There was no added BP in the last Sothebys auction, let alone 25%.
Sotheby’s brings back fees for online-only auctions
Charges had been waived in November to attract new customers
James Pickford in London APRIL 8, 2018 Print this page0
Sotheby’s will no longer automatically waive fees for buyers in online-only auctions, as it seeks to profit from growth in this part of the market.
In November, the auction house scrapped the “buyer’s premium” it charges those who win the bidding in online-only auctions, in an effort to attract new customers. Tad Smith, Sotheby’s chief executive, said the auction house had now partially reversed this policy. “It was a one-size-fits-all that might cut off flexibility,” he told the Financial Times.
Mr Smith, a former chief executive at the Madison Square Gardens sports and entertainment company, has been intent on pursuing innovation at the auction house since he took up his role in 2015, making a series of acquisitions including Thread Genius, an artificial intelligence company, the Mei Moses Art Indices, which tracks the art market, and Viyet, an online marketplace for decorative arts.
Online-only sales at Sotheby’s are small, accounting for just under $16m in 2017, or 1 per cent of turnover — but are seen as a vital way of bringing in new clients. Last year, 53 per cent of online bidders were new and Sotheby’s held 36 online-only sales, up from 16 in 2016. The average sale price in these auctions has been on the rise, reaching $10,000 in 2017.
Insisting . . . [on] no buyer’s premium doesn’t make any sense because we’re chopping the estate into different pieces
Tad Smith, Sotheby’s chief
Mr Smith said one of the motives for partially re-introducing online-only charges was the sale of estates. When Sotheby’s organises the sale of an individual’s estate, some works typically go under the hammer at a live auction, whereas mid-priced or lower value items might be sold online.
“Insisting . . . [on] no buyer’s premium doesn’t make any sense because we’re chopping the estate into different pieces,” said Mr Smith, adding that from April 1 Sotheby’s staff would have the freedom to decide whether or not to apply a buyer’s premium in such auctions.
Sotheby’s latest results, for the fourth quarter of 2017, showed profits rising 7 per cent to $76.7m and sales for the year totalling $5.5bn. Christie’s, the auction house owned by Francois Pinault’s Artemis group and Sotheby’s biggest rival, reported 2017 sales of $6.6bn.
Rommel Dionisio, analyst at broker Aegis Capital, said Christie’s, which does not report profits, had been more aggressive in pursuit of a market leading position through the use of auction guarantees and commission rebates.
“Christie’s is focused more on market share, Sotheby’s is more focused on profitability. This global duopoly situation to a large extent remains intact in the global auction market outside China.”
Chinese wealth has boosted art market growth in the past 20 years, and after a sluggish 2016 its market share rebounded in 2017.
Mr Dionisio said the sustainability of Chinese demand was sometimes cited as a risk factor for auction houses. “There are some concerns there about the level of debt, and potentially deceleration of their economy. You’ve also had the emergence of some Chinese domestic art auction houses so you have some competition within that market.”
