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.