The Sotheby’s/Christie’s duopoly has been devastated by the recent bust in the contemporary art market as well as just about all areas of fine and decorative arts collecting. However, in these difficult times, they have started to make some inroads into the potentially lucrative world of the dealer by trying to exploit what dealers do best, sell privately. Where the auction format fails, this old tried and true method is becoming the auctioneers next best alternative. For dealers, this should signal a warning as well as an opportunity.
I have always felt that the best approach to buying and selling art and antiques is to start with a disclosed asking price. Since the auctioneers method today totally depends on deception (secret reserve) and conflicts of interest (buyer’s premium and a seller’s commission, etc.) the private treaty method is becoming an alternative form of controlling the consigner and buyer. Private treaty sales allow their manipulation of the buyer and seller by still collecting commissions from both sides but in a private placement form of sale. However, now price can be negotiated. What is there in this type of transaction that a dealer shouldn’t or could provide?
At some point, the auction process will be under pressure to change its format. The secret reserve will always be a questionable practice and other forms of deception and fraud that they employ have created nothing but more lawsuits and public inquiry into their dealings. Perhaps Sotheby’s irrevocable bidding scheme tops the list of scams perpetrated on the public. I believe that this duopoly isn’t stupid and realizes that the private treaty format can be expanded as an integral and not a periphery revenue source, and dealers better prepare for this inevitability.
Unfortunately, dealer organizations have no concept or thoughts on how to even discuss let alone come up with a plan to neutralize the duopoly’s inroads into their part of the industry. The answer isn’t going to come from organizations that are too concerned with phony standards or exclusivity of membership. It can happen if dealers actually form alliances and work together to create a real market with shared inventory, disclosed pricing, and the ability to negotiate with the buyer. Letting dealers perform negotiations with the buyer is a skill auctioneers are desperate to replicate. It is critical for dealers to consolidate to meet this challenge and to offer a larger inventory for a prospective client to peruse.
If auctioneers see such a good future in the dealer/private treaty trade, then having available inventory (whether owned or consigned) will become the critical need for success. In this present period of many dealers as well as auctioneers disappearing from the scene, those that survive will find that the consolidation process can provide a basis for strength to go forward. In the end it is always going to be about who has what to sell. This method should give the advantage to the dealer, if they can seize this opportunity.