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Several auctioneers have contacted ATG concerned that Artfact’s terms and conditions ask them to sign exclusive deals in perpetuity for a number of services, an arrangement they feel could severely restrict their businesses.

“Why would anyone sign up for an untested service like that for ever with no way of ever backing out if they didn’t like it?” asked one.

And they have also complained that they have been bombarded with so much information as the new deal is presented that the implications of what they are being asked to sign up to are far from clear.

Artfact president Rod Funston, who is actively promoting the contracts, has rigorously defended his company’s position and says that they are only acting in their clients’ interests.

Auction houses are being told that when their contracts come up for renewal, they will have to pay up to three times what they do now for a range of services, including uploading catalogues for forthcoming sales and company branding and details.

Alternatively, they can get those services free by signing up to a deal that gives Artfact permanent, exclusive, worldwide, royalty-free rights to:
• use and adapt the auction houses’ content in Artfact services; and
• use and display company content in any medium in connection with promotion, marketing, advertising and publicity of Artfact or its services.

The contract also gives Artfact the exclusive rights to act as their sole provider of online auction and support services.

Having given permanent rights over content, marketing and promotion, it means that clients would never be able to sign up with any other live online auction provider.

The permanence of all these arrangements has seriously concerned the auctioneers that contacted ATG.

ATG’s sister company operates a rival service to Artfact but without such restrictions, and auctioneers need only sign up for three sales at a time.

Mr Funston confirmed that every auctioneer who had signed up to the Artfact service so far had asked for a clause to be added allowing them to continue doing business with ATG. “We very much respect Antiques Trade Gazette and the role it plays in the auction industry,” he said.

One auctioneer was particularly worried about having to hand over the right to let another company control how and where they were marketed and promoted.

Another was concerned that because Artfact is a US-based company, any legal disagreements had to be dealt with under Massachusetts law, requiring two sets of lawyers and without any hope of recouping costs in the event of a dispute. But the biggest concern was that auctioneers might sign up without realising the true extent of their commitment.

When ATG put these points to Mr Funston, he said that everyone they had approached so far had been happy with the Artfact offer and could see there was great value in it. “The terms of our agreement are not standard and we negotiate with every client to make sure they are happy with our relationship and we make all kinds of adjustments to suit the needs of each auction house,” he explained.

But this was far from the picture portrayed by the auctioneers who complained to ATG. They said they had been so bombarded by information about Artfact and their services that they were no clearer at the end of the presentation than at the beginning.

One sent a copy of the contract to ATG for analysis. On inspection it takes some deciphering, among other reasons because the terms and conditions of the exclusive agreement are detailed separately from its benefits.

Mr Funston said he had spent 20 years being “very involved” with developing auction businesses. “Having spent 20 years in the auction business as a manager at Phillips and Director of IT at Bonhams, and then providing software to auction houses such as Spink, Lyon & Turnbull and Gorringes to name a few, I joined the Artfact Invaluable team because we are dedicated to serving auction house technology needs and maximising the value that we add to more than 200 major auction houses.”

He felt the terms and conditions of the Artfact contract were fair and balanced. But that is not how the auctioneers who complained to ATG saw it and the fact remains that once they have signed up to the contract, auction houses can never change their mind.

• Artfact acquired the Isle of Wight-based Invaluable Group last year, with another company, Swift-Find, acquiring the Trace database of stolen art and antiques.

By Ivan Macquisten