In what must be characterized as the desperate move of a slow learner, Sotheby’s has made their financial straits apparent in their plan to, yet again, link with eBay in an attempt to bolster their core auction business. In a New York Times article of a couple days ago, it appears that Sotheby’s feels left in the dust given the bricks and mortar expansions of rivals Bonham’s, Phillips, and Christies, and so is desperately, it seems, moving down-market. I suppose senior management overlooked the fact that, in the case of Bonham’s, following on from their 60,000 square foot expansion on Bond Street last year, the auction house is now on the market.
Still, I suppose the prospect of tapping into the reported 150 million eBay users at the lowest of the low end of the art and antiques market seems too tempting to pass up. All this reminds me of the story of the optimistic little boy who, when put in a room full of horse manure, started shoveling furiously. When asked why, the boy replied, ‘With all this horse manure, there must be a pony in here somewhere.’
Well, perhaps there is, but what I know for certain is that eBay serves as a recreation for vast numbers of their users, who spend their spare time tinkering with their accounts while selling and buying $25 items. I’d opine that the rate of compensation for the average eBay user is probably about 30 cents an hour. And how is that divisible, exactly, by the six figure salaries of Sotheby’s senior employees?
Suffice to say, the linkage between Sotheby’s and eBay strikes me as, shall we say, a poor fit that cannot be any better now than it was the first time the company’s tried it.
When word surfaced a few weeks ago that Bonham’s was in play, I asked my partner Keith McCullar if he was interested in being in the auction business. His response was an emphatic no. Actually, his no was intensified by a word we hear frequently these days that begins with the letter ‘f’. Nevertheless, point taken. The better auction houses in the better venues are plagued inherently by high overheads and wildly fluctuating revenues. Yes of course a high end collector would prefer to make his purchase or consign his seven figure item in a lovely venue, but the fact is, these types of items are not daily making their way through any saleroom.
Moreover, the actual number of these types of items is finite, and so, frankly, are those people who would constitute a market, either as buyer or seller. After we had been in business ten years, Keith and I thought we could put together an economic profile of our customers, and mind you, even at the lower end of our business, our buyers are not strangers to any of the major salesrooms. But the fact is, we calculated that this pool consisted of only perhaps 50,000 people- in the world! To say, for instance, that on any given day an Eli Broad will be purchasing a Jeff Koons sculpture is ludicrous, but the fact is, in terms of appearance and accompanying overhead, the auction houses have to appear as though that very thing will happen.