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

Art Business News, March, 2004 by 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.