In 2013, Dan Loeb wrote that “Sotheby’s is like an old master painting in desperate need of restoration.” Now, a little more than a year later after a bloody boardroom battle and with three seats on the Sotheby’s board, the company is getting ready to make its first big digital play with Loeb and his deputies in the room.
The New York Times reports today that Sotheby’s and eBay have formed a partnership to stream Sotheby’s sales worldwide. It’s tempting to ask is this 12-year old idea the best Loeb can come up with? Both companies worked together on a similar project in 2002 but it was quickly shelved. Perhaps this time around it will be different – the difference being that under Loeb’s influence, Sotheby’s is now more comfortable in loosening its collar and using technology to chase a higher volume, lower value end of the art market. This would be consistent with Loeb’s 2013 statement:
Sotheby’s current “strategy” is puzzling. The Company has stated that it intends to focus on “top clients” and high value lots, and shun the lower value lots that your top competitor has effectively captured by leveraging new technologies. Despite this “focus”, Sotheby’s market share relative to Christie’s in items over $1 million actually trails its overall market share. Strategically, we cannot help but ask if ceding the market for lower value lots to your key rival has allowed them to generate profits and relationships with emerging collectors which they are using to compete against you at the top of the market.
As we wrote in 2013, this may be an example of technology (online sales platforms) driving business strategy (going downmarket) which often ends badly. Doing the same thing over and over again and expecting different results is often cited as a definition of insanity. Let’s hope for Sotheby’s sake that this time it’s not insane, it really is different, and that Sotheby’s can make a return on the lower/emerging end of the art market without damaging its core brand. And maybe even (if Loeb’s theory is right) use that increased footprint to defend its position at the top of the market.