Alexander Gilkes co-founded the online art auction site Paddle8 with entrepreneur Aditya Julka in 2011. The initial aim was to enable collectors to buy art through online gallery listings, rather than making them visit each gallery to see what was on offer. What Amazon did for books, Paddle 8 wanted to do for art. Eventually, Paddle8 added to its site previews of art fairs and, more important, auctions benefitting nonprofit organizations.
“It made complete sense for us to host those auctions on our platform,” Mr. Gilkes said of the charity-related events. “And that really became over the course of this year the key business for us.”
The Wall Street Journal: “The benefit auctions did so well, in fact, that Paddle8, just a year and a half old, has overhauled its business model and relaunched as a “virtual auction house” with a permanent philanthropic bent. From now on, the site will exclusively host “benefit auctions” (auctions tied to a specific nonprofit organization, often in advance of a live auction or benefit) and “themed auctions” (auctions curated by Paddle8, with a percentage of the proceeds going to a charitable beneficiary). It will also continue to partner with art fairs, like the annual Armory Show in New York. But gallery listings are out.
“What we liked about [the charity auctions] was not only were you helping solve the main issue of access, but also there was a philanthropic element to it and we’re benefitting the community,” Mr. Gilkes said. “And those seem to be two key themes that are really pertinent in our day and age—the motivations of our generation.”
For the benefit auctions, Paddle8 charges a 5% vendor’s commission on fees (and starting next year, an additional 2% processing fee for clients who use supplementary auction services, like guest registration and shipping coordination), as well as a set-up fee of between $500 and $1,000, depending on the number of art works. For the themed auctions, there’s a 6% vendor’s commission and a 12% buyer’s premium. Traditionally, said Mr. Julka, auction houses charge between 20% and 25% for commission, plus a 20% to 25% premium.
Paddle8′s makeover was not sparked by a particular event, rather by observation over time. Though the company declined to disclose specific revenue numbers, Mr. Julka said that Paddle8′s auction sales proved to be more lucrative than sales through the gallery listings; the auctions had a set time frame that forced buyer action, and they often included better-known, brand-name artists. ”
Read on at The Wall Street Journal.
More at www.paddle8.com.