A Critical Case Study on Christie's Role and Impact in the Creative Economy

Introduction

Christie's is a leader in the art business world. As an auction house with an emphasis on the secondary art market, Christie's deals with art, furniture, jewelry and other collectibles. Operating in major cities and having a long legacy since 1766, Christie's activities play a significant role in setting standards and influencing the creative economy and beyond. This paper intends to explore Christie’s core economic activities and its ancillary effects in society and culture with an objective standpoint.

Objective:

• To understand how Christie’s revenue generating activities directly or indirectly affect innovation, the orange economy, culture, society and the environment.

Research questions:

• What economic value generation does Christie's take part in with respect to art market globalization?

• What are the cultural, social and economic spillovers from the identified activities?

• How does Christie's balance business with cultural stewardship, sustainability, collaboration, ethics and innovation?

Methodology:

The qualitative research adopts the case study methodology (Yin, 2009) with an explanatory approach to understand the causal relationships between Christie’s, the art market, socio-cultural dynamics and the creative economy. The method of analysis is thematic analysis. Sources of information are secondary and triangulated.

Christies as a Commercial Intermediary

As a profit-generating organization, Christie’s has many services revolving around art and real estate. However, as a commercial intermediary in the art market (Joy and Sherry, 2003), their key activities fall to three; art valuation, auction management and client engagement.

Art valuation, specifically financial art estimation, is usually done through a combination of intrinsic and extrinsic price determinants (Gineste, 2023). Each expert from over 50 departments at Christie’s uses a combination of style specific hints, knowledge and experience to estimate the art piece (Christie’s, 2020). Despite this, the lack of objectivity in the process raises questions about the accuracy of the estimate. Even if a team or other specialists are consulted during the process, and if a hedonic regression model is adapted (Christie's gatekeeps), the humanness of estimation and the nature of commodity in hand, artwork, results in extreme subjectivity to the estimates. This may lead to over or undervaluing of the artwork.

The specialists are under no obligation to follow a fair market value as there is no economic condition or autonomous regulation (Gammon, 2019; Lydiate, 2015).

The revenue in this context is affected to accommodate the fluidity of the estimate and the hammer price. For instance, the minimum price guarantee (Christie’s, 2023) results in a proportion of the difference of the hammer price and the guarantee, allocated to Christie’s as a reward. It is intriguing to know if the estimates were made low on purpose as Christie's has a direct financial interest in the sale. A study showed that auction houses probably underestimate hammer prices to influence demand and decision making. Sellers will be more likely to sell if the actual hammer prices rise drastically higher than estimates and buyers will be willing to bid if they feel they are getting a bargain (Ekelund et al., 2013).

Proper auction management can influence demand and be a tool to understand consumer behavior. Apart from offering a seamless experience for the clients, the auction contributes amply to the orange economy by employment opportunities at the ‘dissemination’ level (ESSnet-CULTURE, 2012). By creating a refined pre, during and post auction experience, clients are exposed to a personalized setting through socio demographic tools that influence consumer behavior leading to ‘Client engagement’ which is both Christie's key resource and key activity. The well-maintained and longtime accumulated roster from all over the world provides a client and networking base for all of Christie's services and allows market testing (Lazzaro et al., 2023).

Newer technologies are adapted such as Christies 3.0 to attract a younger demographic. Current study is on the use of Artificial Intelligence to provide unbiased pre-auction estimates (Bailey, 2020). However, capturing intrinsic determinants that are subjective and require human thought on taste poses a challenge. This in turn instigates thought on whether transparency in the pricing process or the establishment of an international regulatory for auction houses would aid globalization.

Cultural, Economic and Social Spillovers

Beyond commerce, Christie's, as a dominant force in the creative economy has unintended external influences or spillovers, branching into economic efficiencies, cultural valuation and social engagements (Lazzaro, 2021;Joy and Sherry, 2003).

A significant economic spillover notably stems from the consolidation of the Impressionist and Modern Art with Contemporary and Post-War departments.(Kinsella, 2020) This operational restructuring influenced by market liquidity and perceived investment value of art, impacts the market's cultural capital by reducing the diversity of cultural products.(Heilbrun and Gray, 2005) While enhancing operational efficiencies it risks creating a monoculture in art offerings, marginalizing niche markets and lesser-known artists whose works fetch lower prices at auctions, a clear negative externality in the economic valuation. (Lazzaro, 2024)

Culturally, Christie’s shapes the appraisal of art, often elevating works with higher economic potential. (Tremayne, 2023) This market-oriented prioritization may constrain cultural diversity, as artworks with profitable commercial appeal often overshadow less economically viable but culturally significant pieces. For instance, in Iran's art market, where galleries, curators, and collectors are increasingly influenced by the sales outcomes of auctions houses, often detrimental to local cultural authenticity and diversity. (Fontainha and Lazzaro, 2019) This is reflective of the broader art-market dynamics where economic priorities often dominate cultural narratives. The high visibility of valuable sales not only privileges certain artists and styles but also establishes a benchmark that marginalizes diverse cultural expressions, contributing to a homogenization that could distort the broader cultural narrative.

Socially, Christie's enhances access to fine art through public auctions and events that contribute to the broader educational landscape as cultural spillovers. (Valdés, 2020) These activities promote community engagement and develop social cohesion, celebrating shared heritage and facilitating network effects. (San-Jose et al., 2023) However, the prominence of high-value sales may inadvertently align cultural significance closely with economic value, influencing social dynamics and potentially diminishing the intrinsic value of art. This is a negative externality, where the broader societal impact—a reduced appreciation for the non-economic values of art—occurs without compensation to those affected by this shift.

These strategies not only lead to a standardization of art offerings but also align cultural worth directly with monetary value, illustrating a negative externality.

Conscious undertakings to be ethical, innovative, and creative

Innovative procedure of Christie’s verifying provenance highlights a deeper process of diligence that sets standards within the art world. Along with public access to auction catalogues and engagement with forums on cultural property, Christie's educates and sensitizes the public on cultural heritage preservation that spillover within the cultural and creative sector (Lazzaro,2024). In addition, Christie's has added to the orange economy by starting their own art appreciation and innovation courses (Christie’s Education).

The mission of the institute is to globalize academic excellence in art business, market, history and curation while ensuring equality, diversity and inclusivity (Christie’s Education, s.d.). It fosters creativity within students and encourages creative competency development of human capital. This probably helps the firm rehire their alumni and develop a sense of culture within the cohort. However, as the tuition fee is high it results in a limited class of students, hindering accessibility.

Christie's operations have had less impact on the environment as they have been conscious in sourcing art and artifacts. To reduce its environmental footprint, Christie’s cut its production of printed materials and boosted its investment in digital communications through their other venture firms. This has also led to creative disruption in fields like NFT in the art market. Even though Christie's engage in environmental sustainability, they have been interrupted occasionally by environmental activists (Akers, 2023) yet they resumed the sales stating their stand in the environmental approach.

Christie's is ethical in that it adheres to the laws, regulations, and treaties on the sale of cultural property whilst also ensuring legitimacy of sourcing of goods. However, Christie’s seem to run morally grey, where the provenance of the artifact is questionable. For instance, the controversy of ‘’An Egyptian Brown Quartzite Head of the God Amen” from a private collection in Germany was sold for the price of £4,746,250 to another private collector. Even though the provenance was questionable, and the Egyptian government was against the sale (stating it was stolen in the 70’s from a temple), Christie’s went ahead with it (Hommes, 2019). Despite this, Christies holds a strong position in the art market.

The positive spillover of the collaborative partnership that Christie's has with organizations like UNESCO and law enforcement agencies originates from fighting against the illicit trade of cultural property. There have been agreements between the parties through written proposals about the art market trade code (UNESCO, 2023). Recently, Christie's has taken measures regarding the codes owing to the Greek vase incident. They found that the vases were linked to a convicted dealer and had to withdraw the sale. This contemplates the requirement of a higher authority to stop the grey area action of powerful auction houses like Christies to ensure ethical decision making. (Alberge, 2024)

Conclusion

Christie’s variety in work and the resultant spillovers requires a regulatory body to ensure transparency, regulation of art pricing and valuation and ethical decision making. Apart from this, a thorough review of their influence on the complex network of cultural and social norms within the global creative industries is also needed. Undertaking this critical analysis is imperative to address unintended impacts and ensure a balanced valuation of artistic diversity alongside economic factors.