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Non-Tech : Sotheby's (BID) Auction House -- Ignore unavailable to you. Want to Upgrade?

To: John who wrote (161)	1/26/1999 5:29:00 PM
From: Steve Andrew	Respond to of 236

Geoff, At the risk of sounding redundant, I too agree with your post. As others have already laid out Ebay's competitive differences and market niches, I'll avoid duplication. As for Sothebys, I am sure their business strategy involves an attempt to "liquify" the lower end of the fine art market (initially with the "stale" inventories of various dealers and galleries). This is what they presently refer to as their "Arcade" business. In their "Internet Associates" contract that is before all of their contacted dealers/galleries, they specifically cite their "desire to use the 'net to auction off items between $5,000 and $20,000." This present business is an absolute loss leader for both Sothebys and Christies and they both recognize its potential for redistribution over the 'net with better cost and margin efficiency(At present,thye are each intent on absolving the vendor, or sale side fee, and retaining the 10-20% buyers fee) I will argue that this is the thrust of their effort and is indeed designed to establish a higher or better class of auctionable objects than the Ebay model. Having said all that, John has the question absolutely identified....Will either house BID or Christies lower their present commission structure? Will they pass along the efficiencies of the 'net to the buy side? Can they effectively create such a twin-tiered commission structure without cannabalizing their existing margins? My opinion is that neither house will effectively lower their commissions (they'll argue that they offer greater value and their expertise is worth more). Neither house has great Net Margins presently (they each have huge overheads and real estate costs)and are highly unlikely to let the 'net biz seep into their profitable areas. Instead, the i-biz they create will be used to help pump out volume and provide an ancilliary income base that may one day be spun out to the public. At present, over 80% of the profits at each house is generated by only two departments....20th Century and Impressionism....and here they are adamantly firm about preserving their commission structures as they carry the majority of the firms profitability. My bet (and only my educated guess), is that they do not lower buy side commissions by any substantive amount in any area, i-biz or not, thus leaving the field still open to others willing to offer lower price values. Christies is just wrapping up negotiations with icollector.com and will make its announcement any day now, FWIW. I think the "street" smells this and is leading BID lower based on that alliance. Steve