Issue #41  2/5/2002
eBay and Sotheby's Strike An On-Line Deal

In an unusual turnaround, eBay and Sotheby's have announced that they will be working closely together in the future.

In what must be a blow for Amazon.com, Sotheby's previous on-line partner, the world's oldest fine arts auction house's on-line auctions will combine with Ebay's Premier category, which never really caught on very much since its launch a year ago, to create a new up-scale auction website to be featured on both the Sotheby's and eBay's sites.

According to a Sotheby's press release, the companies will introduce Sothebys.com online auctions into the eBay marketplace. Expected to open early this summer, the site will feature the same collecting categories of fine and decorative art, antiques, rare books, jewelry and collectibles currently offered on Sothebys.com, including, of course, photography. Some of eBay's Premier dealers and--this is the real interesting part--other auction houses that eBay featured will continue to offer their goods through the new Sotheby's site. We will see how long the other auction houses will stand for that one. Except for Butterfields', eBay's own closely leashed traditional auction venue, it seems doubtful to this observer that competing auction houses will place themselves under arch-rival Sotheby's banner. All items offered will be guaranteed by sellers for authenticity and condition, as they were on the old Sotheby's site. The new Sothebys.com site on eBay will be built and hosted by eBay, but will still, apparently, be called by the old name (Sotheby's.com).

Neither on-line auction venue was doing all that well with its upscale on-line auctions.

Sotheby's was still bleeding red ink from its on-line business and this may help to staunch that flow of millions of dollars in additional capital from an auction house with serious financial woes. The site now gets exposure to eBay's millions of viewers and eBay's generally superior software. How many of their beanie baby hunters will swing upscale remains to be seen.

EBay gets respectability out of the deal and considerably more items to flesh out its offerings, which in the photography section--and other areas of eBay Premier--were looking pretty meager. Whether eBay will move to Sotheby's delayed bidding format (where bids are continued to be taken unless there is no activity on an item for over three minutes) still remains to be seen, but rumors persist that the on-line giant would like to do so but is having problems with the logistics to develop this setup for the multi-million daily transactions that occur on eBay.

Ebay continues to force its Butterfields' division to cut staff (29 more this week), offices (LA has just been consolidated into the San Francisco office) and services over at Butterfield. These latest layoffs follow a significant restructuring in November 2000, which resulted in more than 32 layoffs. In July 2000, the company also closed its Chicago gallery. Butterfields' continues to tighten its belt and move more and more of its operations to support of eBay's on-line auctions.

In addition to the on-line connection, Sotheby's will adopt eBay's Live Auctions technology to enable real-time online bidding for a "significant" number of Sotheby's traditional auctions held in New York and London. The emphasis here is on significant. What that means remains to be seen. Apparently Paris is off the hook for the time being. Considering the problems in Paris auction rooms in just switching to the euro, this should be a blessing, especially on the upcoming Jammes photography sale.

Financial terms of the deal were not disclosed on what has been reported as a three-year deal, and so far the stock market seems largely unimpressed with the partnership. (Editor's note: We do not own any stock in these two companies, nor should this article be considered any kind of stock advice. God knows it is not.)