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Web sites bid for art buyers: despite setbacks, online art auctions are on the verge of coming into their own

Web sites bid for art buyers: despite setbacks, online art auctions are on the verge of coming into their own – news

Barden Prisant

Six years ago, Sotheby’s entered the online auction market. One hundred million dollars later, it stumbled out, bruised and beaten. While it didn’t work for the big gun, several startup specialty sites–and one powerhouse–are working to refine the online art auction game.

Surely, if any other company were to have a shot at online art auction success, it would be eBay. In the words of Lara Bridges, the company’s category manager for art and antiques, the San Jose, Calif.-based site can open up a showroom to 80 million people.

On a typical day, eBay has a quarter of a million pieces listed under “art” alone, (and another quarter million under “antiques”). What kinds of pieces are up for sale? A recent search revealed that 43 percent of the works of art on offer are prints and another 9 percent are posters. When asked about the median value of the pieces sold on eBay, Bridges said that while “it is difficult to say” there is “a huge number in the $5 to $20 range.” Yet, she said there is considerable activity all the way up to the $500 mark, and, she added, this range is “the sweet spot for dealers on eBay.” She wants galleries to view eBay as “a great place to increase liquidity,” and she may attend this month’s Artexpo show to investigate potential alliances.

The phrase “increased liquidity” reveals Bridges’ MBA background. She has also worked in marketing at Sotheby’s. Thus, she is in a unique place to comment on the ill-fated alliance Sotheby’s formed with eBay before closing its online auction division.

“We thought it was a great relationship from our [eBay’s] end, but it was difficult for Sotheby’s,” she said. Part of the reason may have been the discrepancy between the levels of material typically offered on the two sites. According to an analyst’s estimates, at the time the alliance was announced, the average eBay sale was approximately $60, while Sothebys.com was 20 times higher.

Different Strokes

So, is the eBay model now the only option for auctioning fine art online? First of all, eBay does seem to have fought off its mega rivals, Amazon and Yahoo, at least in the art field. Recent searches of art offerings on these two sites yielded relatively few listings. Furthermore, Amazon once committed an art world faux pas by allowing someone to list a piece of garage-sale-caliber art for $100,000. This is one of the perils of the company’s hands-off approach there is no screening and no editorializing–a painting listing equals a toner cartridge listing equals a house listing.

Such an attitude does not find favor with much of the art world. In the words of Steve Moses, president of fineart.com, a multi-purpose art site with an auction component, “One of the beautiful things about art is that it is not a commodity item.” Thus, a number of online auction sites have sprung up catering specifically to the needs of the art market, and they have tried to set themselves apart from eBay in a number of ways.

First of all, the founders of these sites want to show respect for the works of art. In the words of Kip Walraven, president of online auction site Fine Arts Bid (www.fineartsbid.com), his consignors fear “getting lost ha the mix” on eBay. That is an important concern for some of his sellers, he said, most of whom used to be associated with Sothebys.com. For example, search eBay for the word “oil,” and the hit list may put a 1914 Chagall painting cheek by jowl with a quart of Pennzoil. He added that “you will get nickel-and-dimed if you list free works with eBay.” He fears that the mentality of its typical buyer would be incompatible with that of the typical art vendor.

Specialist art auction sites that have cropped up seem to focus only on highly desirable works. iGavel founder Lark Mason (yet another Sotheby’s veteran) declared that his firm’s watchword is “selectivity.” At Sothebys.com, he worked with the dealer associates who consigned pieces for sale. In time, he recognized that that they were all too often simply reoffering goods that they themselves had previously purchased at auction. They were just recycling the dead stock which had failed to sell in their galleries. He now prefers to work with small brick-and-mortar auction houses and other consignment centers. The goal is to bring to the Internet pieces that have been sitting untouched “in grandma’s attic.”

Not only should the works offered on online auction sites be fresh to the market, but, according to Moses, they should be by artists with name recognition. “Unknown artists do not fare well at auction,” he said, and Mason added that this is not even a proper venue for up-and-coming painters. “Most Contemporary art does not fare well on the resale market,” he said. “It does not have much of a track record.”

Name recognition goes hand-in-hand with premium pricing, and it is therefore unsurprising that online fine art auction sites have targeted mid- to high-value items.

Walraven revealed that he see Fine Arts Bid’s target price range as $500 to $3,000. According to Robert Rogal, director of Long Island City, N.Y.-based Ro Gallery, which sells art online through its site, Rogallery.com, eBay loses ground to the specialist sites because it focuses too much on lower-priced items. He thinks eBay should have a $500-and-up department in order to lend it more exclusivity. When his firm holds Internet auctions, the average price per item is $1,000.

A key observation here is the above reference to the “dealer market;” it seems that all of the sites are courting art professionals as consignors. In fact, neither iGavel nor Fine Arts Bid will accept any consignments from private individuals for fear of misrepresentation. “If a buyer can’t see a piece, and if the one selling it is not a professional, it is extremely difficult to know if he or she has described it properly,” said Mason. Fine Arts Bid also prequalifies its sellers and insists that they have a return policy, which, Walraven admitted “scares away the timid.” Rogallery.com, however, does accept consignments from private individuals for Internet auctions. That said, Rogal prides himself on being able “to describe a piece accurately” when cataloguing it for auction. He also asserted that his company will stand behind anything auctioned on the site.

Not only do the online art auction sites want to offer quality works from quality sources, but it seems they also want to offer services of particular interest to those in the art world. For example, Rogallery.com handles all aspects of a sale–shipping, handling, packing, insurance. In fact, Rogal will sometimes even advise his consignors not to put a work into an online auction if he believes it can be better sold elsewhere. He sees a “resistance level” for Internet auctions at about the $30,000 level, and, he confided that he sometimes sends such expensive pieces to Christie’s or Sotheby’s.”

Developing Niches

Of course, the individual sites want to set themselves apart, not only from eBay but from one another. As just noted, Rogallery.com hopes to lure new business by pitching itself as a soup-to-nuts art management company. “I’m the quarterback throwing the ball,” Rogal said. “I frame the art, I price it, I market it.”

iGavel sees its forte as its dedication to the “single sale format.” It only hosts individual, real-time auctions; works are not continuously pouring into and out of the site. The pieces are viewable for weeks before each sale, and the firm also encourages its consignors to have a two- to three-day live exhibition. This long lead time allows iGavel significant marketing flexibility. Consider, for example, a sale arranged by a consignment center in North Carolina that might include 125 pieces of folk art. iGavel could advertise the auction in folk art magazines weeks in advance. “What iGavel is doing is going to be the dominant model,” he said. “Eventually, everyone will end up where we are. Sellers can retain their unique businesses and not be subservient to a company like eBay.”

Kip Walraven wants Fine Arts Bid’s appeal to be its affordability. He is a self-avowed “tech-guy,” and he has designed his site to provide maximum functionality at minimum cost to both him and his clients. He charges no buyer’s premium, (which, by comparison, is approximately 20 percent at Sotheby’s and Christie’s). Additionally, be charges no upfront consignor’s fees, making it, as he said, “a risk free deal for the seller.” The seller only pays Fine Arts Bid when a sale actually takes place. For now, though, both he and Mason will have to wait to learn if their respective business models will succeed; both firms are barely four months old.

So, then, will eBay end up yielding to these upstarts? Not necessarily. A recent review of eBay’s formatting indicates that it is trying to address its perceived weaknesses. It now offers a $500-plus search button on its art page. And as for the complaint that eBay robs art consignors of their individuality, Bridges pointed to the eBay live auction tool. This allows independent, brick-and-mortar auction houses to hire eBay to manage real-time Internet bidding at their sales. She also added, “I think some of the best quality merchandise on the site can be found there.” And as for the thorny issue of the credibility of eBay’s sellers, Bridges said that eBay is considering offering authentication services.

As for the future, Mason believes that “the business is open to a lot of other people moving in this direction.” Sotheby’s may have failed because it moved from the upscale towards the downscale, it is possible that eBay may succeed by moving in the opposite direction.

RELATED ARTICLE: A gallery gets into the game.

All of the online auctioneers interviewed for this article sell at least some works owned by other people. But what about the gallery that simply wants to run its own online auctions to sell only its own pieces?

One such brick-and-mortar dealer is the Boston-based Haley & Steele, which holds online auctions focusing on 18th- to 20th-century prints. “Our online events have become quite a big deal,” said Julien Tavener, president of the 105-year-old firm.

Tavener noted, however, that getting into online auctions was not a spontaneous decision. “Any conversation on online auctions always starts with eBay,” he observed, and, indeed, that is where his firm started hosting its online auctioning. After a while, though, he realized that people coming to eBay looking for his gallery’s type of material were not comfortable there. And so 2 1/2 years ago, he started analyzing the possibility that the gallery could hold its own online auctions.

Starting in the fall of 2002, the gallery held six test auctions, and, as he readily admitted, there was a steep learning curve. In the first sale, “we crashed our server when we ended all of the auctions [for the individual works] at once.” Now, however, the sales run smoothly and successfully, according to Tavener. He holds an online auction every six weeks or so, each including 400 to 600 works. The sales frequently have themes, such as “natural history” or “sporting and equestrian art” so they can be marketed to targeted audiences. As for the value of the works, in one recent auction, the average sale price was an affordable $232. Although that may not sound like much, 500 pieces sold. At that volume, he noted, he can afford to let a few sell at bargain prices. Another reason he can afford such largesse is the fact that he also offers framing specials on the works that sell. Most of the works are auctioned unframed, and the firm suggests appropriate frames to the purchasers. As Tavener put it, they are understandably “keen on selling these framing deals.”

“We truly believe that there is a future in online niche auctions,” he said. “We bring a level of credibility and expertise to the objects–this is not what eBay is doing.”

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