by Lita Solis-Cohen

On January 19, Sotheby's announced it will launch sothebys.com, a new Internet auction business for art, antiques, jewelry, and collectibles.

Sotheby's press release said they have invested $25 million in the project—most of it in marketing, a portion in personnel, and some capital expenditures for software. They hired Susan L. Solomon, formerly president and CEO of Sony Worldwide Networks and chairman and CEO of Lancit Media, as chief executive officer of sothebys.com and executive vice president of Sotheby's Holdings.

David Redden, an executive vice president of Sotheby's North America who has been exploring the possibilities of on-line auctions for the last eight months, said the system will be up and running early in July for the sale of the well-known baseball collection of Barry Halper, portions of which will be sold on line and portions in a live auction at Sotheby's in New York City. Redden said that on-line auctions may be in operation sooner. "The initial response has been so encouraging, we may begin as soon as a group of suitable material comes together," Redden volunteered. "We have asked a core group of dealers to be our partners."

Prestigious firms, including Hirschl & Adler, Ursus Books, and Leigh Keno, were among the first to sign on.

Redden, in a phone interview, explained how dealers will become "Sotheby's Internet Associates." The dealers will consign objects, provide their own illustrations, either by scanning or with digital photographs, do their own cataloging, write condition reports, set estimates and reserves, and guarantee each item as described. When an item is sold, the consignor will be given the name of the buyer as well as the name of the underbidder, if the underbidder agrees.

Sotheby's will also provide links to the consignors' Web sites. All this is with no direct charge to the consignor. When Sotheby's charges the purchase price to the buyer's credit card, however, a 10buyer's premium will be added along with applicable taxes and shipping costs. Only when the shipping confirmation has been received will Sotheby's transfer the funds to the seller.

Redden said the first auctions will have three-week-long viewing and bidding periods, but when the system is up and running, and users have become familiar with it, he sees week-long auctions ongoing in every category that Sotheby's sells, and, in time, there will be theme sales. He added, "It will be a lively site; the turnaround time will be very fast. Books, prints, manuscripts, stamps, any category where there are multiples will be very popular."

In the last few weeks Sotheby's experts have been spending a certain amount of time phoning or meeting one-on- one with dealers, to offer them charter memberships with a choice of two- or three-year contracts. Sotheby's has asked for a response from the dealers within a week.

The selling points are that dealers pay no fees for the term of their contracts, though sellers' fees may be instituted in the future. In addition to putting up items from their own stock, dealers are encouraged to solicit consignments from clients, but they cannot at the same time offer these items on their own Web sites.

Things that do not sell within the time limit of the sale can be reoffered with the reserve lowered to 60% of the previous reserve and with commensurate lower estimates.

Dealers may consign anonymously or use their names. Those who use their names can take advantage of the links to their own Web sites. Redden said Sotheby's has signed up hundreds of dealers worldwide.

Last July Sotheby's held a trial sale of books and manuscripts, which went well. "More than forty percent of the buyers were new to Sotheby's. We reached out to people everywhere," said Redden.

Peter Kraus of Ursus Books, New York City, thinks the idea of a dealer partnership with Sotheby's is a good one. "The dealers will do a better job of cataloging," said Kraus, "but the big question is will Sotheby's keep the quality up or let every Tom, Dick, and Harry sign on?"

Kraus does not see a huge volume of material coming out of the woodwork but notes that dealers always have things they need to sell. The dealer partnership appears to be a clever way for Sotheby's to get ready inventory.

Not every dealer approached signed up immediately, and not all those who signed up checked the box that allows Sotheby's to use their names.

"They couldn't buy my name for one hundred thousand dollars," said one prominent dealer, adding, "No, no, don't say I said that."

"Sotheby's is acting like a high-pressure used-car dealer who wants to get his customer to sign before he leaves the lot," was another anonymous comment from a dealer who has not made up his mind. "If Sotheby's signs up enough people, they will be the place to be, but Christie's may have a better deal," he said. "Sotheby's is charging ten-percent buyer's premium to hold our money; they have no costs for storage, cataloging, shipping. eBay charges two dollars a lot, and eHammer two point five percent."

Some dealers are opposed to the whole idea. "I'm not in the auction business. I like dealing directly with my clients, and I like handling what I buy," said Pat Bell of Olde Hope Antiques, New Hope, Pennsylvania, who turned down the invitation. "If I want to sell at auction, I want to choose which auction is the best venue. I have no hostility towards Sotheby's, they do a good job, but I don't want to be locked into a relationship."

Another non-signer said, "It is antithetical to what the art market is all about; a little picture on the Internet is not how we see it. I don't see the point of sending something to auction we no longer want with our name on it."

The majority, however, see on-line selling in a more positive light. "It is a win-win situation," said Stephen Huber, the Saybrook, Connecticut, dealer in needlework, echoing sentiments of half-a-dozen dealers who were solicited by Sotheby's vice presidents walking the aisles of the Winter Antiques Show, contracts in hand. "You can use it as much or as little as you choose. The only restriction is you can't put anything worth three hundred dollars or more in another Internet auction."

Huber said at first he thought he should let his lawyer read the contract, but when he realized Sotheby's needed an answer within a week, he decided to sign up rather than miss the chance. "You have to cast your lot with somebody, so after reading the eleven-page contract and mulling it over for three days, we signed it and gave it back to Nancy Druckman at the Winter Show." Huber confessed he has never sold anything through Sotheby's before, but he said, "This seems like a whole new aspect to our business."

He admitted that he would not consign his best items. "The real juicy stuff we'll still sell as we normally do, at shows or through our own Web site. Sotheby's is not gearing up for really pricey things."

Redden concurred that initially most things will sell for between $300 and $10,000. "You know that eighty percent of what Sotheby's sells worldwide goes for less than five thousand dollars," he pointed out. He emphasized that Sotheby's live auction business is as important as it ever has been, and in time he believes "the two will converge, and if all goes as planned, bidders will be able to participate in live auctions from their computers.

"There are some technical hurdles for this," he noted. "Technology is not quite there yet."

When word of Sotheby's on-line auctions leaked last fall, Sotheby's stock moved from $15½ in October to $24½ on December 15 on rumors of a takeover and then shot up to $38 on December 24 on rumors of the Internet project and traded as high as $41 3/8. By December 28, the price was back to $35, and the stock, whose symbol is BID, closed at $41½ on January 19, the day of Diana Brooks's announcement. On January 20 the price went as high as $45½ before retreating to $38 5/8. On February 2 the stock closed at $34 5/8.

In response to press inquiries, Christie's, a privately held company, issued its statement on Internet initiatives the following week, saying that after their move to Rockefeller Center, the auction house will announce plans "to broaden its base of services to include offering property on the Web by the second half of 1999."

It will be rather different from Sotheby's partnership with the trade. Christie's "will be involved in the authentication and value estimation of the property to be offered for sale on the Internet and not act solely as a clearing house." Moreover, Christie's service will include client confidentiality and a competitive commission structure for selling art on the Web. Christie's will not propose any arrangements that will restrict competition in the marketplace. "We believe this runs counter to the philosophy of the Internet and undermines the essence of any auction market," the statement read.

"We will have details in spring," said Taggarty Patrick, Christie's spokesman. "It is too far ahead of the product launch to discuss just now. It is not so much who is going to be first as who will have the better models."

Sotheby's clearly has the edge with hundreds of top dealers signed up as charter members committed to Sotheby's for two or three years and pledged not to consign to other auction sites.

Folk art dealer Fred Giampietro, who closed his New York City gallery in January to devote full time to his on-line auction business eHammer (www.ehammer.com), said he is very excited to see Sotheby's become part of the Web. "It lends viability to the on-line concept of doing business," he said. (M.A.D. is an investor in eHammer.)

He said since Sotheby's announcement, business on eHammer had increased dramatically. "January figures are double any other month, and the upswing occurred after Sotheby's made their announcement," Giampietro revealed. "Today [February 2], we have an all-time high volume."

According to Giampietro, "Buyers and sellers want an open, honest place to trade and low fees." He contends eHammer provides the tool (software) and allows buyers and sellers to interact. "We stay out of it. Sotheby's is sticking their foot in the middle and charging a buyer's premium. We charge the sellers two point five percent. Small dealers and individuals are all welcome. We are like discount brokers and charge pennies and don't make recommendations. We have an open and honest forum; the seller gets the names of all the bidders, not just the buyer and underbidder. Our only aim is to make money for our consignor as fast as we can. If you put something up at auction on a Monday, it is possible to be paid by the following Monday. You have a choice of listing it for two days to thirty days. There are about one thousand items for sale every day. We have the capacity for two hundred fifty thousand items in nine hundred sixty categories, all antiques and collectibles.

"We have been approached by people who want us to go public," Giampietro said, adding he thinks eHammer will show a profit by fall. "Start-up costs were very high, but if we can increase our number of users by twenty percent a month, we can easily show a profit by September," he said. "I do not look on Sotheby's as competition, just a different site; not that our buyers won't overlap, they will, but they'll find eHammer is more fun."

The giant of the on-line auctions remains eBay (www. ebay.com) with literally hundreds of thousands of items for sale at any one time.