Wednesday, May 20, 2009

Heritage Closes Photography Department

I first read about the news that Heritage Auction Galleries was shutting down its Photography department in Alex Novak's E-Photo Newsletter (here). I've since followed up with Lorraine Davis to get more details on the situation.

We covered Heritage's April sale (preview here and results here) and the results weren't pretty. While there was a decent mix of material on offer, the total proceeds were only just over $200K. If we back into the premium taken by the auction house on that sum, and match it against the likely costs of staff, promotion, and catalog production/mailing, it becomes clear that the math doesn't really work.

So the basic reason for the decision to close down the dedicated Photography department (after just two auctions) is that the sales just did so poorly; investment spending in a money losing department in this kind of economic climate is a tough sell. Photography will get folded back into the larger 20th Century/Fine Art auctions as appropriate. Lorraine will go back to her appraisal business, writing articles, and working on her revision of Lee Witkin's The Photograph Collector's Guide.

I think the real underlying issue here is that auction houses are trying to give liquidity to illiquid markets. To do so, matches between buyers and sellers must be found. It seems to me that the sellers were decently accounted for here; Lorraine did an adequate job of digging up material that would normally sell to someone at some price. The problem is that there were not enough buyers. Heritage's traditional customer base is collectibles (coins etc.), so their client list isn't a great fit for higher end fine art photography. Building a new list from scratch takes time and effort; the variety of buyers needs to be broad to cover all kinds of material.

It is a good reminder that the defensible advantage that Sotheby's and Christie's have is not only in their ability to get the best consignments, but their deep client lists, built over decades in the marketplace. These two feed on each other and are self reinforcing, making it tough going for new entrants.

2 comments:

Ed Beardsley said...

Speaking on behalf of Heritage Auction Galleries, the E-Photo Newsletter to which you responded is not accurate. I’d like to clarify that Heritage will continue to evaluate photographs for sales at Heritage. Inquiries may be sent to Ed Jaster, Vice President/Consignment Director, at EdJ@HA.com. We will also continue to work with renowned photography expert Lorraine Davis as a Consultant.

While newer to some areas, we are now home to 26 categories of auctions, across the collectibles, jewelry, and Fine and Decorative Arts fields. Our easy to use internet platform has attracted a massive and growing buying-base (450,000+ bidder-members) and consigning base (45,000+). This group is experienced and knowledgeable; one that buys cross-category where their hearts and wallets take them. They are the reason that Heritage is the fastest growing auction house in the world, also one who has not had to lay off hundreds of employees or shut down offices across the globe. In fact we are in the process now of opening new offices, including galleries in midtown New York City and elsewhere, where we will continue to represent photography among our other categories.

Sincerely yours,

Ed Beardsley
Managing Director, Fine & Decorative Arts
Heritage Auction Galleries
EdB@HA.com

dlkcollection said...

Ed,

Thanks for your comment and for the background on Heritage, as many photography collectors (including ourselves) are not particularly aware of all that Heritage has been doing in recent years. Given your comments, it does sound like the facts of our post were generally correct and that vintage and contemporary photography will still be available from Heritage, just not supported by a stand alone department with dedicated photography specialists on a going forward basis (at least for the time being), but as part of a larger Fine Art effort. If we are in error on the facts, please do feel free to correct these miscommunications via further comments.