Barron’s: “Christie’s and Sotheby’s better watch out”

The weekly US financial newspaper, Barron’s, in a blog posting Friday November 8th by Robert Milburn (“Art Auctions Head Online“) frames the current technology-driven transformation of the art market as an opposition between the traditional Goliaths, Sotheby’s and Christie’s, and the upstart Davids represented by “tiny” Paddle8. This opposition brings to mind Malcolm Gladwell’s phrase regarding his latest book, the “mighty leverage of the unconventional.”

Milburn quotes Thomas Galbraith, Managing Director of Paddle8 describing just as Amazon and eBay shifted ­billions of dollars worth of transactions online,

“we’re at the precipice of the same thing happening with art.”

The article cites some metrics indicative of Paddle8’s rapid growth:
  • Founded In 2011
  • $10m funding
  • 230 auctions to date, generating $40m sales
  • 2013 revenue forecast to be 3 times 2012
  • 150,000 registered bidders
As well as competing with Sotheby’s and Christie’s, Paddle8 is developing a new market: fund-raising auctions for charities. Barron’s quotes Paddle8 as stating on average they have helped their nonprofit ­clients exceed their fund-raising goals by 20% to 30%.
Paddle8’s ‘transaction only’ model is different to that offed by Christie’s and Sotheby’s. Paddle8 does not handle artworks it sells, allowing it to reduce commission and other costs significantly. There are no Mayfair or Park Avenue salerooms where potential bidders can inspect artworks for sale – yet.
Echoing other analysts, Barron’s concludes that high value sales will remain Christie’s and Sotheby’s core market, “as the low-end is grabbed by a larger and larger number of online operators.”