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Amazon, Sotheby's in venture
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June 16, 1999: 12:24 p.m. ET
Internet retailer buys stake in famed auctioneer, will launch upscale auction site
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NEW YORK (CNNfn) - Amazon.com, the world's biggest Internet retailer, is joining famed auctioneer Sotheby's Holdings Inc. to create an under-the-hammer online site for upscale art and collectible items, the companies said Wednesday.
As part of the agreement, Amazon will buy 1 million shares of Sotheby's Class A stock for $35.44 a share, and pay an additional $10 million for warrants to buy another one million shares for $100 each. That brings Amazon's total investment in Sotheby's to $45.44 million, equal to a 1.7 percent stake in the world's No. 2 auction house.
The companies wouldn't disclose how any earnings from their joint venture would be distributed between Sotheby's and Amazon.
Ironically, both companies started out as booksellers, but Sotheby's dates from 1744 and is known for its spectacular, multimillion-dollar auctions of prized art and rare collectibles, as well as its staff of experts and appraisers.
Amazon, by contrast, was founded in 1995 on the premise prevalent with e-commerce that anyone with a computer, a modem and a credit card can purchase goods and bid on objects online, regardless of social or financial status.
Amazon Chief Executive Jeff Bezos said at a press conference Wednesday he hopes his company will have a similarly long history someday.
"Sotheby's has been around for 250 years," he said. "Not many companies can do that. We're hoping we can learn some things about longevity."
Amazon and Sotheby's will offer items such as rare coins and books, sports memorabilia and post-1945 collectibles through a jointly run site with the address: sothebys.amazon.com. The main Sotheby's site will stick to the higher-end items the house has become known for.
Bezos said the link with Sotheby's (BID) should create the first auction site with guaranteed authentication and alleviate the growing problem of authenticity on the Net.
The companies said that any item listed on the Sotheby's or Sotheby's/Amazon joint site would be guaranteed to be authentic, while the Amazon-listed items would continue to be backed up to $250.
To make their guarantee process easier, only Sotheby's and professional art dealers can place items on the Sotheby's sites.
News of the joint venture comes only two months after the Seattle-based online book store paid an undisclosed sum for LiveBid.com. That deal gave it ownership of proprietary software, which allows the broadcast of real-time auctions through the Internet. At the time, Amazon (AMZN) said it planned to ally with traditional auction houses.
It also comes at a time when online bidding is swirling in controversy. e-Bay (EBAY), one of the better known online auction sites, was forced to shut down its site twice in June due to server problems and conflicts with the redesign of its Web site, prompting the company to announce it will post lower-than-expected revenue for its second quarter.
Bezos said his company has managed to avoid such problems but said it is possible his auction services could have similar problems.
He also stopped short of making any comments about the Internet taking over the traditional live auctions companies like Sotheby's have been doing for hundreds of years.
"The live auction event is not going to go away. It's too exciting," he said. 
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