Last November Jussi Pylkkänen, the bespoke-suited and unnaturally calm Christie’s auctioneer, conducted history. He was orchestrating the sale of three paintings — a triptych by Francis Bacon — for $142.4 million. As the gavel fell and the crowd in the main auction room of Christie’s North America burst into applause, Steven Murphy said in a voice barely loud enough to call a murmur, “That has never happened before.” Yet Murphy, the company’s CEO since 2011 and the first American to run the British house, would be quick to admit that it was supposed to happen: What was a landmark moment in art economics and Christie’s own 248-year history — the most expensive sale of a single work at auction ever — was also the culmination of the first phase of a major realignment for the esteemed auction house.
Phase two is to make sure that there is much more to the business than public auctions — even those in which a record $691.6 million trades hands, as it did that November night.
Christie’s, which is owned by Groupe Artémis, the holding company of François-Henri Pinault, makes money by facilitating high-end purchases of unique objects. “High end” in this case encompasses a realm big enough to include an $800 photograph from National Geographic and a $58.4 million sculpture of a balloon dog by Jeff Koons — which sold the same evening as the Bacon triptych, setting another price record (this one for the work of a living artist).
In terms of auctions alone, Christie’s edged Sotheby’s in 2013, reportedly racking up $5.9 billion in sales compared with $5.1 billion for its longtime rival. It’s the second year in a row Christie’s has come out on top. That said, at the über-high end of the auction trade, the business can be surprisingly risky. Christie’s cut in such sales ranges between 12% and 25%, but the most expensive and highest-profile works typically offer margins near the low end of that spectrum. For major sales the auction house must also ensure that a work is acquired at a certain price. As long as the global economy hums along and a cadre of the wealthy choose to spend tens of millions of dollars on a wall hanging or lawn ornament, there is little cause for worry. Murphy, though, has made a virtue out of worrying. “I’m on the anxiety diet over here,” he says.
That angst led the 59-year-old Murphy — who was a top executive at Simon & Schuster in the 1980s, then at EMI Records in the ’90s, then CEO of the publisher Rodale in the 2000s — to what he calls phase two of his strategic business plan: “to focus not on auctions, but on clients.” Nearly half of the purchases that Christie’s facilitates happen during private sales, in which the brokering is done discreetly, not in a grand hall with a passel of well-heeled bidders. Private sales through Christie’s have grown by 30% in the past three years, and Murphy’s team is aggressively pursuing new clients. Nearly a quarter of the auctioneer’s customers in 2013 were new, in fact — and of those, about a third came from Asia, which nearly cracked $1 billion in sales for the first time. Christie’s opened an office in Shanghai in October (the Chinese now account for 22% of the company’s global sales), and another in Mumbai in December.
The third phase of Murphy’s plan is e-commerce. It’s still a tiny part of the business — generating just $20.8 million last year, or 0.3% of the company’s $7.1 billion in global sales — but it grew 10-fold year over year. Last summer, Christie’s auctioned off a rare Apple-1, the original Apple computer, complete with a manual and schematics from creators Steve Jobs and Steve Wozniak. It fetched $387,750.
Selling art and artifact is like a Möbius strip, says Murphy: It may look like different segments of business, but it’s a continuum. “The railroads thought they were in the railroad business, but they were in the people-moving business,” he says. For Christie’s, likewise, the art trade goes well beyond the auctioneer.
This story is from the March 17, 2014 issue of Fortune.