Issue #64  11/7/2003
Fall NY Auctions Part I: Market Strong as Buy-in Rate Drops

The Fall New York auctions seem to be bouncing back despite a dearth of stellar material, which perhaps reflected the uncertainties spanned by the conflict in Iraq, which was happening during the normal consignment period. Buy-in rates were down substantially from the last few previous sales, in some case nearly half the rate of the Spring sales, which themselves were pretty strong considering the environment. (A buy-in occurs when an item fails to meet or beat its reserve and fails to sell.) Christie's, for instance, went from a buy-in rate of 42% in the Spring to a very strong 24% in the Fall; Sotheby's improved from just over 25% to under 23%; and Phillips also bettered its Spring buy-in rate going from just over 40% to under 35%. Swann's buy-in numbers were similar for both its Spring and Fall sales. Total sales for all houses improved dramatically, which showed overall market strength considering the lack of top-end material.

Despite all of this very positive news, some sources inevitably get it wrong. Dealer Robert Koch forwarded to me an email promotion for Artprice, a company that sells auction results and who has a banner on our I Photo Central pages. While the company does produce good auction information for individual photographers and images, it went awry when it tried to take that information and build a market analysis. The promotion tried to use fear and distortion to get new subscribers--hardly a reliable marketing approach. The company sent out an email that showed a trend chart for photography that indicated a huge dip in its "basket" of key photographers along with copy that partially read, "After riding the speculative wave of 1997-2001, prices have crashed since the start of the year." All the drop-off was based primarily on the October New York City sales. This was patently ridiculous. The photography market in general has had a rough 18 months, but it began to recover in June after the Iraq conflict military action had ended. The October sales actually reflect the strength of that recovery and not a sharp decline as indicated by Artprice.

So what was the process that got Artprice to claim that the "sky was falling" when the opposite was really what was happening? Artprice uses a very limited number of key photographers as a part of their basket approach to looking at the market. Dealer Bruce Silverstein and I have both explained the shortcomings of such approaches for indicating trends in past newsletters. This focus on only a few photographers can produce huge swings in market indications that are exactly opposite to the realities of the market itself, because the prices for many of these artists depend on the specific images being offered for sale. For instance, Man Ray and Kertesz were two of the photographers in the Artprice basket. There were several very important Man Ray and Kertesz prints that had come on the market over the last year and a half, but none of importance were in the October sales. In other words, Artprice was comparing apples to oranges. That never works.

Likewise, sometimes bids on a few items are too high and they correct at the next auction. For instance, Ansel Adams, who is also in the basket, had his Moonrise drop in the last auctions--although to still high levels--because in the previous auctions people had just bid it up too high for the standard size, which is not particularly rare. This happens every auction and is hardly a trend.

The chart itself was drawn in scary distorted fashion. Add the desire to sensationalize and you have a recipe for silliness.

To quote dealer Robert Koch's email to Artprice: "Your firm might love this sensationalism, but this kind of unsophisticated and distorted representation of the results is of a great disservice to the market and your audience! This would only be valid if you had taken a broader sampling and evaluated the material coming to market. The downward curve is more representative of the reluctance of consignors holding better material to offer it for auction in a down economic environment, fearing that it would not fare well. Also, it is always dangerous to use a selected sampling of artists. Who decided that these artists are representative of the market as a whole? There were certain artists, not on your list, who have been moving up steadily. But without a qualitative analysis of the images and condition of the material coming to auction this kind of analysis is only useful as sensationalist fodder for firms such as yours attempting to lure new subscribers."

Unfortunately, the general press eats up this type of misinformation. The Wall Street Journal is particularly well known for getting the photography market wrong: usually hyping it when it is actually in decline and blasting it when it is doing quite well. Keep that in mind as the general press gets a hold of this misinformation.

The reality is that the market is coming slowly out of the doldrums that it has weathered much better than those of the early 1990s. The auctions have done exceeding well, even though quality material continues to be in short supply. Dealers have done less well, but almost all have reported stronger sales beginning in June and continuing throughout the Fall. Our own sales saw a very sharp drop in the first half of the year compared to the previous year, which was a record year for Vintage Works, Ltd., but we project that our second half will nearly double the previous year's second half. From my discussion with most dealers, this is a typical pattern, although perhaps not quite as strong for most in the second half. The direction though is clearly recovery and strength.