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August 28, 2007

In January, Sotheby's had taken the lead to bump the commission rate (buyer's
premium) which was 20% on the first $200,000, and then 12% on the balance, to
20% on the first $500,000, and then 12% thereafter. Christie's quickly followed

Christie's later this summer quietly raised the fee it charges buyers a second
time in less than a year. This increase targets low-end purchases. Beginning
September 1st buyers will be charged 25% (increased from 20%) on objects costing
up to $20,000. Charges on prices above $20,000 remain unchanged at 20% on the
sale amount from $20,000 to $500,000 and 12% on any amount above that.

Then Sotheby's announced that it would also match the Christie's increase on the
low end in September. Its stock jumped 3.5% on the news.

This is on top of the second best business quarters in Sotheby's history and one
of Christie's best.

Sotheby's originally bumped its buyer's premium to 20% in December 2004 and
Christie's increased its premiums one month later.

In my estimation the auctions' greedy managements are killing off the golden
goose of the art market. Without reasonable expectations of liquidity and
return, collectors will ease off the throttle of their buying. Sotheby's and
Christie's change means that a collector will actually lose about 44-45% of the
actual value of the sale (25% buyers' fee; typical 15% sellers' fee; and various
other costs added--2% insurance, illustration fees, preparation for auction
fees, shipping, etc.). A Christie's person (not in the photo dept.) just told
me by phone that they wait until Sotheby's moves and then they too hike their
rates. If that isn't collusion, I don't know what is. If it isn't breaking the
law, it is definitely pure greed. One well-known blogger (MAO) illustrated the
first hike with a picture of a stuffed pig. I wonder what his next illustration
and comment will be.

One alternative is simple: buy from photography dealers and consign your work to
them, or to auction houses which haven't yet gotten so greedy. Otherwise expect
to give away any profits to Christie's or Sotheby's. They will continue to take
greater and greater shares until their actions result in a total market