When auctions become exhibitions: The invisible border between galleries and auction houses

01The great shift: when auction houses began exhibiting

The story begins in 2007, when Sotheby’s inaugurated its S|2 space in London. For the first time, an auction house opened a permanent venue dedicated to exhibitions, with curatorial programming on par with the best galleries. “We’re not selling here,” declared Simon de Pury, then chairman of Sotheby’s Europe. “We’re creating a space for dialogue with collectors.” Yet every exhibition came with a private sales catalogue, and the works on display could be acquired upon request.

Christie’s followed suit in 2013 with On the Block, a series of thematic exhibitions in New York. The auction house presented works as a gallery would, but with one crucial difference: everything was for sale, either at auction or through private treaty. In 2018, Phillips opened its Howick Place space in London, designed by architect David Adjaye, where exhibitions sat alongside traditional salesrooms.

What seemed like a marginal experiment has become a core strategy. According to the 2023 Art Basel/UBS report, 42% of major auction houses now have permanent exhibition spaces, up from just 12% in 2015. “Collectors no longer want to choose between the gallery experience and the efficiency of auctions,” explains Thaddaeus Ropac. “They want both.”

02The galleries strike back: when the auction becomes a sales tool

Faced with this offensive, galleries were quick to respond. On May 13, 2021, Gagosian staged The Now Evening Auction in New York, a live auction of 28 contemporary works. Among the lots: a Basquiat estimated at $10–15 million, a Gerhard Richter at $8–12 million, and several pieces by artists represented by the gallery. The result? $92 million in sales, with a 96% sell-through rate.

“We’re not an auction house,” Larry Gagosian clarified in an interview with the Financial Times. “We’re simply using the auction as one tool among others to serve our artists.” Yet the mechanics were identical: an illustrated catalogue, public estimates, live bidding, and even a professional auctioneer’s gavel.

Others followed. Hauser & Wirth launched its Artist’s Choice sales, where artists select the works to be sold. At David Zwirner, an online sale titled Artist’s Picks moved works by Yayoi Kusama and Luc Tuymans directly from the gallery’s website. Even smaller galleries joined in: Paris-based Chantal Crousel organized an online auction in 2022 to celebrate its 40th anniversary, featuring works by Gabriel Orozco and Abraham Cruzvillegas.

03The economic model that shakes up the middlemen

This convergence isn’t just about format—it’s upending the market’s economic balance. Traditionally, galleries operated on a 50% commission for primary sales, while auction houses took between 12% and 25% on secondary sales. With these models blending, those boundaries are fading.

At Sotheby’s, private sales now account for 28% of revenue, up from just 8% in 2010. These off-auction transactions allow the house to earn commissions comparable to galleries. Meanwhile, Gagosian now charges auction fees on its The Now sales, reducing the artists’ share.

The most striking development is the rise of “hybrid guarantees.” In 2022, during the Macklowe collection sale at Sotheby’s, the house offered a $1 billion guarantee—a record. What was once an auction-only tool is now used by galleries. In 2023, Hauser & Wirth guaranteed the acquisition of a major Louise Bourgeois work for $35 million before it was even exhibited.

04The artist at the center: opportunity and risk

For artists, this convergence presents both opportunity and danger. On one hand, it opens new commercial avenues. In 2008, Damien Hirst bypassed galleries entirely with his Beautiful Inside My Head Forever sale at Sotheby’s, generating £111 million. In 2021, Takashi Murakami sold NFTs of his works for $2.5 million without any intermediaries.

On the other hand, this hybrid model exposes artists to new pressures. “When a gallery runs an auction, it must choose between serving the artist and maximizing the price,” says Georgina Adam, author of Dark Side of the Boom. “Those goals aren’t always compatible.” In 2022, a Pace Gallery auction celebrating its 60th anniversary sparked controversy when several artists discovered their works were being sold well above primary market prices.

Banksy’s case is emblematic. In 2018, his Girl with Balloon partially self-destructed during a Sotheby’s sale, becoming Love is in the Bin. The artist turned an auction into a performance, but the intervention also revealed the limits of his control. “Artists lose power when the market becomes too speculative,” notes Olav Velthuis, a professor at the University of Amsterdam.

05Transparency versus opacity: the great paradox

One of the auction houses’ arguments for encroaching on gallery territory is transparency. Unlike galleries, where prices are often negotiated privately, auctions display public results. Yet this transparency is increasingly illusory.

In 2020, Christie’s introduced “enhanced guarantees”—secret guarantees where the guarantor can remain anonymous. That same year, Sotheby’s sold a Bacon triptych for $84.6 million via private treaty without revealing the buyer’s name. “Transparency is a myth,” says a former auction house director under anonymity. “Behind every major sale, there are secret deals, hidden guarantees, and sometimes even fake bids.”

Galleries, meanwhile, leverage this opacity to justify their existence. “Our value is the trust we build with artists,” explains Emmanuel Perrotin. “We’re not here to break records, but to build careers.” Yet even galleries now adopt opaque practices. In 2023, several European galleries were fined by ADAGP for failing to properly declare droit de suite, a tax on resales of artworks.

06Digital: accelerator or gravedigger of convergence?

The digital shift has accelerated this convergence, but it has also exposed its limits. In 2020, the pandemic forced auction houses online. Christie’s organized ONE, a live global sale that generated $420 million. Sotheby’s launched BIDnow, while Phillips developed Phillips Live.

Galleries followed. In 2021, Hauser & Wirth launched its own online sales platform, with auction-inspired features. David Zwirner developed Platform, a direct sales system allowing collectors to buy works without a dealer. Even art fairs got in on the act: Art Basel organized OVR: Pioneers in 2022, an online sale featuring works by Cindy Sherman and Julie Mehretu.

Yet digital has also revealed the weaknesses of this hybrid model. In 2022, online art sales dropped 17% according to the Hiscox report, after two years of record growth. “The problem is that digital can’t replace the physical experience,” says a Parisian gallerist. “An online auction is efficient, but it doesn’t build relationships. And that’s what collectors want.”

07The future: toward a unified market?

What will the art market look like in ten years? Several scenarios emerge. The first is total fusion, where galleries and auction houses become indistinguishable. “We’re moving toward a model where every player offers exhibitions, private sales, auctions, and advisory services,” predicts Simon de Pury.

A second scenario is increased specialization. Auction houses would focus on the high end, with blockbuster sales and massive guarantees, while galleries return to their core mission: discovering talent and building careers. “The market needs both,” says Thaddaeus Ropac. “Auctions for liquidity, galleries for quality.”

A third, more radical scenario sees the rise of new hybrid players. In 2023, specialist online platforms launched specialist online platforms Auctions, a system allowing galleries to offer works at auction directly on its platform. “We’re neither a gallery nor an auction house,” explains CEO Mike Steib. “We’re a facilitator.”

One thing is certain: the border between galleries and auction houses is permanently blurred. What was once a clear division—creation here, speculation there—has become a continuum where each player borrows the other’s tools. The art market has never been so fluid, nor so complex. And in this great convergence, one question remains unanswered: who, in the end, truly serves art?