The New Antiques Business Method: Commercial Alliances Among Dealers
July 3rd, 2009 by admin
In reality, the first question concerning how the antiques business will operate down the road is will it survive at all, like the banks and auto industry, but without government assistance.
It also creates the perfect storm for change and innovation. Just as public awareness of how the Sotheby’s/ Christie’s duopoly operates on deception, fraud, and conflicts of interest, dealers as a group are too distant from each other to collude so successfully. If 50 dealers in any one antiques market operated with their own rules, like the duopoly operates, then dealers would probably make more money. But dealers need to know that any form of standardizing the sale of antiques will bring unquantifiable benefits to their industry. This advantage would not just be for dealer to dealer transactions, but extend to the general public, the duopoly’s real moneymaking market.
There are no two dealers that are remotely alike in the type of business forms and methods they employ to make and record a sale. It sounds stupid, but Con Ed sends me a monthly bill with too much data and information; but most electric companies give the same basic information.
Commercial alliances among dealers should start with some level of integrity among the dealers or it is doomed from the beginning. The opportunity to gain a form of creditability as a commercial group should be far more effective than being in some antiques dealer “association”. It has also never been attempted on a multiple dealer platform.
However, the trading and sale of antique, collectibles, or contemporary art have operated successfully with a consistent auction method. The rules for the auction method employed today requires no opportunity for negotiation on the part of the buyer short of being complicit in a form of fraud with the Sotheby’s irrevocable bidding scam. Negotiations between a buyer and a dealer selling something he believes is worth it make for good economics. It is the organizational structure of the dealer group that can make the difference.
All forms of exchanges like the New York Stock exchange, or the corn or oil exchanges have a market pricing method. They also have members of those exchanges that generally follow a clear method that works for the group of dealers to make the exchange efficient.
Antiques dealers, like all participants who do not compete by operating on the auction method need to think outside the box and innovate. The risk/reward opportunities usually can be found in times of difficulty within any industry; my industry is now challenged. Now can it morph too?
The New Auction Format, Private Treaty Dealers
June 22nd, 2009 by admin
The Sotheby’s/Christie’s duopoly has been devastated by the recent bust in the contemporary art market as well as just about all areas of fine and decorative arts collecting. However, in these difficult times, they have started to make some inroads into the potentially lucrative world of the dealer by trying to exploit what dealers do best, sell privately. Where the auction format fails, this old tried and true method is becoming the auctioneers next best alternative. For dealers, this should signal a warning as well as an opportunity.
I have always felt that the best approach to buying and selling art and antiques is to start with a disclosed asking price. Since the auctioneers method today totally depends on deception (secret reserve) and conflicts of interest (buyer’s premium and a seller’s commission, etc.) the private treaty method is becoming an alternative form of controlling the consigner and buyer. Private treaty sales allow their manipulation of the buyer and seller by still collecting commissions from both sides but in a private placement form of sale. However, now price can be negotiated. What is there in this type of transaction that a dealer shouldn’t or could provide?
At some point, the auction process will be under pressure to change its format. The secret reserve will always be a questionable practice and other forms of deception and fraud that they employ have created nothing but more lawsuits and public inquiry into their dealings. Perhaps Sotheby’s irrevocable bidding scheme tops the list of scams perpetrated on the public. I believe that this duopoly isn’t stupid and realizes that the private treaty format can be expanded as an integral and not a periphery revenue source, and dealers better prepare for this inevitability.
Unfortunately, dealer organizations have no concept or thoughts on how to even discuss let alone come up with a plan to neutralize the duopoly’s inroads into their part of the industry. The answer isn’t going to come from organizations that are too concerned with phony standards or exclusivity of membership. It can happen if dealers actually form alliances and work together to create a real market with shared inventory, disclosed pricing, and the ability to negotiate with the buyer. Letting dealers perform negotiations with the buyer is a skill auctioneers are desperate to replicate. It is critical for dealers to consolidate to meet this challenge and to offer a larger inventory for a prospective client to peruse.
If auctioneers see such a good future in the dealer/private treaty trade, then having available inventory (whether owned or consigned) will become the critical need for success. In this present period of many dealers as well as auctioneers disappearing from the scene, those that survive will find that the consolidation process can provide a basis for strength to go forward. In the end it is always going to be about who has what to sell. This method should give the advantage to the dealer, if they can seize this opportunity.
The Antiques Trade, Opportunities For The Next Generation
June 3rd, 2009 by admin
When I inquired if my teenage daughter was considering working at the family business any time this summer, she remarked “write a blog why I should work at Newel”. Talk about reversing the tables on who’s the boss! So it’s time for some humility and serious consideration about her, my other two sons, and wife. What are the opportunities to succeed in the antiques and decorative arts industry in the 21st Century?
For anyone in the industry, whether a dealer or auctioneer, the ability to just survive is tenuous and very unfamiliar as to how the industry has always been. Anyone connected to the trading of art and antiques is witnessing the most dynamic shift ever to take place in modern times in our industry. However, the stress of being able to adapt to a new world of trading these items should bring opportunities for novel methods to market, price, and distribute these objects. It will take a new generation of dealer to move it forward.
Styles may change, but one thing that will always be constant is the nature of people to collect. It has always been about having the resources to buy things of perceived value that please the aesthetic cord of an individual. Art, antiques, music, the theater, all invite intellectual pleasure and are supported with a financial underpinning. The new world order in the antiques industry is now open to opportunities to innovate as past practices don’t continually work.
The next family generation who might contemplate coming into my business will have the advantages of a going enterprise with 3 prior generations of experience. It should be a great opportunity for them to question how things work and what improvements could be made. New methods of marketing and management might alter how antique shops promote their products and establish market pricing. The collateralization of these items is such a necessary part of any future success for the industry. The ability to raise capital and sell inventory through public market exchanges should become a reality in the next generation, which should allow for building bigger and stronger companies.
Many say these are the worst economic times since the Great Depression, and that might be true not only for the art and antiques world, but autos, real estate, and many other industries. Somehow I don’t think all is lost, quite yet. To my children, the challenges are monumental, but the opportunities are boundless. Go ahead, be creative and resourceful; you’re lucky to have the chance to have your vocation be what most people can only do as an avocation.
Why Are Some Institutions Above the Law?
May 19th, 2009 by admin
It amazes me how some institutions, both public like our government, and private institutions can arbitrarily create their own rules that supersede written laws. You can be quite capriciously not be admitted to an antiques dealer association as easily as being denied acceptance into a country club. And just as randomly, you could be expelled for an action erratically enforced by the group.
Private schools and the enforcement of their rules on expulsion are meant to intimidate both students and parents on their one-sided methods to maintain control of the actions of both. Step out of line and your transcript will be blemished. The methods to control the situation by the institution are commiserate with how damaging was the cause and enforcement of the student expulsion. Embarrassing situations can sometimes be the best PR. Lies, deception, fraud, intimidation, these things however don’t enhance one’s image.
The risk of suing for “justice” from the wrong inflicted by any institution can be a frightening task. The shield that a private organization is surrounded with can be quite impenetrable. As the membership or acceptance by the institution comes from within, there is the same instinctive need within the group to survive without that member. Survival of the institution is based on the need for a controlling interest in the group to take the initiative. It could be civil servants or a board of directors; it could be management or a wealthy interest group. The cost of litigation to break the institution from wrongful control can be daunting when measured against actually winning. The emotional toll also has a significant cost.
Discrimination is a term that connotes lost opportunity. Institutions that base their membership on any form of this really could be missing the prospect of enhancing the group. Maintaining a certain level of requisite wealth or skills needed by the organization to function is of paramount purpose to survive. However when an institution bends the law to insulate itself from a threat to its control of its marketplace, the stakes for manipulation gets higher. Just ask Microsoft or Google how they approach threats to their turf.
Of course this thought gets me back to the Sotheby’s/Christie’s duopoly in the art and antiques industry. These two branded institutions have controlled the market with lies (undisclosed conflicts of interest), deception (secret reserve), fraud (irrevocable bid kickback), intimidation, and oh yes, price fixing (an ever rising, non-negotiable buyer’s premium). Their growth and survival have depended upon these methods. Perhaps President Obama’s recent justice department statements to pursue antitrust practices can find its way into this state of affairs.
Antiques, Back In Favor?
April 30th, 2009 by admin
Its been a constant tendency over the last decade that 20th Century modern design and decorative arts have been the number one topic for publications to promote and elevate, at the expense of other periods of antiques. It was to my amazement that last Friday (April 24) in her Antiques column, Wendy Moonan of the New York Times started her article by suggesting that “antiques were creeping back into favor”. Well it’s about time.
Her source for this epiphany was none other than the Kips Bay Decorator Show House, which last year I criticized as being the poster forum for Mid-Century Modern design when it was showcased in an apartment building constructed in the 1950s. The use of antiques then was practically nonexistent. Now, with the format back in a traditional town house location, she commented that the designers created setting that were “more eclectic, and many more antiques are in evidence, a lot of them unusual pieces from different countries and centuries”.
The interior design trade for the last decade has abandon antiques, and their use in coffee table design magazines has been spotty at best. Decorators were eagerly availing themselves to clients who avoided the stigma of “old furniture” verses the cache of new and modern; the interior design style trend went hand in hand with the contemporary art craze. Just like financial bubbles burst, we are now seeing that phenomenon taking place with modern art and design. Perhaps the public is starting to recognize that antiques and classical designs are timeless and really don’t go out of style.
More importantly, with antiques “what comes around goes around” and the cycle of what trend is presently in vogue will always be fluid. As I have observed prior to the 1970s, French, English, and Victorian were the lead styles as seen in the shelter magazines of the time. The iconic decorators like Billy Baldwin and Sister Parish kept their clients in classically designed and furnished interiors. In the 1980s and 90s we saw a proliferation of new periods such as Art Nouveau, Art Deco and Biedermeier become popular and successfully enter the public’s acceptance.
I always felt that with the approach of the 21st Century, 20th Century designs would become desirable. As we cross the millennia, Mid-20th Century works of art began to distance themselves from the 21st Century and become “antique”. Now that we are almost a decade into this present century perhaps we are now tiring of over exposure to this period style. Maybe antiques aren’t so old after all; maybe they just have to be freshened up.
Dealers Can Learn From This Auctioneers’ Conference
April 16th, 2009 by admin
The auction business hasn’t been successful just by using smoke and mirrors in the bidding process. The secret reserve is very effective however their institutional organizations will now be on display with the Antiques Trade Gazette’s promotion of the Auctioneers’ Conference taking place next week in Birmingham, England. In looking at the program for the conference, it is quite instructive. (http://www.antiquestradegazette.com/news/7054.aspx)
The scope of such a conference is like nothing that can ever been conceived by dealer and their various “representative” organizations. From what I understand the only opportunity for various dealers to actually get together to discuss industry issues is at antiques shows, or at an auction (be careful not to talk and bid at the same time). The issues facing dealers are just as pressing as those facing auctioneers and in many ways overlap.
One of the most impressive features of the conference is how the list of sponsors represents many interests in the success of auctioneers and international scope of the attendees. The fact that ATG Media (the parent company of the Antiques Trade Gazette) has created this conference for the auctioneers is also very telling. They could effectively do the same thing for dealers, but would dealer organizations and their members have the time, money, and inclination to design and structure a conference on this level? It’s an unfortunate missed opportunity.
Dealer fragmentation in levels of price, specialty, location, and operating style can and never will be reconciled, but they should be able to evolve with technology, a discerning eye, and business savvy. Knowing one’s limits in the antiques trade is usually based on liquidity and the ability to buy. The understanding of what the competition (be it another dealer or auctioneer) is doing and how they are doing it should be constructive and practical in its adaptation.
The program includes approaches on how to have a good personal and professional presentation of yourself to your clients, to techniques for selling locally or around the world. The concept of thinking “green” and “recycling in style” are promoted along with methods of marketing and understanding today’s retail environment.
I would love to go to this conference just to learn what ideas are circulating among this part of the industry however I’m sure as a dealer I would look like a fish out of water. Are dealers and their representative organizations hopelessly embarrassed to admit that they too could use a live forum to improve their condition?
Letter to the Editor of ATG-A Flawed Process
April 8th, 2009 by admin
Following is a letter I sent to the editor of the Antiques Trade Gazette (England) in response to a commentary written by Mr. John Rumens that appeared this week in this trade newspaper.
I feel compelled to challenge John Rumens comments on the “addictive nature of auctions” as “a flawed process-but here to stay”. In my mind that is the kind of attitude that has allowed auctioneers, and in particular the Sotheby’s/Christie’s duopoly to lead an unabated course of deception and fraud on the public and trade, which many innocent auctioneers must follow.
To acknowledge that we just have to live with these methods is an insult to the integrity of how this industry should operate and why the public in general can’t quite trust its pricing format. Pricing is critical to any form of commerce, and dealers are just as guilty of price deception when they don’t publicly disclose the prices of their items.
If all the troubles in the financial system that we are now experiencing are the results of greed and deception, certainly we will be expecting government intervention to make and enforce better regulations. The present auction format has evolved with systemic issues that call out for the same kind of government scrutiny and intervention now more than ever.
Apparently, competition that the auction method is suppose to create has now fallen prey to this flawed process and all parties now require the cat and mouse game of a “secret reserve” among other tactics. Auctioneers fear that they must manipulate bidders with it, as they have no confidence in actually having a competitive market for their items. If that is the case, then the rule of deception is a terrible blot on how this industry operates.
While I consider myself one who cringes at the thought of government intrusion in my business, it sounds like Mr. Rumens is actually calling out for a remedy to extricate this industry from its failings. Dealers and their representative organizations have been cooped by the auctions; an independent, enforceable government position is needed for real price transparency to break the addiction.
The Advantages of Dealer Consolidation-Part 1
March 31st, 2009 by admin
Last week on my vacation I read a book by the economist Paul Krugman who got me thinking that consolidation in most industries is part of the dynamics of economic forces. Any industry can be skewed by laws, new skills, or technology. The decorative and fine arts industry has its 800 pound gorilla with the Sotheby’s and Christie’s duopoly still able to function unabated. But that can change, like GM or Citibank.
The clear advantage that dealers could have to break the back of auctions is the ability to warehouse and sell directly; not with secret reserves, but negotiation. Unless you came from the planet Mars and you never met an antiques dealer, negotiations are fun. All things considered, would you rather buy with some personal contact or be taken advantage of with an impersonal 25% buyer’s premium?
Dealer consolidation would appear to contradict every antiques and art dealer’s reason to exist. There are no comparable dealers as individual businesses that do the volume of many auctions, and have the profit margins to boot. The overhead of a staff of specialists and warehousing is something that doesn’t exist in the trade. The advantages however become clearer when good marketing with good products can catch the attention of the public, but especially the dealer, collector, and interior design trade. Just like the duopoly, branding their names and format are critical to being able to distribute their products.
Starting the consolidation process is as tough as getting antiques and art dealers to admit they are in an industry where they have no public voice. However a firm like M.S. Rau Antiques, based in New Orleans has a format that offers industry potential; a large diversified inventory with a web and physical site, and a professional staff. Newel of course would work, as well as 1stDibs, but any business model that can support the acquisition of inventory and markets its pricing, can make it work.
Art and antiques have the commodity quality of supply and demand. The ability to trade is based on cash and or credit. The credit is more personal and not institutional like if it were from a bank or brokerage. Even money market funds can choke. But art and antiques traded in the right way can offer a reasonable alternative to an auctioneer’s deceptive pricing in the form of a sham bidding to reach a secret reserve. Dealers wake up and smell the roses.
All dealers negotiate if they want to or have to; call it a commission, discount, or special price, it can’t be higher than the disclosed asking (list) price. However the commission structure on each item should be affected by if it is owned by a member dealer or is on consignment. Investing your capital should bring more profit, and capitalizing your own merchandise to the inventory of the dealer organization should be to your benefit. When selling consigned items the profits should be apportioned.
But before I go on about an art and antiques world nirvana, the double whammy of capital needs and organized business entities have to be solved. It should have been simple in the last 35 years to create such an industry model, but the duopoly got there first with their implementation of the non-negotiable, always rising, buyer’s premium joined with a secret reserve price.
Collateralizing Antiques
March 18th, 2009 by admin
During the mortgage collateralizing frenzy that sunk with excess subprime shenanigans, I always thought antiques had an underlying value that could be monetized. The lack of a coordinated and cohesive marketplace to package and warehouse the product as well as a payment distribution method to bond holders are big hurdles to overcome.
But I do like the concept; it is where dealers and traders, like in any commodity, look for value and try to make some money. I guess you could take this to other forms of art and collectibles but it should be structured in the form of a REIT (real estate investment trust). REITS basically own a collection of real estate properties that can be traded and or held for rental income. REITS have shareholders but also can afford carrying debt on their properties.
Warehousing and general physical maintenance of these items isn’t all electronic. Shares of IBM are literally on a computer hard-drive, but REITS do have managers that run the properties. This is where dealers, who know how to warehouse and know what has value, can succeed. It also allows for shareholder to see and invest in a portfolio of antiques which not only are described, valued, and inventoried in a prospectus, but can be sold, traded, or liquidated at any time.
With all the hoop-la from collateralizing mortgages, to student loans, credit card and car payments, oversight of the marketplace was lax or nonexistent. Dealing with antiques can be no different. All the parts are there to make the concept work. As an investment I believe antiques are on par with any form of asset class having a value that can fluctuate, but doesn’t disappear.
While my fantasy concept won’t come about in the near future, it does offer a challenge to the auction process. It allows for an orderly distribution and reasonable valuation in a diversified or specific inventory of items. It also starts to create a real marketplace for antiques to be traded in bulk or individually. The shareholders/owners directly benefit, not the auctioneer who uses deceptive practices of secret reserves, conflicts of interest with a buyer’s premium and seller’s commission, irrevocable bid scam, etc, etc. SEC, bring it on!
Thoughts on Art & Antiques Dealers’ Organizations
March 2nd, 2009 by admin
As a third generation antiques dealer, neither I nor any of the previous family owners of my business attempted membership in any prestigious associations with fellow antiques dealers. I certainly don’t want to think of dealers as a “bad lot” of gentlemen; maybe I wouldn’t make the grade too. However, it is the existing way they are organized that prevents dealers from being able to achieve goals with good aspirations.
Below I’ve compiled some position statements from leading art and antiques dealers organizations. They are all great objectives and need the united backing (for the benefit) of all dealers. Getting everyone under one roof sounds incongruous, but if the methods don’t match the goals, dealers should try to revamp them.
C.I.N.O.A. (LA CONFÉDÉRATION INTERNATIONALE DES NÉGOCIANTS EN OEUVRES D’ART):
Bind their dealer members to adhere to reputable standards of quality and expertise
Facilitating the legitimate circulation of art throughout the world
Disseminating practical information on the art market
Proactively supports measures which aim to eliminate traffic in stolen antiques and works of art
Takes an active part in speaking on issues which impact the market sector’s economy
LAPADA (The Association of Art and Antique Dealers):
Works to maintain a flourishing art and antiques trade
Keep UK in the forefront of the international market
Vital to dealers faced with increasing national and European legislation as well as financial, regulatory and marketing pressure
Lobbies national and local authorities over current and proposed legislation to ensure that the interests of dealers, both large and small are considered at the highest level
BADA (The British Antique Dealers’ Association):
Set standard(s) for trading in the antiques business
ADAA (Antiques Dealers’ Association of America):
Dedicated to integrity, honesty and ethical conduct of the antiques trade
NAADAA (National Antique & Art Dealers Association of America):
Safeguard the interest of those who buy, sell, or collect antiques and works of art
To promote the best interest of the antiques and art trade
To promote the just honorable and ethical trade practices
AADLA (The Art & Antiques Dealers League of America):
Devoted exclusively to the best interests of the dealers and buyers of antiques and works of art
VARIOUS ANTIQUES ASSOCIATIONS WORLDWIDE:
To dedicate itself to the study and the protection of the interests of the trade
To oversee the issues, propriety and development of the trade
Assist in trade developments with the rest of the world
Stimulating the art market
Safeguarding the purchaser of antiques
Assurance that the customer’s invoice will contain a fair description of the article sold
To inspire the public’s confidence in its members
Aim to bring antiques into the lives of everybody