Credit: Sarah Palagyi/Column & Stripe
I had never been to an auction house and had never considered the economics of the auction market. The visit gave some insights into the “New Economy.”
The Niches are in the Riches
“The ego-belittling truth the Internet makes visible is that none of us is as unique as we’d like to believe.” — Diamandis & Kotler, “Bold”
The internet has changed the auction house. While fewer in-person bidding occurs these days, the Internet has exploded the so-called “long tail” of interests. In the digital age, almost nothing is weird enough to have some buyer base. While this does mean that auction houses must compete globally, a solid niche trumps competing on price. See this time and again on the internet: with the right group of followers connected, willingness to pay is an afterthought. Auction houses know what they’re doing here!
Sell Stories, Not Stuff
With Baby Boomers aging and downsizing, there is a lot of stuff around. A lot of it just isn’t that valuable to Millennials, who are famous for eschewing material goods.
What is still selling though, is stories. I heard once that the same item was posted on eBay. One description listed mere physical attributes, while the other shared the item’s origin and other anecdotes. Guess which got a better price?
The auction house knows this. That’s why they ensure the best provenance they can get — not just as a signal that the piece has been well cared-for, but to position it as a story.
It’s Hard to Fool People These Days
The internet has made commerce like one large village market: word travels. With more cross-selling between auction houses, galleries and collections, it’s hard to thrive on craftiness. This quote says it best.
I expected my trip to Cowan’s to be a pleasant diversion from the world of economics and finance. Far from it — the trip shed more insight into the digital age.