How Will They Cope?

Auction houses, being pulled into the new era, bit by bitcoin.

Sotheby’s is widely known as one of the most reliable platforms to sell to collectors worldwide with the auction house originally operating in London around 1744, and the operation has expanded to salesrooms worldwide including Hong Kong, India, France and also the first ever international fine art auction house located in China which opened in 2012. With a global network of 80 offices worldwide it would be considered they hold a large monopoly of the Antique and collectables sector and are also the oldest company listed on the New York stock exchange. (Sothebys, 2019).

Sothebys has given proof of embracing innovation, expanding into different retail sectors, one of which is the Sothebys Financial services. Unique in that it is the worlds only full-servicing art financing company, offering customized terms, fast results and security against the customers portfolio. This is an important subsidiary to the Sothebys brand, and one which facilitates a lot of the purchases made through the whole operation. The financial sector is fast moving and sothebys being a major influence in the antique and collectables scene is required to stay ahead of any competition, currently offering a service unmatched in speed with the ability to provide the funds required within a matter of days (Sotherbys, 2019)

During the last decade financial technology is advancing at speed, particularly with the introduction of that buzzword blockchain, this means that every sector has to consider the disruption it can bring and plan accordingly. Whilst many are not sure what is happening, Blockchain is simply a distributed database which is decentralised and cannot be altered creating a storage of records. These records can be transactions, digital events, assets or information, and once entered the information can never be erased. Creating a permanent record of what was required to be recorded at the time of input, the hypothesis being that the blockchain creates a digital consensus in the online world that can be accessed through a computer quickly, concisely and immutably.(Swan, 2015)

Sothebys finance department although excelling in what it does at the moment, must consider the disruption blockchain brings to the assets and financial world. A project called Maecenas, has the vision to bring a platform for investors to own shares in paintings and sculptures instantly, the represented storage of the asset being on the blockchain and accessible to all to own, buy and sell a share of a piece of artwork by Monet or Rembrandt and many more. Branded in the mainstream news (Telegraph) as ‘A new online marketplace that promises to give art lovers the chance to buy shares in famous paintings’ this technology could reduce the exclusivity of dealing with Sothebys dramatically, removing the ‘middle man’ position that the Sothebys Finance department holds in this sector. (Maecenas, 2019)

Although the technology could be considered a threat, it can also be embraced. Looking at other companies in the sector we can see that Portion, an auction house which only accepts crypto currency as a means of payment. Although this is just a payment protocol, it opens up the possibilities of worldwide purchases including the unbanked, if we align this with the tokenisation of the asset, this really can open the collectors market to a whole new demographic of clients (Portion, 2019). There is also the immergence of the Codex Protocol which is a blockchain registry for fine art, wine and collectables which tackles provenance. This data is the identity and chain of ownership, provenance which predominantly exists in certificates and paper work is very important to legitimise the art and prevent replication, ensuring legitimacy in ownership and authenticity (Gill, 2016) so we can clearly see the benefits that blockchain can bring this space.

With any business the workforce has to grow with the environment the world evolves into, with Sotheby’s being of a traditional nature technology is more than likely the part of pestled that will struggle to be embraced under the business analysis, employees of the traditional auction sector may be more adverse to embracing the technology that can advance and grow the company into the mass market. With antiques and collectables being traditionally targeted at a wealthy market demographic, staff would have to embrace the technology and accept that the wider audience may not have the same passion, wealth or personality as the original market sector, but none the less the potential to grow would be what would ultimately see the business keep the dominance in the sector (Anon., 2014).

The marketing of the Sotheby’s brand being typically targeted to a particular demographic will be effected with the introduction of the disruptive technology, considerations to the change in customer base would bring a challenge, but also a scope to increase the reach exponentially. Opening up every day art lovers and collectors to owning a piece of history for both the emotional aspect and the investment possibilities would really challenge how the marketing strategy would adopt to the customers needs and wants. The existing and potential customers meanwhile would also feel positives and negatives to the technology laterly due to ease of access to previously inaccessible artwork, whilst the technology maybe too far out of reach for the traditional clientele. The marketing of the change in direction may have to include an educational approach towards the technology to keep both the original customer base whilst opening up the avenues to the millennials (Ferri-Reed, 2010).

Whilst technology can bring a large customer base through data analytical targeted marketing, a lot of this is done online, considerations would have to be made on how investment and budgeting would be made on the effects of footfall into auction houses and the effect an online presence and marketing would have on the sustainability of the Stores or auction houses and the employees within. Although in one sense the risk may be averse to the traditional employees of the company, the shift in change would be to the deployment of technology which would increase the employment possibilities in a different direction. It’s a decision that would have to be based on what is ethical towards the current staff and in relation to the sustainability of the business and the profits involved with considerations to share holders (Walczuch, 2007).

This work is my own, i have no been reimbursed, i am not invested in any of the businesses mentioned here.

Anon., 2014. Introduction to the Special Issue Information Technology in Retail: Toward Omnichannel Retailing. International Journal Of Electronic Commerce, 18(4), pp. 5–16.

Ferri-Reed, J., 2010. The Keys to Engaging Millennials. The Journal For Quality and Particpation., 33(1), pp. 31–33.

Gill, D. W., 2016. Thinking about Collecting Histories: A response to Marlowe. International Journal of Cultural Property , 23(3), p. 237.

Maecenas, 2019. Participate in Blackchain-Based auctions of art. [Online]
Available at: https://www.maecenas.co
[Accessed 10 March 2019].

Portion, 2019. Index. [Online]
Available at: https://portion.io/about/index.html
[Accessed 10 March 2019].

Sothebys, 2019. About us. [Online]
Available at: www.sothebys.com/en/about?locale=en
[Accessed 25 Feb 2019].

Sotherbys, 2019. Sothebys Financial Services. [Online]
Available at: www.sothebys.com/en/about/services/sothebys-financial-services
[Accessed 25 feb 2019].

Swan, M., 2015. Blockchain: Blueprint For A New Economy. London: O’Reilly Media, inc.

Walczuch, R., 2007. The effect of service employees’ technology readiness on technology acceptance. Information and Management , 44(2), pp. 206–215.