Like many industries, the art world is finding it necessary to evolve to deal with fragmentation of the market. The days of traditional auction business models – a man with a gavel, standing next to an expensive piece with a well-dressed audience placing rapid bids – seem to be numbered. The competition? Exclusive online auctions involving considerably lower costs.
At the moment, fine art and antiques are still dominated by the same few historic houses. But experts and those with a long history in the industry do not expect things to stay that way for long. With an increase in consumer spending and total internet connections growing quickly, revenue for the e-commerce and online auctions industry is projected to rise year by year.
To keep up with the changes in the art auction world, Tim Goodman, formerly Australian head of Bonhams and later Sotheby’s, with a career spanning 40 years in the auction business, has just launched an online auction: Fine Art Bourse (FAB). His aim is to attract a completely new audience by refreshing the auction world. In his words, his goal is to “democratise the secondary art market and make more art more accessible to more people”.
His model is unique in that it cuts costs in three specific areas: bricks and mortar, human resources and printing. FAB auctions take place exclusively online, specialists are hired for specific projects on an as-needed basis and printed catalogues are not used. Traditional auction outlets are nearing 20 percent for sellers and 25 percent for buyers. FAB, on the other hand, offers 5 percent premiums. According to Goodman, taking advantage of the internet has not only allowed him to be more cost efficient, but also overturn old-fashioned models of auctioneering.
Even with the many advantages and opportunities, online auctions have their fair share of challenges. Online auctions are currently labeled as “high risk” because of scam websites and businesses trying to take advantage of consumers. Changes to bank standards because of payment processing fraud is also an issue. As a result, these businesses struggle to find payment processors willing to work with them.
Many merchants moving their business to the online auction world have chosen to work with alternative providers like EMerchantBroker.com. EMB is a high-risk specialist that not only provides efficient payment processing solutions (e.g. penny auction merchant accounts and online auction site merchant account) and business funding, but safety from scammers running illegal operations as well.
“I believe the future lies in a new business model for fine art auctioneering,” says Goodman. “The traditional auction business model is no longer sustainable.”