• CHRISTIE’S
    Valuable Books and Manuscripts
    London auction
    13 December
    Find out more
    Christie’s, Explore now
    TREW, Christoph Jacob (1695–1769). Plantae Selectae quarum imagines ad exemplaria naturalia Londini in hortus curiosorum. [Nuremberg: 1750–1773]. £30,000–40,000
    Christie’s, Explore now
    VERBIEST, Ferdinand (1623–88). Liber Organicus Astronomiae Europaeae apud Sinas restituate. [Beijing: Board of Astronomy, 1674]. £250,000–350,000
    Christie’s, Explore now
    PROPERTY FROM THE COLLECTION OF ALICE & NIKOLAUS HARNONCOURT. Master of Jean Rolin (active 1445–65). Book of Hours, use of Paris, in Latin and French, [Paris, c.1450–1460]. £120,000–180,000
    Christie’s, Explore now
    A SILVER MICROSCOPE. Probably by Antoni van Leeuwenhoek (1632–1723), c.1700. £150,000–250,000
    Christie’s, Explore now
    AN ENGLISH HORARY QUADRANT
    C.1311. £100,000–150,000
  • Fonsie Mealy’s, Dec. 12-13: Roberts (David) & Croly (George). The Holy Land, Syria, Idumae, Arabia, Egypt and Nubia. Lond. 1842 - 1843 [-49]. First Edn. €10,000 to €15,000.
    Fonsie Mealy’s, Dec. 12-13: Incunabula: O'Fihily (Maurice). Duns Scotus Joannes: O'Fihely, Maurice Abp… Venice, 20th November 1497. €8,000 to €12,000.
    Fonsie Mealy’s, Dec. 12-13: An important file of documents with provenance to G.A. Newsom, manager of the Jacob’s Factory in Dublin, occupied by insurgents during Easter Week 1916. €6,000 to €9,000.
    Fonsie Mealy’s, Dec. 12-13: WILDE (Oscar), 1854-1900, playwright, aesthete and wit. A lock of Wilde’s Hair, presented by his son to the distinguished Irish actor Mícheál MacLiammóir. €6,000 to €8,000.
    Fonsie Mealy’s, Dec. 12-13: Heaney (Seamus). Bog Poems, London, 1975. Special Limited Edition, No. 33 of 150 Copies, Signed by Author. Illus. by Barrie Cooke. €4,000 to €6,000.
    Fonsie Mealy’s, Dec. 12-13: Binding: Burke, Thomas O.P. (de Burgo). Hibernia Dominicana, Sive Historia Provinciae Hiberniae Ordinis Praedicatorum, ... 1762. First Edition. €4,000 to €6,000.
    Fonsie Mealy’s, Dec. 12-13: COLLINS, Michael. An important TL, 29 July 1922, addressed to GOVERNMENT on ‘suggested Proclamation warning all concerned that troops have orders to shoot prisoners found sniping, ambushing etc.’. €3,000 to €4,000.
    Fonsie Mealy’s, Dec. 12-13: Scott Fitzgerald (F.) The Great Gatsby, New York (Charles Scribner's Sons) 1925, First Edn. €2,000 to €3,000.
    Fonsie Mealy’s, Dec. 12-13: Yeats (W.B.) The Poems of W.B. Yeats, 2 vols. Lond. (MacMillan & Co.) 1949. Limited Edition, No. 46 of 375 Copies Only, Signed by W.B. Yeats. €1,500 to €2,000.
    Fonsie Mealy’s, Dec. 12-13: Miller (William) Publisher. The Costume of the Russian Empire, Description in English and French, Lg. folio London (S. Gosnell) 1803. First Edn. €1,000 to €1,500.
    Fonsie Mealy’s, Dec. 12-13: Miller (William) Publisher. The Costume of Turkey, Illustrated by a Series of Engravings. Lg. folio Lond.(T. Bensley) 1802. First Edn. €800 to €1,200.
    Fonsie Mealy’s, Dec. 12-13: Mason (Geo. Henry). The Costume of China, Illustrated with Sixty Engravings. Lg. folio London (for W. Miller) 1800. First Edn. €1,400 to €1,800
  • ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
    ABAA VBF: Holiday Edition
    November 30-December 2
    abaa.org/vbf
  • Sotheby’s
    Fine Books from a Distinguished Private Library
    28 November 2023
    Sotheby’s, Nov. 28: Captain Thomas Brown | Illustrations of the American ornithology. £80000-120000
    Sotheby’s, Nov. 28: William Hamilton | Campi phlegraei. £40000-60000
    Sotheby’s, Nov. 28: Nicola Zabaglia and Domenico Fontana | Castelli, e ponti con alcune ingegnose pratiche. £6000-8000
    Sotheby’s, Nov. 28: Bible, German | Nuremberg: Koberger, 1483. £40000-60000
    Sotheby’s, Nov. 28: Bible, English | King James version. £8000-12000

Rare Book Monthly

Articles - March - 2022 Issue

The Changing Economics of Rare Paper Auctions

In my February 2022 article for RBH, we parsed out the numbers from last year to understand if and how change is occurring within the auction markets for rare books, prints and ephemera. From analyzing the charts (www.rarebookhub.com/articles/3135) we were able to determine a concentration of auction houses hosting the bulk of auction events, resulting in an increase of supply through the market.

 

More lots are out there than ever before, however competition is tight and the profitability of each auction event has never been more crucial for auction houses caught in the middle range of the market.

 

This article will look at the micro-level of the auction event itself to provide an analysis of the economics of the auction event in order to understand emerging trends and tendency within the market. If you are going to work with auction houses, best know how they make money.

(www.rarebookhub.com/articles/3044)

 

 

 

The graph provided imagines the revenue and cost curves of two distinct auction events, the Value Model (#1) and the Volume Model (#2).

 

Revenue curves

 

The revenue curves are generated by multiplying the Gross Auction Value by the seller’s commission and the buyer’s premium and adding any service revenues that might occur. Gross Transaction Value (GTV) represents total proceeds from all items sold at the auction houses’ in person auctions, and online marketplaces.  Auction Revenue is generally 15-30% of the Gross Auction Value.

 

The angle of each revenue curve provides insights into the average value of each lot offered in the auction, with the steeper curve of the Value Model being indicative of an auction event with higher value items and the shallower curve of the Volume Model being an auction event containing lower value items.  The Value Model, because there is a higher contribution to profit per lot, has a lower breakeven point (the point in an auction event where all fixed costs are covered by revenues) than that of the Volume Model.  As shown in the graphic, the Value Model is profitable (the point at which the revenue line exceeds the Total Cost curve) with the sale of many fewer lots (150-175 lots) than the Volume Model (300-325 lots).  In reality, the Revenue Curves are indicative of two different auction event business models.

 

Cost curves

 

Some of the costs for an auction event are fixed and some costs are variable. The fixed costs of an auction event, usually allocated from a pool of fixed costs from the auction houses, do not vary as a function of the number of lots presented or lots sold. Big drivers of fixed cost in any auction business are facilities costs and the salaries of staff.  As you can see from the graphic, the Fixed Cost curve is flat, and does not vary across all numbers of lots; both Value and Volume Models face the same fixed cost of the event.

 

Variable Costs relate to a specific auction and can include unique auction event marketing, product acquisition costs and specific staffing requirements driven by the auction event.  As you can see from the graphic, the variable costs layer on top of the fixed cost to provide a Total Cost line.

 

As previously noted, Profit (Total Revenue greater than Total Cost) for the Value Model occurs at 150-175 lots, while the Volume Model require the sale of 300-325 lots to be profitable.  These are two different auctions likely held by two auction houses with differing business models and strategies.

 

Event Profitability

 

Each auction event has a profit dynamic. In order to increase revenue an auction house needs to increase Gross Transaction Value (GTV). This can be achieved by either increasing the number of units offered or increasing the unit value of items offered. The Volume Model’s draw being a confluence of many, lower prices lots resulting in an increased sell thru rate (STR), the Value Model’s draw being the showcasing of a few, rare items to achieve the same GTV objective.

 

Another way to increase profitability of an auction event is through increasing revenue per unit by increasing either the seller’s commission or buyer’s commission (or both). This can be justified if evidence of high STRs can be demonstrated, supported by an infrastructure of client management programs and multi-prong marketing campaigns.

 

At the same time, decreasing costs by reducing variable costs per unit and/or reducing fixed costs need to be continually reassessed by the auction house. For example, a major method by which to reduce auction event cost levels is by transitioning auction events from in-person to online formats. We saw this prior to the Pandemic by a few auction houses, then almost ubiquitously during.  This digital transformation of the auction industry is likely structural meaning that we will not likely completely return to the “old way” of heavy reliance on in-person auction events.  As a result, many auction event costs will be permanently driven downwards.

 

Auction business profitability moving forward

 

An auction business is a portfolio of individual auction events. Not all auction events need to be profitable, but the portfolio of auction events when consolidated over the year needs to be or the auction house will not survive. As was observed in the previous article, there are many more in the ecosystem, mostly in the low/mid-price range.

 

At present, within each auction event and after, auction houses running a legitimate growth strategy are seeking to increase the revenue per event, decrease the variable costs per event and decrease the fixed costs per event.

 

Moving forward, the following responses are indicative of auction organizing adapting to the structural changes underway:

 

Commission percentages paid by both Buyers and Sellers will likely continue to rise with more services invented and delivered to augment auction revenues.

 

On-line auction events will become the rule rather than the exception as all auction houses seek to drop the level of fixed and variable costs in their operations. Sizes of auction events (number of lots offered) will continue to increase until an “optimum event size” is discovered that maximizes profit per event.

 

The number of auction events per auction house will continue to increase in order to spread fixed costs over more auction events.  This will continue subject to the constraints of consignment availability and the willingness of auction houses to invest in new, expanded infrastructure (i.e. online platforms and further intelligence toward targeted marketing of yet unidentified collector clients).

 

Investors will likely get an opportunity to invest in the publicly listed shares of auction houses as established firms such as Sotheby’s (again) go public (https://news.artnet.com/market/sothebys-takes-another-step-ipo-2060295) or K Auctions in South Korea (http://www.koreaherald.com/view.php?ud=20220113000959&np=1&mp=1) to raise money to grow and expand infrastructure and venture backed auction houses, such as Catawiki, go public to create liquidity for the original investors.

 

The forces impacting the rare book auction market are bigger than books. The economic drivers as outline above seem unfamiliar because they are originating from areas of the economy (Capital Markets, Digital technology, Social Media marketing and Cloud-based auction platforms) that have not historically played a major role in rare book, manuscript, and ephemera ecosystems. However once introduced, these forces have permanent impacts on the bottom lines of auction houses and the services they provide Collectors and the Trade.

 

About Spencer W Stuart
 
Spencer W Stuart provides analytic services to collectors and dealers using auctions to build their collections and inventory. For Dealers, Spencer provides consulting services to develop hybrid or total transitions of book business to the use of auction mechanisms as a growth strategy.
 
In concert with his advising, Spencer is an active writer and lecturer on histories of the printed word for a variety of publications including The Book Collector and Amphora as well as with the Canadian Broadcasting Corporation.

Rare Book Monthly

  • Forum Auctions
    Fine Books, Manuscripts and Works on Paper
    30th November, 2023
    Forum Auctions, Nov. 30: Saint Jerome penitent, woodcut with contemporary hand-colouring and letterpress text beneath, [Augsburg], [Johann Froschauer], [c.1498]. £15,000 to £20,000.
    Forum Auctions, Nov. 30: Elimithar (Elluchasem) "Ibn Butlan". Tacuini sanitatis, first edition, Strasbourg, Johann Schott, 1531. £15,000 to £20,000.
    Forum Auctions, Nov. 30: [Missale Romanum], Latin, Incipit ordo missalis secundum consuetudinem Curiae Romani, manuscript in Latin, on vellum, 234ff. [c. 1400]. £15,000 to £20,000.
    Forum Auctions
    Fine Books, Manuscripts and Works on Paper
    30th November, 2023
    Forum Auctions, Nov. 30: Foyle copy.- [Shakespeare (William)]. Macbeth. A Tragedy: With all the Alterations, Amendments, Additions, and New Songs. As it is now Acted at the Theatre Royal, for Hen. Herringman, 1687. £5,000 to £7,000.
    Forum Auctions, Nov. 30: Dickens (Charles). A Christmas Carol. In Prose. Being a Ghost Story of Christmas, first edition, first impression, first issue, Chapman & Hall, 1843. £12,000 to £18,000.
    Forum Auctions, Nov. 30: Lawrence (T.E.) Revolt in the Desert, working draft typescript, 1927. £10,000 to £15,000.
    Forum Auctions
    Fine Books, Manuscripts and Works on Paper
    30th November, 2023
    Forum Auctions, Nov. 30: Hampstead Bindery.- Phillips (Stephen). Marpessa, exquisitely bound by The Hampstead Bindery, almost certainly P.A. Savoldelli, 1900. £6,000 to £8,000.
    Forum Auctions, Nov. 30: Matisse (Henri).- Joyce (James). Ulysses, one of 1500 copies, this one of 250 signed by the author and artist, New York, The Limited Editions Club, 1935. £8,000 to £12,000.
    Forum Auctions, Nov. 30: Burroughs (Edgar Rice). Tarzan at the Earth's Core, first edition, signed presentation inscription from the author to his son, New York, 1930. £5,000 to £7,000.
    Forum Auctions
    Fine Books, Manuscripts and Works on Paper
    30th November, 2023
    Forum Auctions, Nov. 30: Fitzgerald (F. Scott). Tender is the Night, first edition, first printing, signed by the author, New York, 1934. £15,000 to £20,000.
    Forum Auctions, Nov. 30: Fleming (Ian).- Hooks (Mitchell) and David Chasman. Dr. No, British film poster, Stafford & Co Ltd, [1962]. £10,000 to £15,000.
    Forum Auctions, Nov. 30: America.- California.- Palou (Francisco). Relacion Historica de la Vida Y Apostolicas Tareas delVenerable Padre Fray Junipero Serra..., first edition, second issue, 1787. £6,000 to £8,000.
  • Swann
    Maps & Atlases, Natural History & Color Plate Books
    December 7, 2023
    Swann, Dec. 7: Samuel Augustus Mitchell, A New Map of Texas, Oregon and California with the Regions Adjoining, Philadelphia, 1846. $3,500 to $5,000.
    Swann, Dec. 7: 17th–19th-century case maps of various locations. $1,500 to $2,000.
    Swann, Dec. 7: Andreas Cellarius, Haemisphaerium Stellatum Boreale Cum Subiecto Haemisphaerio Terrestri, celestial chart, Amsterdam, 1708. $2,500 to $3,500.
    Swann
    Maps & Atlases, Natural History & Color Plate Books
    December 7, 2023
    Swann, Dec. 7: Vincenzo Coronelli, Set of engraved gores for Coronelli’s monumental 42-inch terrestrial globe, Venice, circa 1688–97. $18,000 to $22,000.
    Swann, Dec. 7: Lucas Janszoon Waghenaer, group of four navigational charts, Antwerp, 1580s. $2,000 to $3,000.
    Swann, Dec. 7: Thomas Bros, Block Book of Berkeley, Oakland, 1920s. $800 to $1,200.
    Swann
    Maps & Atlases, Natural History & Color Plate Books
    December 7, 2023
    Swann, Dec. 7: John Nieuhoff & John Ogilby, An Embassy from the East-India Company of the United Provinces, map of China, plan of Canton, London, 1673. $1,200 to $1,800.
    Swann, Dec. 7: Frederick Sander, Reichenbachia, St. Albans, 1888-1894. $5,000 to $7,000.
    Swann, Dec. 7: Two early illustrated works on horsemanship and breeding, Nuremberg, early 18th century. $700 to $800.
    Swann
    Maps & Atlases, Natural History & Color Plate Books
    December 7, 2023
    Swann, Dec. 7: John Gould, A Monograph of the Ramphastidae, or Family of Toucans. Supplement to the First Edition, London, 1834; 1855. $40,000 to $60,000.
    Swann, Dec. 7: John Pinkerton, A General Collection of the Best and Most Interesting Voyages and Travels in All Parts of the World, London, 1808–14. $1,500 to $2,500.
    Swann, Dec. 7: Oakley Hoopes Bailey, Hackensack, New Jersey, Boston, 1896. $800 to $1,200.

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