downside to their placement in the auction market even if the prices are bid up significantly?
Absolutely because there is the concern—that wonderful adage still holds true—that a record price does not a market make. And the specialists, my colleagues, then have to take a very considered view as to whether doing that will then impact the artist’s career. It’s difficult for the auction house because the relationship with the client as a buyer and seller is significant. But then from a market perspective, what is our role and when do you say no? These are all considered decisions that the specialists make as international teams, the same way they talk with each other to make sure that the contemporary team isn’t taking in, say, 12 Basquiats in the same year and the same medium and the same subject matter. It’s important to make sure that there’s quality control and establishment of what hits the market and when.

How do you buffer the risks to the youngest, most recently established/emergent artists in the auction market?
There is an art to orchestrating an auction. The way the specialists curate the lot sequence, the logical positioning is to place it so that it will be carried, sandwiched well, so there’s stability built up, so there’s momentum in the room and online and on the phone. It’s a very scientific “un-science.” That’s the beauty of live auction. Whether the audience is in the room,  online or on the phone, it’s still interactive theatre that will then dictate where the marketplace is. Our collectors, our buyers, our clients, and now speculators, hunters, established, seasoned—everyone has their own way of letting us know what they are or aren’t going to do—so there’s only so much we can anticipate or predict.

Do you see any risks for more traditional players in the emerging contemporary market—i.e., the galleries? Are they also going to be drawn into this market earlier to forestall career damage to their artists?
It’s a tough question to answer because it’s so subjective. Obviously there is an interest in seeing those artists perform well in the secondary market, and how that is implemented and executed… . You make a valid point about career damage. There’s no one answer—because it depends upon who the artist is, and what their output is and who represents them. It really all depends on the artist, the medium and the market.

Then there are the advisors and dealers trading amongst themselves and in the auction markets—do you think some of these players are setting themselves up for a fall? 
I think that’s been going on since the beginning of time. Whether or not they’re setting themselves up for greater risk or to fail—the stakes are higher.

What does a contemporary artist need to do to negotiate his or her way through this market?
I think the same way an actor or an athlete would have an agent. So whether it’s an art dealer or an agent, I think an artist should be an artist, and not a lawyer or an agent or representing themselves. My answer to that is to leave it to the professionals.