The More Things Change in The Auction Business…

The New York Times has an odd, superficial story about the auction business. The premise of the article is an interesting one: how have businesses founded in the 18th Century adapted to survive into the 21st Century.

Unfortunately, we don’t get much substance to answer the question. The Times quotes Christie’s CEO Guillaume Cerutti echoing a statement made by William Ruprecht a decade before. Ruprecht was talking about net art exports from the US. Cerutti is now saying the same about Europe:

But Europe — the place where the big auction houses were founded, after all — is now more vital on the supply side. “From the helicopter point of view, Europe is mainly a zone of exportation,” Mr. Cerutti said. “There are more sellers than buyers.”

Spoiler alert: Not long after Ruprecht made his comments, the US became a driver of the collector base. The same may not happen in Europe but there’s no reason to assume that the continent must remain a net exporter of art indefinitely.

The Times also tries to move the needle with some strange statistics about globalization. Talking to Sotheby’s Oliver Barker, the Times makes a leap in logic from Barker’s pushing the company line on the internet transforming the auction house’s business model to the supposed influx of new buyers:

Of course, with the digitally connected world, the physical auction location now matters less and less. “The internet is a key battlefield,” Mr. Barker said. At Sotheby’s, it most likely accounts for the fact that in 2007, buyers came from 117 countries; in 2016 that number was 126.

Sotheby’s does have an unfortunate habit of presenting nonsensical statistics like these. How an 8% increase in the number of countries where buyers come from (not the number of buyers, just domiciles) over 9 years shows meaningful growth neither Barker nor the Times bothers to explain.

But the Times is on a roll, so it doubles down with this number:

Bringing in new buyers is crucial for any business, and among online purchases last year, 45 percent of the buyers were new to Sotheby’s.

Think about that one for a minute. Online sales represent 5-6% of Sotheby’s sales; of that tiny portion of sales, fewer than half of the buyers are new to Sotheby’s.

Translation: Online sales only provides Sotheby’s with 3% growth in new clients.

Auction Houses Find New Ways to Survive (The New York Times)