Wednesday, November 21, 2012

Slice of heaven

As expected New Zealand dealer galleries are starting to up their commission on sales to 50 percent. At least one major Auckland dealer has already done the deed so the others won't be far behind.

Of course that's not to say that top-selling artists won't be able to negotiate down, even below the 40 percent currently changed by most dealers.

Meanwhile down South there's the Dunedin School of Arts. Not content with simply hauling in government funding, private sector grants and student fees, this educational institution has informed fine arts students that it intends to raise its commission (yes, they charge commission on student sales) to 25 percent on their end of year exhibitions. The unconvincing argument for the increase is that the art school “subsidised the exhibition” and that “they made a loss.”

Then, in auction land, a new way of structuring commission based on performance is starting to appear internationally. Sotheby’s now have the following clause inserted in their contracts with sellers: “Sotheby’s performance related commission will be equal to the lower of (i) 2.00% of the hammer price achieved for that lot and (ii) the difference between the hammer price achieved for the lot and its final high presale estimate”.

In NZ where vendors of top-line items are managing to push auction sales commissions down or remove them completely, there is unlikely to be any shift in the short term, but the incentives for Sotheby’s are clear. They conclude almost 40 percent of their sales above the high estimate. Now that's not something that happens in NZ very often.