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.