In a letter sent to clients on Thursday, Sotheby’s announced that the auction house would abandon an overhauled fee structure announced in February and implemented in May and return to the “bespoke” fee terms it previously offered sellers. The buyer’s premium ranges from 15% to 27% of the hammer price, depending on the monetary value of the work.
The new terms are in stark contrast to plans announced in February, when the auction house said it was standardizing seller commission rates – capping fees at 10% for the first $500,000 of a lot’s sale price and exempting items with an estimate of less than $5 million. . Under the terms, the buyer’s premium is 20% of the hammer price for works under $6 million, falling to 10% above that price.
Related articles
At the time, CEO Charles Stewart defined the change as art news This is a “smart disruption” and a sign of the increasingly “mature” art market. He said it marked a shift from “bespoke pricing structures” that had prompted sellers to focus on commission negotiations rather than starting discussions about how to get the highest price for their work.
In a letter to customers on Thursday, the letter was issued by art news“The idea is to encourage growth in our market by creating transparency, simplicity and fairness around fees, which have always been very complex,” the House said.
“Over the past six months, we have listened to the market and assessed the needs and preferences of buyers and sellers,” the company said in the letter, acknowledging that the new fee structure clearly did not have the desired effect.
during an interview The Art NewspaperStewart similarly defended the decision earlier this year, but added that sales charge reform was disliked by “people who are used to commissions and people who have artistic advisors.” Stewart further blamed overall “supply issues” for overall market conditions in 2024 – this year has been particularly challenging for the art market in general, and auction houses in particular.
“We need to respond. We’ve tried, we’ve learned, we’ve listened,” Stewart said.
The fee structure announced on Thursday will come into effect on February 17. With it, the house will not be completely restored to its pre-2024 condition. The 1% “indirect premium” on all purchased lots will not return, while the auction success fee of 2% above a lot’s high estimate, introduced this year, will remain. The 15% to 27% buyer premium range is only a fraction of the 13.9% to 26% range before 2024.
The reversal comes at a tumultuous time for the auction house. On December 11, it was reported that Sotheby’s New York office was laying off 100 employees, with most of the layoffs including back-office staff, junior employees and experts in various departments. Further layoffs are underway at other Sotheby’s offices around the world, but the size and scale of the cuts is unclear. (Sotheby’s conducted a round of layoffs in London in May, with about 50 employees laid off.)
Separately, this fall, Sotheby’s reached an agreement with Abu Dhabi’s ADQ sovereign wealth fund to invest nearly $1 billion, including $800 million to repay the company’s debt. new york times——and officially completed the acquisition of the Brower Building on Madison Avenue in New York (the former site of the Whitney Museum) for $100 million.
The new fee structure also comes after proceeds from Sotheby’s November New York sale of Impressionist, modern and contemporary art ($533.1 million) were much lower than in 2023 ($1.2 billion). The company has yet to release total earnings figures for the year. Christie’s did the same earlier this week, with 2024 sales of $5.7 billion, down about 8% from 2023.
The full text of Sotheby’s letter to clients is as follows:
Dear customer
You may recall that earlier this year we announced a bold move to lower buyer’s premiums to 20% on nearly everything we sell and establish fixed financial terms for sellers who put their materials up for auction. The idea is to encourage growth in our market by creating transparency, simplicity and fairness in fees, which have always been very complex.
Over the past 6 months, we have listened to the market and assessed the needs and preferences of buyers and sellers. So, starting February 17, we’re reintroducing custom terms for sellers, while preserving the underlying principles that drove this change. Our buyer’s premium is as follows.
The updated buyer’s premium will apply to all categories except wine and spirits, motor vehicles and real estate. The Terms will be posted on our website when they become effective and will include information about other currencies.
We look forward to working with you in the new year.
