Christie’s CEO Steven Murphy: ‘Why shouldn’t I take Amazon going into the art business seriously?’

Christie’s CEO Steven Murphy: ‘Why shouldn’t I take Amazon going into the art business seriously?’

August 9, 2013: 11:23 AM ET

The storied auction house reacts to Amazon entering the fine art biz.

By Ryan Bradley, senior editor

FORTUNE — On Tuesday Amazon announced the launch of Amazon Art, a partnership with 150 U.S. dealers and galleries that currently features some 40,000 works from 4,500 artists. There’s a Monet selling for $1.45 million (user reviews are appropriately snarky: “BUYER BEWARE: THIS ITEM IS IN FRENCH. There is no English version. I purchased this product and couldn’t understand a word of it.”) and a Norman Rockwell for $4.85 million, the most expensive piece on the site, so far. On Wednesday Fortune sat down with Christie’s CEO Steven Murphy, who is especially well-suited to consider the magnitude of Amazon (AMZN) entering the fine art space. Before arriving at Christie’s in 2010, Murphy worked in music and book publishing — first at the publishing house Simon & Schuster, then as a president at EMI Records, and finally as the CEO of Rodale. So he’s seen, firsthand, his industries hugely affected by the online retail Goliath. Edited excerpts follow:Does this Amazon news worry you?

All these things worry me! I’m on the anxiety diet over here. Why shouldn’t I take Amazon going into the art business seriously? I can hear the trucks! [laughs] It’s the big rumble … it’s like: AMAZON. It’s perfectly well named. It’s huge! But, I’ll tell you, like the Wizard of Oz said, “We have something they haven’t got.” We have the Christie’s brand.

There’s a similar argument, which is not completely analogous, but it’s something book publishers, and book sellers, and record companies have made before, and Amazon completely ate their lunch.

No, no, no I agree with you. This is a major event, something to give us concern. This is a complex point, let me jump ahead: They can take a big chunk of the art world. That’s a given. But there is a big difference between Christie’s and brands in the books and music. Frankly, no one is buying Eric Clapton because he’s on Warner. And except for very few but a couple publishing imprints …

Sure, sure, most people don’t know Knopf, or FSG … 

But if you read the New Yorker, maybe.

Right, but the vast majority of people, folks on Amazon don’t.

It’s very rare. Christie’s does have 250 years of a value and certain imprimatur. Amazon is creating a marketplace for dealers, some of whom have a good brand. My first pass is: This is actually good for the art world. Encouraging people to buy art online is going to be good for Christie’s, because I’m building an online platform for Christie’s. I think I’ll have an opportunity to grab some of the business myself. Our job will be to make sure we have the exclusive on the art that people are looking for. The name of this game is still consignments, and that is a game we are very, very good at.

And the online retail game?

Look, it’s early days at Amazon in this space, so I don’t really know enough about it, but I imagine we’re serving slightly different audiences in different ways. When our online business comes to complete fruition — this is the first year, and we’ve gone from seven tests to 60 online auctions — we’re approaching the relationship between our network of buildings and exhibition space more in the same way that apparel companies might have a store to drive their online business. So there will be things being toured, seen — so it’s very different than Amazon.

I imagine that the key differentiator is how you treat your customers, and retaining them, which is something that, well, with Amazon, you could be anybody, or nobody.

Yes. Yes. Look, philosophically I think it’s really important when new things happen to embrace them and do it better rather than say: Go away, this will never happen. I remember vividly Jack Valenti going to Congress to try and stop home recording when it was already happening. It’s like that old story about the railroads thinking they’re in the railroad business when they were in the people-moving business, otherwise they wouldn’t have missed the airplane. We’re in the client business, and the mandate has been to focus on how they interact.

We just did a very tasty, beautiful little sale of some wonderful Chinese porcelain from the 18th century … The price point is $20,000 or $8,000 or $45,000 — it’s an aficionado’s category. We had 55 pieces in the online sale, sold 50, and only marketed online. Twenty-five of the 50 buyers were brand new, from Canada, China, the U.S., and Europe. Now they’ve just received contact, sometimes phone calls, we’re not selling them, just inviting them back in: What information can we provide them about their purchase? What more do they want to know? Someone who just spent $20,000 two days ago might like to know the story behind what he bought, and we can give that to them. I don’t know if Amazon can.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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