Going Once, Going Twice in Cyberspace

Virtual auctions are coming to the real world of buying and selling fine art. And even if no one knows exactly how the sales will work or what they will mean to the art market at large, major auction houses and seasoned dealers are plunging in to test the waters--while hoping for a flood of new business in cyberspace.

Attempting to corner a market that has scarcely been tested, Sotheby’s auction house in New York has committed a whopping $25 million to a new Internet venture, sothebys.com. In a blitz of planning strategy and marketing, the high-profile firm already has contracted with almost 1,800 art and antiques dealers worldwide to provide material for sales that are expected to begin in July.

Charter participants, called Sotheby’s Internet Associates, include such prominent art galleries as Galerie Louis Carre in Paris, Marlborough, Richard Feigen and Mitchell-Innes & Nash in New York and L.A. Louver, Patricia Faure and Rosamund Felsen in Los Angeles. Under terms of two- or three-year contracts, Sotheby’s will waive the standard 10% to 15% seller’s premium, but dealers will be prohibited from consigning works valued at $300 or more to Internet auctions run by any other firm.

As might be expected, the exclusive agreement has sparked a debate. Christie’s has issued a veiled criticism of its competitor’s tactics in a statement by CEO Christopher M. Davidge, saying that Christie’s Internet auction plans--to be announced on March 1--will not include “any arrangements that restrict competition in the marketplace, as we believe this runs counter to the philosophy of the Internet and undermines the essence of any auction market.”

Credibility Remains Key Selling Point

Artnet.com, a New York-based, art market resource with 700 commercial gallery Web sites, also plans to conduct online auctions--but “absolutely not” on an exclusive basis, said marketing director Michelle Mullineaux.

Sotheby’s also came under fire for requiring dealers to commit to its Internet auctions within a week of receiving the company’s offer. But Susan L. Solomon, CEO of sothebys.com, says exclusivity and speed were necessary to determine the scope of the rapidly evolving operation.

“We want to have the site up in July, so we needed to find out, OK, how much property are we talking about and which dealers will be involved,” Solomon said. “Dealers can continue to sell from their Web sites and still be linked to the Sotheby’s site. And, if they choose to become part of an Internet auction below the $300 price point, they are perfectly free to do that.”

Jan Kesner, among the Southern California dealers who have declined Sotheby’s offer, said she didn’t want to make a quick decision about a process that will entail a great deal of work.

Although participating dealers will pay no fees, they will be responsible for descriptions, condition reports and warranties of consigned artworks. The dealers also will ship purchases to buyers, who will pay Sotheby’s by credit card. Sotheby’s will essentially act as a marketer and clearing house for the sales, with the dealers supplying much more material than the auction house could assemble on its own.

The dealers are not obligated to make consignments, however, so those who have joined Sotheby’s say they have little, if anything, to lose. At worst, they view the venture as a learning experience in the brave new world of doing business on the Internet.

“The most important element is credibility,” said Louis Stern, a specialist in Impressionist and Modern art who maintains a gallery in West Hollywood. Sotheby’s cachet is the key to public confidence and, therefore, to the viability of the auctions, he said.

Stephen White, a private Los Angeles-based photography dealer, concurred. “This opens up a whole new area for me, through a very well-known, reputable company,” he said. “It gives me access to all their clients. I see it as expanding the business tremendously.” One of the most attractive features of the plan, he said, is that potential buyers who are interested in his auction consignments can link to his Web site, see other material he has available and contact him directly.

Auctions are not new to the Internet, of course. EBay, the giant in the field, sells a huge range of collectibles--but without guarantees. Butterfield & Butterfield, a relatively small, traditional auction house based in San Francisco and Los Angeles, offers continuous online auctions of art and collectibles, screened by its staff. But Sotheby’s is banking on its name and expertise to create a major presence on the Internet.

‘Beautiful Images’ Will Reach Out on Internet

The firm conducted an exploratory online auction of books and manuscripts last June. “That really encouraged us because 40% of the buyers were new to us,” said David Redden, an executive vice president of Sotheby’s. The new venture will be launched in July, with baseball memorabilia from the collection of Barry Halper, a limited partner in the Yankees. Virtual auctions of art, jewelry, antiques, books and manuscripts and collectibles will follow.

Initial sales of fine art will offer works valued at up to $10,000, Redden said. But he expects the price level to rise fairly quickly. “As technology becomes more advanced, it’s clear that one can have beautiful images on the Internet,” he said. “It reaches out to so many homes and offices that it’s possible to find a whole new constituency of buyers.”

Many dealers say relatively inexpensive, familiar artworks may sell online, but doubt that collectors will take a chance on adventurous, high-end material. “I can’t imagine buying something [on the Internet] by an artist whose work you have never seen in person,” said Los Angeles dealer Margo Leavin.

Yet others, such as Rosamund Felsen, contend that attracting a client on a computer is no more farfetched than making a sale to someone who sees a reproduction of an artwork in a magazine and buys the piece without examining the actual object.

Despite differences of opinion, many dealers are fascinated with the possibility that the phenomenon of shopping in cyberspace may have a profound effect on the art market.

“I think a lot of people are going to feel more comfortable bidding from their dens or offices than in intimidating sales rooms in New York or Los Angeles, where they are competing with others who--for all they know--are professional buyers with tremendous resources,” Louis Stern said. “The psychology of this interests me greatly.”