Amazon takes $45 million stake in Sotheby's
Buys in name auction house for respectability - but how respectable is Sotheby's?
Updated Amazon.com has spent $45 million on a 1.7 per cent stake in auction house Sotheby's to secure its help in beating online auctioneer eBay at its own game and add a little bit of respectability to its own service.
What respectability, we ask? According to Peter Watson's 1997 book Sotheby's: The Inside Story, the prestigious auction house was responsible for the evasion of customs and national laws to move art treasures covertly around the globe in pursuit of the best price. But don't take our word for it, Amazon management -- you can look up yourself through your own e-bookstore, which sells copies of Watson's work.
Should they find stocking such an item way too embarrassing, interested readers can look here here. In any case, eBay's ongoing technical problems may benefit Amazon more than a flashy, high-profile deal like this.
Central to the deal is the formation of a joint online auction project, though both companies will continue with their existing online auction services. The agreement isn't without precedent -- eBay bought a San Francisco-based auction house earlier this year -- and marks another stage in the online auctioneering business' attempt to be seen as a serious operation and not some glorified classified ads business.
Part of that desire for respectability centres on the need to be seen to be protecting potential bidders by authenticating items offered for auction. Sotheby's will provide Amazon with the expertise to do that. It should also help allay the fears of potential bidders that they're not going to get conned out of $1000 on something worth merely a fraction of that. Then again in a world where beanie babies are considered collectors items, you have to wonder...
Of course, the real benefit is that alongside better authentication comes better valuation, so reserve prices are likely to increase, and thus any commission the online auctioneer may choose to charge. The deal also gives Amazon a well-known auction house brand name to work with, and since the online auctioneering business is as much about building user bases to better tempt online advertisers, this is no bad thing for the e-store. ®