2006 | Case No. EC35
Sothebys.com operated from 2000 to 2003, during the tail end of the dot-com boom, in an economy threatened by recession and in a period when the art market overall was depressed. Historically, luxury goods have not sold well during recessions, and Sotheby’s traditional auction business also did badly at this time. Sotheby’s Holdings made a net loss of $42 million in 2001 and a net loss of $55 million in 2002. To make matter’s worse, Sotheby’s management was distracted by the lengthy and well publicized price-fixing trial, which led to the firm’s chairman being sent to jail, Sotheby’s paying a settlement of over a quarter of a billion dollars, and the firm’s reputation being left in tatters. As Sothebys.com was shutting down, the Wall Street Journal proclaimed “a chapter of art-market history” to be coming to a close. Sothebys.com failed, the Journal argued, because the “owners of the money-generating lots—the Monets, Warhols and Chippendale chairs—had no interest in selling them on the Net, nor did the buyers wish to purchase them there.” Expensive artworks sell best, the Journal said, “in real-time sales with glossy printed catalogs and elegant auctioneers wielding polished wooden gavels.” People could easily log on to the Sothebys.com web site, but they did not want to bid “without looking, touching, and feeling that unique thrill one gets in the presence of something ineffably beautiful and satisfying.” Selling art is “a job intrinsically unsuited to the Internet.” From the very beginning of online art sales there were skeptics who expressed the same views. Were the skeptics right? Does the collapse of Sothebys.com mean the Internet is unsuitable for selling fine art?
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