Peter Wilson, Sotheby’s Maestro Coverup

In reading the Sotheby’s published commentaries of the life and career of Peter Wilson (Sotheby’s Maestro), there is no denying his creativity and methodology to change an industry.  It was also the start of a time with endless possibilities for a stodgy way of doing business.  The Post-World War II landscape of Europe vs America for taste and money, was wiped clean. His opportunities were in delivering a better product, in a better way with a good bit of PR, which never hurt.

 With all the accolades and anecdotes about his life by the many colleagues and professional acquaintance I found it stunning that no one mentioned his role in the implementation of the buyer’s premium in the mid-1970s.  With all the showmanship attributed to his demeanor and control of an auction room, it all came down to money, and Sotheby’s not going broke or be overextended.  It seemed that he had no shame spending money to do what he wanted. However, Peter Wilson was complicit as anybody in the premium’s creation and operation, having a willing partner with their competitor,  Christie’s.  Why wasn’t this titanic sea change in the auction revenue stream commented and recognize as an achievement in any of these commentaries?

 The buyer’s premium was created to separate the dealers from the retail trade and it has worked magnificently.  It had a build in price increase mechanism that worked flawlessly for over 40 years.  It became the auction industry standard of non-negotiable revenue paid by a buyer, and today, auctioneers wouldn’t have it any other way. Honestly, the reason I bought the book was to learn more about the intrigue and thinking of when the premium was first implemented in London.  From my perspective, the best version of the whole episode was from an incredible account by Peter Spira, in his insightful autobiography, Ladders and Snakes.  As the Chief Financial Officer for Sotheby’s in London, he was careful not to implicate his boss in any collusion with Christie’s; not so for Mr. Taubman unfortunately.

 As an anecdote to the book, I would like to give my one and only meeting of Mr. Wilson.  It must have been in the late 70’s and we were just starting to establish a relationship with Sotheby’s through Robert Woolley, who was the head of Sotheby’s decorative arts division in New York.  Robert was enamored by Newel’s immense size, quality, and diversity of decorative arts and he knew it might be something that Wilson should keep on his radar. I believe Robert also brought Gerald Bland who ran the English department too.  As Wilson walked around our warehouse he remarked, “how did all this incredible stuff end up in New York.”  One piece in particular that caught his attention was a chaise in the form of a crocodile that was vintage Brighton Pavilion; his eyes lit up.  I got the sense that he loved nothing more than to be in his element, decorative and fine arts items.

 To bring the Peter Wilson story to a close, Sotheby’s has continued to advance and reshape the auction house role. Today, irrevocable bidding would be like introducing a secret reserve price.  In the end, the book is very entertaining and a last gasp of how the industry operated, with only a telephone or face to face.  The Internet has now taken on a dominant role as pricing continues to get more transparent.  How things were done, with a purpose, and where they morph has and will kept this industry evolving quite dramatically. In fact, Sotheby’s recently announced that they were getting rid of the buyer’s premium for online sale only; what comes around goes around!

Remember The Buyer’s Premium

I guess if you live long enough you can see everything.  I believe I have witnessed in my career in the art and antiques industry the most seminal decision by an auctioneer to voluntarily forgo the buyer’s premium.  Sotheby’s, you not only see the handwriting on the wall, but now realize new potential in how the market can work.  Offering no buyer’s premium to online sales only, is the most significant auction method change since it was first introduced in the mid 1970s.

In the press release, Sotheby’s acknowledged the economics of the decision to test the waters where there is least resistance and the greatest pool of buyer.  Presently, this is not the marketplace for million dollar works of art, those buyer’s premiums are sacrosanct for the milking of billionaires in the live action dramas of the public performance sale.  Cracking the complete abandonment of the buyer’s premium as opposed to reducing it represents a new business model.  Sotheby’s is developing a prototype that relies on the more traditional seller’s commission.

The implications of this are intriguing because their present line up of online only auctions includes Contemporary Art, jewelry and watches, prints and Old Masters.  Where’s the decorative arts?  This is my immediate question as to which areas Sotheby’s sees the potential markets.  In my experience, the buyer’s premium had the most devastating on furniture and decorative arts dealers, who are practically non-existent at the higher end. However, if their little experiment starts to win over consignments and costs are contained with the technology, Sotheby’s could create a competitive ripple effect on buying at auction.

This brings me to the present dealer fee (commission) that is imposed by 1stdibs.  Pressure to create revenue from the seller is the traditional method for most transactions.  If auctioneers like Sotheby’s attempt to rely on seller commissions only, as in their proposed online sales, then 1stdibs is their template for this.  1stdibs, through its technology operates world-wide and sells without ever owning an item.  Buyer’s pay nothing, the sellers (like myself) pay it all.

While 1stdibs is still searching for a healthy bottom line, Sotheby’s makes an enormous profit.  And if the “competition” gets wind of what is going on, Christie’s will have to have an answer (usually match the latest salvo).  What is very interesting in todays present online auction process is the standardization of the present buyer’s premium and extra fees for using online auction services like Invaluable and Live Auctioneer.

It’s an exciting time to be in this business, just when I thought it was never going to improve.  Taste and money are always changing and evolving into different forms and styles.  Great inventory opportunities abound for both dealers, auctioneers, and retail purchasers.  The selections have never been so plentiful, except at the very top, where no one wants to be except perhaps a museum or billionaires. The end of the buyer’s premium is like the fall of Communism; it had its run but it was always flawed.