I’m never bashful about my disdain for the Sotheby’s/Christie’s methods of deception and fraud, as they seem to be doing it quite successfully in spite of my rants against them. But as all things must adapt and change with the evolution of a dynamic environment, the world of the auctioneer and their methods is not going to be the same. Control via the economic power of a duopoly can cause the two parties complacency and rigidity in how they operate. That can lead to an inability to recognize that old methods can inhibit growth and creativity.
The evidence of this phenomenon is how this duopoly in the art and antiques industry has in a calculated way, jettisoned the decorative arts and many other niche markets where they fail to dominate or have successfully destroyed the vitality of the secondary market. Their unabashed push into the contemporary and 20th Century fine art market illustrates how single minded and reliant they have become on this lucrative and dominant market. Stamps, period furniture, collectibles, and so many other fields that they use to participate in are no longer on their radar. For them it is now a big bet or no bet at all, and contemporary/20th Century is where they want to be for that purpose.
The notion that markets only rise is a recipe for a disaster. The duopoly should know and remember what happened in the 1980s, with Impressionists Art and the Japanese buying bubble. However, the present environment presents a different challenge to their dominance and their vulnerability to market vagaries. Their sole method of success now relays on conflict of interest and deception to a retail clientele. Rich hedge fund billionaires and sovereign wealth funded individuals now dominate the upper strata of their marketing and promotion. Can the demand of that small but elite group keep up with a shrinking supply of high quality inventory; will this demand for contemporary perhaps move to other areas as valuations become unsustainable with limited product availability?
It seems to me that the Duopoly has painted itself into a corner. While they use to have a diverse portfolio of products their profitability is now more reliant on fewer. The lip service Sotheby’s is giving to alliances with the like of eBay make for a dilution of their brand and at minimal profitability. In addition, they both are clearly losing their top talent in those areas of the highest profitability and risk. Many of their former employees in the contemporary and 20th Century fine art departments have departed, realizing they can make more money as consultants with flexibility to operate outside the duopoly, than working for them.
The dramatic changes in the industry over the last 10-15 years will only accelerate. Sure, they will continue to promote themselves as the only go-to resource for the best of the best, but things are changing and nimble individuals and dealers will continue to make inroads as viable alternatives to their methods that center on having control of both buyer and seller. Within the time frame of the next decade, growth for this duopoly will only continue to be constrained by new competitive forces going after a limited supply of product. That product will find options that can compete with the constraints of how the Duopoly presently works.