There really is no other industry that is dominated by an auction system. I’ve been racking my brain to find one that has any similarity to this industry. Think about it. We are a diverse wholesale, retail oriented business, with unique works of art that are (usually) sold second hand from the original manufacturer or artist. Other similarities with other industries are the international nature of its trading and public awareness of its asset value. However, where is an industry that is dominated by two auctioneers?
General Motors, Ford and Toyota are the biggest auto makers, Exxon, BP, and Shell are representative of oil and gas, on and on; not one industry even remotely has a dominant auction presence, let along on the scale of the Sotheby’s/Christie’s duopoly in my industry. Part of this might be the weakness or inability of a commercial business entity to afford the capitalization necessary to make a presence, in any segment, let along all the segments that this duopoly can influence. That was not necessarily the case prior to introduction of the buyer’s premium in the mid 1970’s. But we must acknowledge that these two have passed the test of time, and their ability to go “corporate” may have been the key to their success, and the failure of the commercial side to do the same. While there are commercial dealers that have been around for over 100 years, they have essentially struggled to survive and stayed within the boundaries of a family structure.
It is this point of not being able to develop a corporate culture in the commercial side of the industry that will inevitably keep the auction method on top. Not that most auctioneers have it, but only Sotheby’s and Christie’s have it so well developed and far beyond everyone else. Perhaps the only “corporate” style organizations in the industry are non-profit organizations like museums. The duopoly is well financed and insulated from competition both commercially and from other auctioneers, and their only major concern is protecting their advantageous operating methods from any legal or legislative assault (like the proposed NY State sham bidding legislation). It sounds a bit like the private equity firm The Blackstone Group protecting their success from the federal government’s attempt to raise the tax rate on their revenue.
So why has the commercial side failed to develop? Someone might tell me “stop writing your blog and get to work on your own business plan”. Sounds like a good idea, so my plan is to get access to significant capital, develop multiple locations around the world staffed with competent managers, expand and cultivate a corporate infrastructure that can relieve me of micromanaging the affairs of the company, so I can focus on “the big picture”. Simple! Did I forget to also put auction industry operating changes on the agenda?