New global online auction house Fine Art Bourse (F.A.B.) is challenging the centuries old business model established by Sotheby’s and Christie’s by slashing fees and simplifying the auction process.
Just launched at www.fineartbourse.com, F.A.B. will charge a buyer’s commission of only 5%, compared to the 25% fee commanded by most of the traditionalists – and transaction charges will be exempt of VAT/Sales Tax/GST, artist resale royalty and copyright fees.
The first sale is scheduled for September.
F.A.B. will also warrant catalogue descriptions and good title, unlike many online art portals, where it is a case of “buyer beware”.
Packing and shipping – often a barrier to entry for bidding online – are free for buyers and sellers, and clients’ money will be kept safely in escrow.
F.A.B. is the brainchild of Tim Goodman, formerly the founding chairman of Sotheby’s Australia – and a number of renowned art experts are backing his vision as consultant specialists.
Goodman sees the current wave of digital development as being akin to the Great Oklahoma Land Rush of 1889, as auction houses, art dealers and young techies compete for a slice of the US$50 billion global art market and to see who can be first with the best new way to sell art online.
The stakes are high. Traditional auction houses take fees as high as 60% of the proceeds from the sale of art and they still struggle to make a profit.
“Something has to give,” says Goodman. “The traditional auction business model is no longer sustainable.”
With US$3 million raised in initial funding so far, the world of finance is taking his claims seriously.
F.A.B. rents small, humble premises around the world, employs few full time staff and does not produce catalogues.
“All we have done is apply digital technology to some of the good old ways and cut costs. We are handing over the costs cuts to our customers who are the ultimate beneficiaries,” Goodman says.
“It is important to remember that we are not an intermediary service platform but an auction house dealing directly with buyers and sellers. This allows us to deliver exceptional value not just in terms of service and fees but also by uniquely providing conditions of sale that legally exempt our clients from a raft of additional charges that they would be obliged to pay when using online portals.”
He adds that F.A.B.’s fee structure – with its fixed-price Lot Offer and Lot Buyer charges – means that it rewards its sellers and buyers more as prices rise.
“On a $1m hammer price, for instance, total transaction charges spread across buyer and seller would come in at less than a third of what the dupoly would charge.
“We feel that is fair, and we are able to keep our charges low because we have deliberately not burdened ourselves with luxury premises, legions of staff and unnecessary expense,” he says.
Goodman believes that if people can freely bid on an artwork and receive it within 72 hours without it disrupting their daily lives, it will open up the previously secretive and elitist art world to the masses.
Some 30 highly respected consultant specialists located in the Americas, Asia and Europe will catalogue the art consigned to F.A.B. by the sellers. It will then be sold live at a global online auction.
“I feel as though my whole career has been in preparation for this. I am 62 and I feel like I am 32 again. We are discovering fresh pictures not seen on the market for generations. I am loving it,” says Goodman.