About Sotheby’s Founded in 1744 in London, England, Sotheby’s is one of the oldest and largest auction houses in the world. Although Sotheby’s beginning was not as exalted as one would imagine for an auction house that has long catered to the extremely rich, it was still looked upon as a fashionable enterprise in eighteenth-century Britain. After the death of Sotheby’sfounder, Samuel Baker, in 1778, the company remained under the direction of the Sotheby family. For nearly a century the auction house focused on the sale of fine books but has since expanded into the sale of art and related items. By 1917, Sotheby’s had grown sufficiently to require a new location. The firm moved the auction house from Wellington Street to New Bond Street in London. After themove, the firm embarked on a dramatic development process that enhanced its global image with several impressive art auctions. Sotheby’s became associated with elegant auctions that brought in increasingly large amounts of revenue. One of the firm’s most distinguished sales occurred in 1961, when Rembrandt’s Aristotle Contemplating the Bust of Homer was sold for $2.3 million to The Metropolitan Museumof Art. In 1964, Sotheby’s began its global expansion by acquiring the United States’ largest auction house, Parke-Bernet. Since this initial acquisition, Sotheby’s has continued to expand and now has sales rooms and offices in North America; the United Kingdom and Ireland; Europe and the Middle East; Asia, Africa, and the Pacific; and Latin America.
With the rapid growth of the firm, Sotheby’swent public in 1977. The firm’s shares were well received by investors, and their value doubled within two years of the public offering. Sotheby’s experienced market troubles in the early 1980s and was subsequently bought by A. Alfred Taubman in 1983. Under Taubman’s leadership, Sotheby’s reverted to private ownership. Sotheby’s thrived in the late 1980s; one example of the firm’s success was thesale of the Duchess of Windsor’s jewels in 1987, which made headlines as one of the largest international auctions ever. The sale brought in over $50 million. In 1988, Taubman decided to take the company public again.
Since the auction house’s beginning over 250 years ago, Sotheby’s has experienced numerous market swings that have caused the company to change the way it does business. In 2000,Sotheby’s expanded its operations by offering online auctions via Sothebys.com. The online auctions began on a successful note, aided by the sale of a print of the Declaration of Independence as well as panels from the Boston Garden’s parquet. Soon, however, the online auctions fizzled and the Web site became just an information tool for live auctions.
The Business Environment of Auction Houses The world of auction houses includes two major players—Sotheby’s and Christie’s—and numerous second tier players such as Phillips. Sotheby’s and Christie’s control 80 to 90% of the $5 billion international art auction market. This 80 to 90% figure has remained remarkably consistent to this day.
Christie’s remains Sotheby’s prime competitor. Established by James Christie in 1766 in London, thefirm is still headquartered there, although it has sales rooms and offices around the world, competing in essentially the same markets as Sotheby’s. Christie’s conducted some of the greatest auctions of the eighteenth and nineteenth centuries, including the sale of Sir Robert Walpole’s collection of paintings, which would form the base of the Hermitage Museum Collection in St. Petersburg. As notedon Christie’s Web site, “Christie’s auctions became major attractions on London’s social agenda.” Today, Christie’s focuses on auctions of art, books and manuscripts, collectibles, jewelry, motor cars, and vintage wines, among other property.
Auctions have long been viewed as fashionable events; maintaining this image is very costly. The major auction houses—Sotheby’s and Christie’s—spare no...