Sotheby’s Contagion Now Spreading to Ebay

July 17th, 2014 by admin

On July 14th the front page of the New York Times ran a major article concerning the new relationship being created by Sotheby’s with the original internet auction giant eBay. With all the fanfare of the Sotheby’s PR machinery, breaking the news of this questionable combination was orchestrated to quiet their critics and leapfrog their “competition.” Well Christie’s, their duopoly partner/competitor, is probably not too concerned given that this new partnership is full of many hurdles and issues that perhaps may yet come back to haunt them.

It’s interesting how the New York Times article puts such a spin on the synergies and possibilities of eBay’s worldwide market gaining access to Sotheby’s “imprimatur of authenticity.” There is a big problem however, they both operate in directly opposite manners, with one (guess who) charging and exorbitant buyer’s premium and the other just a listing fee. It appears that eBay will be getting a listing fee from Sotheby’s, but will the buyer’s premium now be the generally accepted method for the eBay masses, and can we now rate Sotheby’s as a Power Seller? Of course the details of the arrangement remain confidential according the article, probably because they have to reconcile that gap and many others.

Another interesting comment made by eBay was that they perceive Sotheby’s as an “anchor tenant” in their virtual shopping mall, but since when does Saks Fifth Avenue have a marquee place in the same location as a Kmart? Ebay tried to go upscale by purchasing the auction firm Butterfield & Butterfield and it failed not because it was a bad idea but because they could not make the migration to an upscale market. Same was the case when Sotheby’s made prior deals with eBay and Amazon. When they attempted to create their own marketplace and approached my firm to be part of it, I told David Redden, then running that operation, that it would never succeed. We somehow forget that secret reserves, and an outrageous 25% buyer’s premium on items sold under $100,000 (naturally identical for both of the duopoly participants) has severely impacted the market for these items and the jury is out as to how much lower on the food chain this practice will be tolerated.

Unfortunately for Sotheby’s, this gesture to the mass market will only dilute their cache and give Christie’s a better marketing position. According to the article, Christie’s will be expanding its online presence by going it alone, using consultants from other high end retailers to bolster their image, not dilute it. However, both of their sights are on the younger online shopper who now does not want or need to visit a gallery or showroom. Also, this younger generation might not tolerate the deceptions and frauds perpetrated by their business methods. Explaining these practices to a generation that craves the openness and disclosure that the internet offers could have the opposite effect. It has turned me off of being a participant in their rigged practices and might just do the same to the middle/mass market; so let their present affluent customer base enjoy being hoodwinked.

http://www.nytimes.com/2014/07/14/arts/design/with-ebay-partnership-sothebys-extends-potential-reach-by-145-million.html

Humira, The Arthritis Drug For Antiques

July 13th, 2014 by admin

While watching the news on TV it seems that most of the commercials cater to drug oriented products, be it erectile dysfunction, diabetes, stomach ailments, and cholesterol issues. One that caught my eye was for an arthritis relief drug called Humira. Not that I have arthritic issues (although I do have a bum knee), the Hurmira commercial features a young lady searching through an antiques shop as a nod to her physical ability to enjoy a task that the drug would ameliorate. Why antiques, and she appeared to be under 45 years of age.

Perception is not necessarily reality and not anyone who wants to live and collect antiques has to be rich and elderly. What I found so stunning in the commercial is that the showcasing of “antiquing” was a subliminal connection to perhaps biking down a country road or playing with your grandchildren. There is both a physical and cerebral activity involved. Ever watch the TV show “American Pickers”; you have to go through floors, up steps, over tables, and just plain move the stuff around in search of something that connects. In the Humira commercial the featured actress touches a brass clothes valet that has a certain charm and functionality which catches her attention. It is what all antiques and decorative art should do, to be able to make a personal and pleasurable connection for what it is and how it can be useful and enjoyable.

The public image of antiques has a way to go before it gains a cache like fast cars and the newest handheld technology. Just getting noticed is a start and not having a condescending attitude about our items is even more important. The upscale show phenomenon has little reason or the ability to expand its public persona just as the elitism of Sotheby’s and Christie’s is portrayed by their abuse and manipulation of both buyers and sellers.

The only salvation for the growth in the market for antiques is to be a more generally accepted commodity. Acceptance has to come with a recognition by the general public that, like an effective drug, you want it because you believe it will offer a positive benefit. Antiques should implicitly offer a remedy for value, functionality, taste, and style. What we need is the benefit of an industry organization that can get the message out to our potential customers. Unfortunately we don’t have an AppVie, Inc (the developer of Humira) or a Bristol Myers who have the deep pockets to promote our industry and the products we sell.

The Spring Masters Show in NYC, Done Differently

May 4th, 2014 by admin

I started blogging about this industry back in 2007 when I discovered Clinton Howell commentaries and his participation at shows. I saw him today, exhibiting in the revolutionary format of this year’s Spring Masters show. With Artvest Partners now in control they are attempting a different approach that is dramatic, and it works. Clinton suggested I write something about the show, as he obviously loved the change and extraordinary visual vistas of the show floor.

It works because of the creative and inventive approach taken by the architect, Rafael Viñoly. That antiques and art fairs so desperately need a new format is reflected in the fact that this show unfortunately was projected to be no better than the prior year show which was created by AADLA, or for that matter any highbrow style show. The whole idea of any show, be it a Pier Show, Brimfield, or any local event, is the grid layout that prevails as the only solution. Up one aisle and down the next; and (my method) repeat the process in reverse so you can really see the most merchandise at any show.

Mr. Viñoly’s design for the show has attempted to break that monotonous pattern with a fun, fantastic, and innovative approach to multi-dealer display. The magic is the open, almost interconnected feeling that is created by have transparent and angular walls within the layout of the booths. What made this all the more fun is how you almost get a certain vertigo in terms of “have I been here before”? This makes you look even harder at all the merchandise, and appreciate how the dealer mix from antiquities and art, to items of recent design, are somehow seamlessly connected.

Lost in this review is the merchandise and art that in on display. Yes it is of high quality and caliber, but why do some have prices and others do not? And if you need a set of chairs, not at this show. This fair isn’t necessarily for the decorator trade but really requires patrons who want to see a diverse exhibition of fine and decorative arts in a stimulating and contemporary environment. Being creative and innovative is how you can make it approachable to students and a younger generation of consumer. Imagine if every item in the show could be looked up on an iPad as you strolled the show?

Perhaps this style of show presentation will be replicated by other show promoters. It cannot help but foster some creative new approaches to dealer presentation as groups or individually. There should be a way to promote having a stimulating experience and interest in how and what we sell. But this original 2014 Spring Masters New York will be the standard reference as to what broke the “show” mold.

The New UK Way: Auctioneer Exemption, Of Course

April 28th, 2014 by admin

When I was trying to relax this past Sunday morning, I picked up the latest edition of The Art Newspaper and was stunned when I came upon an article explaining how the new English Regulatory Reform Act of 2013 would exempt the auctioneer’s from being a party to a public sale. At auction, the restrictions and disclosure of financial arrangements are only applicable to dealers who form a “ring” or limit the number of potential buyers, but not on the auctioneer’s side of a deal.

I can’t image how proud I would feel if I were a member of the British trade. First they blinked at challenging the auctioneer’s buyer’s premium back in the mid-1970s, and now your own government in coming down against the dealer trade. When you read about the restrictions and new regulations, I am totally in favor of them. I think that disclosure of inside information is good for the market. Since governments can’t control or regulate the financial markets from a meltdown, let us start in my unregulated industry. Great, but why not level the playing field for disclosure of auctioneer collusion with another interested party.

Disclosure of a transaction within the auction world is of course, the biggest joke that Wall Street envies. The way this new Reform Act works, the info on the irrevocable bid somehow does not need to be disclosed in the same format required by non-auctioneers. It seems strange that the auctioneer, the consignor, and another party (or more) does not have to disclose the same information requirements of the new law.

To be fair, I think the British trade has been a good model for the US, who have an even more flawed structure as a representative organization. It really comes down to the classic duopoly approach that leaves one two-headed monster (guess who they are) running their own show. I would love to lead the charge to dismember them, and would suggest that only a class action be initiated to demand equal status as the auctioneer who is running the event in question, with these new rules.

The Sotheby’s/Christie’s duopoly has had its share of publicity regarding hedge fund activity, record prices at their auctions for contemporary art, and having made a major push into the private treaty/dealer space for transactions. They pride themselves on being the most egregious offenders of conflict of interest in their major transactions and way of doing business.

These new Regulations requires that the “ring” dealers submit a written contract to the auctioneer, so the auctioneer is aware of the pending transaction. But what of the dealers or other bidders who does not have the privilege information that an auctioneer may have with its consignor and or an interested third party? This is a fundamental flaw in the regulations and with their international scope, will allow them to funnel contracts to auction merchandise in the country that best serves their and their interested 3rd party’s interests.

This leads me to the point that dealers must and will have to evolve in the face of the unregulated, manipulative, and fraudulent methods employed by auctions. Secret reserve and chandelier bidding are blatant deceptions; the British government condones that and leaves dealers like myself with another excuse to not partake in their farcical way of operating. Unfortunately, this is the power they exercise.

Buying Decorative Art; A Changing Knowledge and Passion

April 16th, 2014 by admin

The alchemy of knowledge and passion can usually result in a productive creation (not necessarily legal either). However, in the decorative arts as a dealer or collector, it now requires a new calculation of the supply/demand equation. The reality of how goods surface on the market has drastically changed and with it is a radically different consumer, who has an expanded or minimal visual perspective of space.

Filling the space to suit a lifestyle will usually require some sense of taste and style. Today, the buyer of antiques for the home has not changed much and has always been the largest application for their functionality. The home will always be the easiest destination for one’s own passion be it living or working. The place where you want to show your passions and interests can range from an apartment with dramatic panoramic views of New York City, to a bomb shelter garage housing a collection of vintage automobiles. It is all in the perspective of having enthusiasm and satisfaction.

Knowledge is much more tangible and easier to quantify. What you know presents a clear advantage that does not require an interpretation when the facts are self-evident. You know a Tiffany lamp when you have seen thousands. The decorative arts has so many nooks and crannies of makers, materials, shapes, and functions. How can’t you just keep learning? The search for knowledge and the recognition of a great object requires an inquisitive mentality that has many competitors for your attention. It requires a motivation, which also includes money and valuation.

Since I first went on a European buying trip with my grandparents in 1963, I have witnessed some of the most critical junctures in the pricing, supply, and demand for use of decorative arts by interiors designers, who also work with collectors. Acquiring a 40 foot jumbo container of great merchandise was almost literally a walk in the park. That fantasy period has completely disappeared and has now being transformed by the complete lack of dealer price support in the market. Are you kidding, who is buying things at auction for stock? Not nearly as many as in years past. The critical number of dealers to support auction pricing is vastly different and private purchasers cannot make up the difference.

Because of this disruption to the buying side of the decorative arts, new and exciting options will avail themselves to those dealers that afford to control or take advantage of the lack of competition both to buy and sell. As economists talk about generational passing of assets from parents to children, the amount of inventory potentially coming on the American market is staggering. There was such a tremendous importation of decorative arts into the United States in the last century and a half. Not much has gone back. For me there is no financial advantage to try to load up a container in Europe; it is already here, somewhere.

This gets me back to my original thought, how the changing market dynamics offers an opportunity for someone to wants to own and live with these items. It should not be a case of making it difficult to find and buy at a reasonable price. The decorative arts needs to embrace design, and expose minimalism for what it really is, stunted creativity.

Going, Going, But Not Gone; This Decorative Arts Dealer

March 11th, 2014 by admin

If you take out of the equation, Mid-20th Century Modern, the traditional antiques dealer no longer exists or does so as a relic of the past. Counting down the number of surviving dealers from just 20 years ago is a staggering thought. The monumental shift in taste has made the antiques business a one pony show of 20th Century and modern. Dealers in classical French, English, 17th, 18th, and 19th Century decorative arts might never appear again.

Never is a strong term, but the role of a dealer must evolve into being more of a merchant than a curator. No one ever accused Sotheby’s and Christie’s of being curators, but rather as super promoters. If you want to curate, go to a museum; to make money you have to raise the awareness of your business and promote it so it can engage one’s visual and intellectual attention. You don’t do that by building walls of intimidation (go to a “fancy” antiques show), price deception (auction with secret reserves or dealers not showing a price tag), and difficulty in finding and shipping the item. We are not talking about buying TV’s, but these are major obstacles to connect with the potentially massive public domain.

These issues of making it difficult to embrace the public will not be ameliorated by any dealer run organization, as has been the case for the last 35 years (since the British dealers blinked at the imposition of the buyer’s premium at auctions). Dealers as a group sounds more like an oxymoron for inaction. It can only come from some sort of dealer consolidation, where many can be spoken for by one dealer, both in policy and operation. Perhaps that is an evolutionary thought for my industry, but how else will it ultimately survive?

For the last several months, I have heard from so many dealers that having a physical storefront is not particularly relished any more. An incredible number of venerable and well stocked firms have made the decision not to renew a lease or are looking for an exit from the business. And this is on top of an industry that has contracted significantly in the last 10 years. Adding fire to the situation, The New York Times noted in an article on affluence that every major category of wealth spending rose considerably, but furniture fell 16%, yes 16%.

But somehow, I think Newel will survive this present state of the industry like it has always survived; it will go on with what it does best but with a vision of doing it even better. For years we have been busting out of our building and it has been a major constraint on our growth. Walk-ins can be great (and scarce) but a presence on the Internet is worth that price.

Later this year, we are planning to move our business to a new destination; the third in our history, Long Island City. Yes, it is across the river from where we are now, but it is closer than you think and will make Newel bigger and better. We’re going, going, gone; across the river into an exciting new channel of our future.

“Concerned Dealers” and The 1stdibs Challenge

December 23rd, 2013 by admin

There appears to be a dialogue of some 1stdibs member dealers who have made public comments and complaints about an evolving process of commerce. It has always been a concern that this industry has little life blood left compared to just a decade and further into the past. While auction success with the buyer’s premium certainly took a toll on dealer survival, we are now witnessing the next transformation of the industry by 1stdibs.

There is a thread of commonality in any “concerned” 1stdibs dealers that the 1stdibs web site does on such a large scale what any individual dealer can never achieve, eyeballs and buyers. As a Johnny-come-lately to 1sdibs, I know the frustration of trying to build a competitive web site. In the early 2000s, my web site had almost 10 times as many visits as today. I know my loss certainly has been their gain. Yet, now as a new member of 1stdibs, I am selling far more with an ease of transaction that does not necessarily require the hand holding of a physical showroom. That is revolutionary and the next challenge for dealers is to accept and embrace this power offered by the Internet.

As a case in point, most if not many dealers today are not in central locations build for foot traffic. The rents and overhead of those locations (as well as their specific inventory stock) have made that method difficult or nearly impossible to be profitable. That has lead to the demise of or the curtailing of a storefront in favor of a traveling show exhibitor and/or an inexpensive storage overhead location. The gap of location is now filled with the Internet, and if you take that out of the equation, for most dealers you take out 1stdibs.

As I see dealers fret about the Goliath of a 1stdibs running roughshod over them, I see a company that is trying to grow and with it come growing pains. I don’t think any “concerned dealer” could deny that 1stdibs is forward thinking and wants to move into new and untested areas of commerce. To me that is exciting and an opportunistic prospect. I can think of nothing better than benefiting from their success, and I would suggest that the issues of concern for the dealers run parallel to 1stdibs.

A lot of the dealer issues center around technical problems like good analytics and clearer functionality for both dealers and buyers. However, they at least understand that customer service is a big head ache for all of us and they are trying to absorb some those issues for the dealers. Undeniably, customers (whether interior designers or private purchasers) today are much more demanding of service, price, and other options.

With the prospects of dealers having a dialogue with the management of 1stdibs, it is certainly an opportunity to help them help us. I will always encourage them to charge fees when they perform a service that can result in a sale; it is my pleasure to share a profit and grow with them. For me, it is making them more efficient in my generating and completing a transaction. Their assistance in making it happen is undeniable in this new age of commerce for the industry. It is also a testament to what they have accomplished and that they appreciate their relationship with dealers and our method of trading, which auctioneers seemed to have left at the doormat.

While I don’t claim to be an apologist for all the dealer complaints or issues cited in this collective group, I will say that my experience has been quite positive and beyond my expectations. It has been the successes of direct contacts (mostly with trade designers) initiated from 1stdibs that have dominated over the 1stdibs direct “purchase” (which has operated quite nicely-less discount net of their fees and no need to deal with retail types). Collaborating with 1stdibs to make changes should be with a measured and not antagonist approach. If you think you can create a competitive alternative site, don’t think Accel Partners isn’t in the same profit mode as a Benchmark.

Why Obama Will Go Down As a Great President

November 29th, 2013 by admin

I have never written a political blog commentary, at least on the point of an American President. When President Obama was first running for the office, I deferred to my oldest son on his opinion of who might be the better choice. I felt McCain was part of my generation. But there does come a time to pass the torch, and I voted with my son.

Because I voted for him once, does not automatically mean I would go with him on a second round. Romney could have been an excellent President, with great managerial skills. We do have a lot of waste in government and it is a systemic problem that needs more oversight and direction. It is part of what a President does, but the challenges in this age are expanding exponentially. Control and being cool under pressure are the hallmarks of any leader. You can bend, but you can’t break.

What got me re-appraising my thoughts on Mr. Obama was his performance and focus when he was being heckled by some immigration protesters at a prepared speech. Even the Presidents strongest critics must acknowledge that he is extremely bright and his family values are impeccable. But what set that episode apart, was the fact that he waived off Secret Service agents who were going to approach the hecklers. He was the man in the room and went on to articulate his greatest problem, Congress, which can’t pass any legislation relating to immigration issues.

But let us get to the area that every American President wants to shine, foreign affairs and international diplomacy. We have seen this president do what Richard Nixon did in opening up Communist China, or Reagan and the fall of the Soviet Union. Being at the right place at the right time can also be very fortuitous. The opening of a dialogue is only a starting point. You’ve got the ball, now start rolling it together. I think Iran realizes that might is right, which has taken its economic and social toll when applied in the manner that Obama was able to implement with the international community. After all, he started it all with his “Arab Spring”.

President Obama would love as much as any President to be the architect of a lasting peace in the Middle East. Europe was moved off the spotlight after the fall of Communism so the world has had two generations to figure out this dilemma. Religion is a big issue, but that is just an excuse for power and a following; it doesn’t provide an equitable solution. But if you must start with that big impediment, a test of wills is the last resort. The President’s enforcement of restrictions on Iran is an unqualified success. We know that they know our economic muscle is for real. Obama deserves all the credit for its effectiveness. He also was able to see what kind of diplomacy has not worked in the past.

Perhaps his most successful and renowned accomplishment might be the breaking down of Al Qaeda and its leadership. Obviously President Bush never did the job, only to leave office with a stalemate. International dynamics are now more than ever dominated by economics exerted by both political and corporate interests. It also worked because Iran is a one trick pony with its oil and gas. I believe Obama understands how effective we can use collective economic interests for political gain. That same approach can work with the Palestinian and Israeli conflict, as a trickle down of the Iran capitulation. But he does have one big problem that needs his attention to make it all work and gain recognition as a great American President, the economy.

If ever someone was dealt a bad hand, this President came into an economic mess of potentially catastrophic proportions. The fact that we are still standing is a thought that many might argue. Yes things have most definitely improved, but at what cost and will the President keep growth going or let it possibly slip back. The strength of the United States has historically been attributed to our economic growth and creativity. This President understands that the opportunity for economic growth is to integrate it into the world community, where American values can best be displayed. It is a noble goal.

The State of the Decorative Arts Market, Never Better

November 26th, 2013 by admin

After a solid 15 years of ho-hum at best business, the decorative arts are finally reaching a critical state, with the greatest potential for success in front for all to see. Great merchandise has never been more available. The quality is of all shapes and forms, and anyone with some sense of taste and value can find great objects like never before (or perhaps since the last three decades after World War II).

I think it has taken a maturation of the decorative arts to be weaned off auction blood for survival. The biggest potential market for a dealer’s acquisition of inventory is now the private collector or client who employed a talented decorator to design rooms that exuded a class not seen but in old time moving pictures. It can be purchased (or preferably consigned). Today a dealer has to adapt, and the better ones tend to be on the mark with the right kind of inventory and a well-developed internet presence.

So why is business so good? I’ll tell you a little secret, it’s not. But still, the opportunities have never been greater. The availability of exceptional merchandise at auction is a joke. If they would only sell works of art without a reserve, everyone (buyer, seller, and auctioneer) would be happy. After sale haggling sounds like auction houses truly want to be dealers. With the 25% buyer’s premium is tacked on, so much merchandise is now bought in. There is a better way.

In all my years in this business, I find that it has never been hard to buy good merchandise. Except for the obvious financial constraints, I have always been able to find antiques and decorative arts that had a saleable personality (or rentable; our TV and movie rental business in New York City is doing fantastic). Rustic and Regency are as connected as Mid-Century Modern with Italian Neo-classic. If you keep your eyes wide open, the pieces are there. My favorite phrase, “opportunity meeting preparation” works with everything.

So what are the chances that we will actually see an expansion of business in the next couple of years? Well, we all know, and have been saying for some time that “it can’t get much worse.” The heroes of today in this industry are the ones that are still here, a lot less than in the last millennium. I also don’t see many new “start ups” in this field. Capital allocation is the wildcard.

There needs to be an understanding that personal capital allocated to this asset class, can be a value investment, especially for better quality. Anyone can “pick a stock,” but those that see value will make a profit. At market price or a great deal, there is undeniable value in the decorative arts, hopefully with functional and intellectual user benefits. For this industry to be able to expand and grow, the dealer function will be even more critical. The dealer must act as a conduit for merchandise distribution. It will take more that 1stDibs to make this happen. However, capital allocation to this market will grease the wheels of the evolutionary growth in this industry.

When Decorators Used to Teach Their Client

November 1st, 2013 by admin

I had an interesting conversation with Mario Buatta, who recently published a book on his lifetime of designing interiors for clients who could afford the best and looked to a person who understood what that meant. We reminisced about the skills today’s clients require from their interior designer, and what was offered by those of a prior generation. Unfortunately, we will never see those individuals who understood the job requirements of teaching a client what they were going to purchase and how its value was measured in what is was and how it added aesthetic qualities to enhance a living space.

Mario Buatta is a living relic (sorry Mario for being so crude), who extrudes skills that his pictorial of work can only scratches the surface. He knows that the Louis XV style is no substitute for Louis XVI. He knows his periods and styles, and doesn’t just rely on Mid-20th Century modern + color as the only scope of decorating. Unfortunately, today’s decorator also has a different type of client that cares little about what it is that they are buying through an interior decorator, but is more apt to use that individual as a stylist for the their home. Like preparing for a photo shoot, a store window, or a TV set, the interior is meant to portray an elite sense of minimalism, and not a sophisticated knowledge of times and places.

With an abundance of technology and limited time, the world as we know it does not require or even want to take the opportunity to learn, touch, and appreciate what can be an intimate part of our lives. The interiors shown in many publications reveal a simplicity bordering on being airless, dry, and without a soul. Oddly, when these shelter magazines do show an interior chock full of personality and eclectic period pieces the casual contemporary reader is left speechless from the visual overload. Too bad there so few designers to explain what is going on.

When I started out in this business, I was blessed with the opportunity to grasp a job that would offer a lifetime of learning. As a young “shlepper”, I moved, waxed, cleaned, and wrapped items in the store, but I relished the opportunity to walk around with a respected interior designer, as he explained what each item was and why it was important for the client to purchase it for their home. I cut my teeth in this industry by learning from professionals who knew what they were buying and how it was to be properly used in the decorative scheme of an interior. There was no cookie cutter Mid-Century Modern formula.

The transformation of the client/decorator relationship has been irreparably changed to one of expedience to get the job done and cheaply, ASAP. The attention to detail is substituted by either the view from the windows or the trophy art on the (few) walls. With educational institutions giving lip service and a fleeting acknowledgement to antique periods and style, less of today’s designers are prepared to teach their clients anything short of the prestige and cache of having done the job and getting it published. A client deserves more but demand less.