Hammer Prices Hidden in Online Auctions

Andy Warhol’s print of a nickel coin was expected to sell for as much as $30,000 in a money-themed online auction on http://Paddle8.com

Instead, the 1986 work failed to draw a single bid, the biggest casualty of the “Currency” sale in which 65 percent of the 20 lots went unsold.

When the auction ended at 5 p.m. on July 24, the estimates and final bids vanished from the site.

Art collectors of ArtKabinett social media network have found that "online" auctions typically evade the ancient rules of public auction disclosure

A five-year art rally has fueled a surge in online auctions and opened the doors for new companies that are betting consumers will buy works by Warhol and Banksy while lounging at home.

Unlike regular auctions at Sotheby’s, Christie’s or Phillips -- where estimates and prices are posted on the auction houses’ websites and filtered into databases that track sold and unsold lots -- results of online auctions often are not published, making an already opaque art market even less transparent.

The lack of transparency is making harder for buyers and sellers to establish a fair price for an artist’s work. Online auction companies said they omit sales results on purpose to protect clients, some of whom are artists and others that are nonprofits that rely on artists to donate works for their charity auctions.

“It’s about preserving the anonymity of what’s happening on our site, especially for our consigners,” said Osman Khan, co-founder and chief operating officer of Paddle8, a website that has raised $17 million in funding since 2011 with backers including Tyler and Cameron Winklevoss, twins who claimed Mark Zuckerberg stole their idea for a social-networking website to start Facebook Inc. “Even if it does sell, not every owner wants the work’s price publicly disclosed.”

Opaque Market

The opaque market makes it easier for buyers to quickly resell, or flip, an artwork for a profit. Sellers can test the market without fear of tainting the value of the work if it flops.

At Paddle8’s 10-day “Currency” auction, the seven purchased pieces tallied $14,950, a fraction of the $264,700 high target set by the auctioneer.

The most expensive work sold was Kate Brinkworth’s painting of red and black dices and other gambling paraphernalia, estimated at $4,000 to $6,000. The final bid was $3,500. The price isn’t in Artnet’s database.

Online auctions also tend to focus on the lower- and middle-market, with most pieces selling for less than $100,000.

Federal law does not mandate that auction companies post the results of their online auctions, unlike established auction houses.

Hidden Results

Companies that offer online auctions, both commercial and charitable, among their services -- Paddle8, Christie’s, Artspace, Artsy and Artnet -- said they will give information on specific online sales if contacted directly.

Internet-based art auctioneers said the market will become more open as it expands and matures. Dallas-based Heritage Auctions generates detailed results after each of its auctions, whether they take place live or online.

Visitors to http://Auctionata.com a Berlin-based auctioneer of fine-art and collectibles, can view past auction results by clicking on an icon next to each sale.

Schiele Drawing

Heritage Auctions and Auctionata send the sale results to the Artnet database.

They range from a Marilyn Monroe print by Lawrence Schiller that fetched $938 in an online-only session at Heritage last week to a 1916 Egon Schiele drawing that fetched 1.5 million euros a year ago.

Artnet, which sold $4,351,343 of art online during the first quarter, will start reporting its online auction results in September.

As the Internet becomes a more important part of the auction market there may be a stronger trend towards the same type of transparency that’s common in offline auctions.

The present lack of transparency may have a much simpler explanation: If they were doing really well, there’s no doubt they would tell you everything.