August 29th, 2009 by admin
Art + Auction Magazine’s 30th Anniversary Issue was enjoyable to read and reminisce about the great events and personalities that have had an effect on the industry during this period. As someone who has been in the business before the publication came into being, it was entertaining reading. Their review made Wall Street’s shenanigans look like our industry standards too.
To me, the most searing exposure in the Magazine’s commentary was about the exponential growth of the auctions, and most specifically the Sotheby’s/Christie’s duopoly. This growth was most certainly directed at taking the dealers’ market share. In this 30 year time period, dealers have not enjoyed that kind of sales growth. As a dealer however, I find that the article fails miserably in not exposing how this all couldn’t have occurred if the non-negotiable, great conflict of interest buyer’s premium was never implemented.
This whole period of auction growth has been built on an accepted form of deception, fraud, and industry inefficiencies. It is also interesting how little attention was shed by the writers on the duopoly’s conviction and fines for collusion, a point where they “lost the battle but won the war” for their operating methods. If my memory serves me well, they still operate in the same way, but have taken it up a notch by adding innovative schemes like Sotheby’s “irrevocable bid” insider information-kickback scam. (Ref: http://newelsantiqueblog.com/?p=83)
After reading the review of events over this period, I can’t help but daydream a bit about what the future will be for the art and antiques industry. Probably a lot of the same scamming, stealing, politics, and PR; lawyers will always find this a growth industry. However, unless the process of buying and selling at auction is radically altered, dealers will not have a fair opportunity to grow. Secret reserves combined with sham (chandelier) bidding, are an effective advantage that a dealer cannot overcome in the pricing process. If you add in the ubiquitous buyer’s premium, you can better understand how the duopoly has developed this beneficial financial subsidy that opened the door for their creative conflicts of interest.
In the end, dealers will also have to learn their lessons, and evolve with a changing world economy. The challenge of owning inventory and operating a business, especially in this distressed period are daunting. The entrance of new dealers into the industry seems like an oxymoron. However the future success of either dealers or auctioneers will ultimately come down to having the ability to control and supply inventory to the market. To determine if someone should buy, hold or flip merchandise, the marketplace should function where dealers provide a ceiling price; auctioneers disclose the floor (reserve).