The recent scandal involving price-fixing allegations between Sotheby’s and Christie’s hasn’t affected Sotheby’s web site launch. The company, working with Amazon.com, began taking bids online beginning January 25th with the help of a network of 4,500 dealers making consignments to the site.

According to Sotheby’s vice president John Block, "71% of the property consigned to the web site is from dealers who obviously haven’t lost faith in Sotheby’s." "It’s business as usual," says Block, despite the fact that Sotheby’s stock price has fallen dramatically since the allegations were announced last month.

In a recent press release, the company said it would not pay a dividend in the first quarter to meet its cash needs. Sotheby’s auction sales for 1999 rose by 16% to $2.3 billion, the highest increase since 1990.

Sotheby’s site is meant to take advantage of the growing popularity of online auctions. For the first half of 1999, eBay’s sales were $1.6 billion. "It works out to approximately $8 million a day," says eBay spokesman Kevin Pursglove. Forrester Research of Boston estimates sales of jewelry on the Internet in 1999 were $201 million, about 5% of which was sold in auction format.

People love to bid for their bounty. The Internet brings the allure of the salon auction to the masses, passing out paddles to anyone who wants them. And, in America the masses have money.

The question is, how much will they spend on a single purchase? Evidence suggests a lot. Last November, Antiquorum held a watch auction in Geneva, where it sold a Patek Philippe for just under $2 million, the new all-time world record price paid for a wristwatch (until two weeks later when Sotheby’s sold one for $11 million). Although the Antiquorum buyer’s winning bid was placed over the telephone, he followed the auction live on the Internet, from his home, watching the bidding price change in real time. He was among 3,500 Antiquorum customers who watched the auction on the web, 25 of whom placed bids online, competing successfully with bidders raising paddles in the ballroom of the Hotel de Bergues in Geneva.

"The Internet," says Antiquorum president, Oswaldo Patrizzi, "is the new Fifth Avenue." Antiquorum, in partnership with The Auction Channel, was the first – and so far only – major auction house to broadcast live auctions on the web, taking bids online. Online since 1993, it was also the first to establish a web site. The company recently teamed up with eBay to offer timed auctions on its Great Collections site.

Sotheby’s does not broadcast auctions in real time but they are perpetual. Objects can be viewed 24 hours a day, seven days a week. Prices range from $100 to $100,000. Each item is accompanied by a photograph, a condition report, a description and the bidding deadline.

According to David Redden, who masterminded the venture, 40% of the buyers that logged on to one of the company’s first online auctions were new to Sotheby’s. But he notes the only way the venture can be viable is by volume. It takes a lot of merchandise to sustain a 24-hour auction site. So Sotheby’s turned to its network of consignors, signing up 4,500 dealers across all product categories, to help get the goods. The dealers, who were asked to sign exclusively with Sotheby’s, work out their own consignment agreements, enter the products into the Sothebys-Amazon.com site, including photos, condition reports, estimates and descriptions. Sotheby’s never has to see the merchandise.

Although Internet bidding will not altogether replace Sotheby’s live auctions, much of the merchandise formerly slated for certain venues, such as the arcade auctions (previously six a year in New York), will now become part of the enormous inventory needed to feed the online auction venture. Redden explains, "Sotheby’s sells 200,000 lots a year at auction. When divided by category, that’s not enough to make lively, interesting or sufficiently seductive online auction channel."