At first glance the venerable auction houses appear to be doing business the same way they always have. Auctions still take place in elegant rooms where serious dealers and high-society types buy and sell items to an auctioneer’s call and the sound of a gavel. But change is under way, and the driving force behind it is the Internet.
High-end auction houses rarely invite online bids for items sold live. And most don’t operate separate Web sites dedicated for online bidding. But these houses are using the Internet in other ways, including online catalogs, immediate posting of auction results, consultations with dealers and bidders, performing appraisals, and allowing people to place absentee bids.
In effect, what the Internet has done is open the parochial world of high-stakes auctions to a wider audience worldwide and provide an inexpensive and quick way to communicate with this audience.
“I think the Internet has been a huge push for the auction business in general,” says Peter Shemonsky, director of fine jewelry and timepieces for Bonhams & Butterfields. He says the Internet has been the “great equalizer” for anyone interested in finding the value of an item they either want to sell or purchase. “It brings people to the door who otherwise would not be able to get to us,” he says. “It has unilaterally increased our database two- and threefold over what it would be without it.”
Instant Information. The biggest change that the Internet has brought is the ability for auction houses to place their catalogs online. All of the high-end auction houses do this, and most, if not all, provide search engines that allow customers to home in on either a particular product or a specific category. The online catalogs are identical to the published ones, with vivid images and detailed descriptions of jewelry and other items up for bid.
François Curiel, director of Christie’s international jewelry department, says Christie’s online catalogs are posted on its Web site as soon as the print catalogs are available to the public, about three weeks before an auction. “Clients may browse a particular catalog online free of charge and access full descriptions and color illustrations,” Curiel says. “They may also order a copy or buy an annual subscription to the category of their choice.”
The auction houses have discovered that online catalogs are an effective way for their customers to educate themselves about upcoming auctions. “We found having our catalogs completely illustrated online is a very helpful way for clients to participate,” says Patty Madara, Sotheby’s vice president of corporate affairs.
Sotheby’s also selects articles from its in-house magazine to put online, providing options for additional research. And all of the major auction companies post their press releases on their Web sites and publish auction results, literally hours after an auction concludes.
Curiel says the most important development at Christie’s has been the creation of “LotFinder,” a search engine that enables users to consult sale catalogs from auctions around the world and leave absentee bids online. The tool includes a program called “LotFinder Assistant,” which notifies collectors automatically by e-mail of any lot included in a Christie’s auction that particularly engages them. “Browsers must simply indicate the type of jewel or gemstone in which they are interested, and they will receive, at no cost, the details of the items matching their criteria,” Curiel says.
LotFinder has become a popular tool for Christie’s, Curiel says. In February, the company recorded more than 1.2 million page views from the program in the United States. The jewelry department, which has its own special subsite, is the second most visited on Christies.com. In February, 13,128 page views were recorded for the jewelry subsite alone.
“Thanks to these special features, we have seen an increasing number of users leaving bids online, first at a rather low price level, but now increasingly for more-important lots,” he says. Shemonsky says having such easy access to information allows people all over the world to better educate themselves on the value of items for upcoming auctions. “It helps people do their pre-bid homework online.”
Access to Experts. The Internet also allows people to communicate directly with the auction houses via e-mail. Customers can now get appraisals online for their jewelry, antiques, and fine art. “I probably get 25 to 30 requests for information on a client’s item per week,” Shemonsky says. But appraising jewelry and gemstones online is far from ideal, and the auction houses try to make that clear to their customers.
“Online appraisals are performed virtually every day, as we regularly receive e-mails from all over the world asking for a jewel or stone to be valued,” Curiel says. “In response, we will give a provisional auction estimate based on a description or digital image of the object. But since it is impossible to accurately value a piece of jewelry, and more especially a stone, without physically seeing it, we will direct the client to one of our specialists so that arrangements can be made to examine the piece and confirm our estimate.”
Shemonsky says the quality of the photo is most important when doing appraisals online. And even when an image is of high quality and accompanied by a good description, he says, it is still difficult to judge. “When we do this type of work we explain to people that it is at arm’s length,” he says. “When I appraise something, the hardest thing to deal with is the average size of the item—even with the measurements.”
Online Auctions. The last frontier for the Internet and the high-end auction business is for buyers to be able to place bids online. By 2001, Sotheby’s and Butterfields had invested heavily in online-auction technology. EBay, the Internet auction powerhouse, acquired Butterfields in 1999 for the purpose of entering the high-end antique business. Sotheby’s had a dedicated Web site for online auctions. By 2002, both companies abandoned those projects. EBay sold Butterfields to Bonhams, and Sotheby’s closed bidding capabilities and formed a partial alliance with eBay for certain auctions.
“We found that it was a very expensive vehicle to allow people to the Internet,” Shemonsky says. “It was offering pretty much the same capability as phone bidding to the same audience. It did not bring in new people. The cost didn’t justify the means.”
Lark E. Mason Jr., president of iGavel.com and a veteran Sotheby’s employee who last served as director of online auctions for Sotheby’s.com, agreed that creating an online auction is a costly and difficult endeavor for the big auction houses.
“There are very few online auctioneers in existence,” Mason says. “The conditions for bidding on those sales deter most people from participating. The reason for that is the buyers’ premium is generally very high [he says about 20 percent or more] for anyone who purchases through an eBay live auction. It almost always is a higher percentage than you would pay if you call them on the telephone and bid on the live auction directly.”
However, Mason does believe that high-end online auctions can be successful under a different business model—a model that he and another Sotheby’s refugee, Ben Turk Tolub, created two years ago when they launched iGavel.com. This is a pure-play Internet auction site that uses a network of regional dealers and appraisals to provide antiques and fine-art pieces to savvy buyers. All sales are online, Mason says. There is no live auction.
“We’ve developed a relationship with trustworthy regional experts who primarily take on consignment property from estates. That coupled with very detailed photographs and condition reports, descriptions, and guarantees is what made us succeed,” Mason says.
Like eBay, iGavel.com is a platform for dealers and buyers to meet. However, Mason says his system has much more control over the dealer network than eBay’s. “Only professionals may sell on our site,” he says. “Most of the people who work with me are completely online. They’ve owned and worked in auction houses. But it is a much lower cost for them to be online and they’re getting the same or higher prices.” Because this is a dedicated online buying experience, Mason says he can charge more reasonable buyers’ premiums (15 percent).
The site primarily lists antiques and fine art. Jewelry is currently a very small percentage of the product mix, but Mason says he wants that to increase. “I’d love to have more jewelry sellers but I’m looking specifically for jewelry sellers that have access to estate properties,” he says. “Selling retail-priced items does not work for us.”