Just when business has started to get better, one of my two old nemesis, Christie’s, just threw a softball to every decorative arts dealer who wants to claim “the middle market.” I don’t think it is really a big secret that the duopoly abhor the process and logistics of selling the vast quantities of it out there, all for the taking. Their problem is they don’t know how to make this segment of the industry profitable, short of giving it away or strangling a consignor (they do it quite nicely with the buyer already). First, I have to explain what Christie’s is doing, as reported in this week’s Antiques Trade Gazette; the new fee comes as an added expense for those consignors lucky enough to get them to sell it.
If during an auction sale the consigned item hits or beats the high estimate, Christie’s (and they are the experts) will tack on an additional 2% commission “to incentivize and reward high performance that exceeds consignors’ expectations”. Only in this industry can such unconscionable actions be a generally accepted way of doing business. They reinvent ways to fleece a buyer or seller, even as secret reserves and other deceptive practices still openly function. Enough with my ramblings on the felons, the exciting thing about this move away from the middle market is that the middle market has the most potential for development as the biggest market in the industry.
No one can deny that there exists a tremendous glut of quality, middle market inventory that is suffering from the market dominance of Mid-20th Century decorative arts and modern design. Today, the efficiency needed to manage a large inventory is not so easy, for an auctioneer or dealer. They require storage, damages, and movement in and out, which are structural operating necessities. The fact that Christie’s is sending this message puts additional pressure on other auctioneers to impose the additional fee, or at least think about it.
However, Christie’s in the end knows that the 2% fee is chump change in the scheme of their operations. The message is clear, we want you to go somewhere else or you will pay dearly. Of course it will be buried in the fine print, but will each item that it affects be disclosed to the buyer; probably not. However, shouldn’t the buyer be rewarded with not having to pay an additional fee on the buyer’s premium? I guess there are limits as to how much that should be, as I am always in favor of raising the buyer’s premium, as fast and as high as you can.
For me it has always been about the middle market, and searching both the top and the bottom of the strata. The industry needs this market to not only survive but to potentially have spectacular growth. This is also where basic economic market mechanics of using the efficiency of a database technology with economies of scale, can disrupt the norm. We, at Newel are approaching our operation with that in mind. Moving to a new facility, twice as big as our present building, will have untold possibilities. Of course Newel will still be known (historically) as a “prop house”, but the opportunities in the decorative arts market are getting pretty intriguing. Dealer competition is negligible, and auctioneers will never have the luxury of a strong secondary market that the dealers once offered. We have always been lucky and fortunate to have a highly successful rental division; it has made the transition in this industry’s last 15 years possible for us.
The rumbling of the middle market is starting to sound like an echo, and it's getting louder. We believe in the future of the middle market, and that the best is yet to come.