Encouraging New Collectors - Why it is not Happening
DisneyFan
Posts: 2,093 ✭✭✭✭✭
Dealers talk about trying to encourage more collectors. I believe there are two major reasons why we are seeing few new collectors beyond the billionaires who buy for many reasons besides investment.
First, major auction houses are now routinely charging 37.5% commissions - 20% to the buyer and 17 1/2 % to the seller. Every time I plan to put in a bid at a coin auction my wife asks how can I expect to make money buying coins with a 37.5% roundtrip commission, especially since it's probable that I will not be able to hold them for 20 - 40 years or more as previous long time collectors have done. Those old time collectors and estates may swallow hard at today's commissions when putting coins up for auction; but, they most likely have substantial profits from long ago purchases. In the 1970's and early 1980's, collectors were encouraged by auction house commissions of a flat 20% to the seller and no buyer's commission. Over time those commission have increased to today's levels.
It's understandable that an outright purchase of a collection by a dealer, who is tying up his money, will result less to the seller. Auction fees of 20% gave a collector a reasonable chance of making a profit. That was the attraction of auctions. Today's auction fees give no advantage to a seller over an outright sale to a dealer in spite of the fact the auctioneer does not need to tie up funds in inventory until a lot is sold.
Second, while I do not want to get into politics, the current political environment has caused many to question the honorability of previous generations resulting a lessing of pride in America and therefore the desirability of owning keepsakes from our past.
Your thoughts and comments.
Comments
I think Hertiage and Stack's are 17.5% buyer and 5% seller, unless they jacked up the seller take as well. Plus you can usually negotiate the seller's fee if you have a few thousand or more to consign. Still a big nut to cover, but not near 37.5%. Great Collections is 10% buyer and 5% or 0% seller (0% for $1k and up). Ebay even less, but you have to do some work. BST is "free" but not as many eyeballs. As time goes by and technology improves, there may be other ways to buy and sell with less "vig". I think more a fundamental interest in coins by younger folks needs to be promoted, hopefully the ANA and PCGS's increased presence on social media will help.
Well gang, I'm an old timer that grew up learning that If you want something done right, you have to do it yourself. Who says Ebay or Stacks has to be the only game in town. There are 80 people online in BST as we are typing. Why can't we start an Auction thread. There are plenty of dealers here and most of us are collectors. Do as a 1 day perpetual Auction. Auctions stop at Midnight or random time etc
Bob Sr CEO Fieldtechs
Why buy a coin when i can buy a phone and text my friend sitting next to me.
Paper money eventually returns to its intrinsic value. Zero. Voltaire. Ebay coinbowlllc
Your first point about auction fees is just wrong.
+1.
I'm tired of hearing the old wives tale about sellers commissions. Anyone with a halfway decent consignment can easily negotiate at least full hammer and, in many cases, also a piece of the buyers charge. If you're having trouble getting a deal like that, there are many dealers on this forum that would be happy to negotiate for you for a modest 2% fee.
Member ANA, SPMC, SCNA, FUN, CONECA
You have a very smart wife.
When I was young and starting, coin collecting was about filling albums from what I could find in circulation. Today, that still works for coins back to the 60s, and even further for nickels. I suspect a lot of people became “collectors” of state or park quarters. That is a legitimate facet of collecting – one that does not require a lot of expense or an eye on “investment” value.
Eventually I came to realize that collecting the coins I want requires me to pay for them. I’m older now, with more resources to buy coins and to travel to shows. This is a different aspect of the hobby, and as @FadeToBlack suggested, it requires more resources than what most younger people (and many others) can justify.
Maybe most new collectors are off our radar because they don’t participate in auctions or show up on forums like this. Perhaps many of those will eventually transition into the deeper end.
My strategy is about collecting what I intend to keep, not investing in what I plan to sell.
There are 179 Million Active users on ebay.
I just choked on 20% at Heritage. If it wasn't such a difficult coin I would have passed.
Great transactions with oih82w8, JasonGaming, Moose1913.
I think auction house commissions are just confusing to new people. It takes a while to understand how things like juice and hammer actually work.
When someone says a seller is getting 95%, 100% or 104% of hammer, I think it's much simpler to just say the seller is getting 76%, 80% or 83.2%, assuming a 20% BP. Of course, 100% sounds a lot more than 80%, which may be a reason for the language.
Heritage and Stack's are both 20% BP for coins. Heritage charges more for other categories.
I personally believe both your points are irrelevant. Auction fees have been annoying to some, but there are so many other ways to buy coins. Plus, just because they are high doesn't mean nee collectors are not being encouraged. Your second point I can simply find no connection of any kind in. Not only have i seen no evidence of this, it disregards collectors in other countries too.
Beyond your two points, I think there are active efforts to get collectors involved. Cluvs and organizations run various programs, National Coin Week is promoted well sometimes, if you haven't heard of it I suggest you Google "Great American Coin Hunt", some dealers do things sometimes, etc. There are already active younger collectors, particularly evident on Instagram. Coin accounts can have thousands upon thousands of followers there. My numismatic account is sort of small with 1350ish followers, but I can see that my demographic is mostly 25-34 year olds.
CCAC Representative of the General Public
Columnist for The Numismatist
2021 Young Numismatist of the Year
Lacking any real data other than US coin prices, there is no reason to believe that there are fewer serious numismatic collectors out there, but we can assume that collectors buy differently simply because we can today. My own sample of 1 has moved mainly into 18th century European medals, something that would have been impossible to sustain an interest in pre-internet. Most purchases are made overseas. (I am also upgrading my US type set thanks to more realistic prices, but these are more infrequent purchases.)
Correct but this forum is a different story IMO. Could be worth a try if our host goes for it but members only for sure.> @ErrorsOnCoins said:
Just an observation or two --
For people 30 years old or less, much of personal and social communication is different than what most of us "old" folks here learned, or even how people communicated for the last 500 years. The ways that money is handled and used in daily life has also changed; the 'cash model' is barely relevant to a 30 year old. This applies across social and economic strata.
These point to a fundamental change in the way coin collecting is approached. It is now less a hands-on-connection than a historical-relation-observation. Coins are becoming like old coffee grinders, astrolabes, sextants, and other pieces of past cultures and lives.
This change makes it much more difficult to develop new collectors - now they must learn almost everything about an alien society in order to make the coins "fit" into a world that no longer exists for them.
What does it mean?
Smaller numbers of collectors. Overall, I see continued decreases in standard-dollar prices for most rare coins. The extreme high end will be fine, but the rest will decline to their economically viable price levels. Emotional "Wow that's neat!" purchases will support lower end items in nice condition such as silver dollars and gold coins; but that cannot sustain the specificity of date/mint/variety us collectors crave.
These days people don't want Coins ,or Currency for that matter. Whip out a Card and in a few moments you're on your way. If people don't want to use Coins for buying things , why would they consider paying any premium to buy an old or odd Coin? It absolutely makes no sense at all.
Kids don't need Coins. Give them a Penny, they throw it on the ground. Give them less than $5 Dollars, most likely they'll sit there and holler.
I do not think first time collectors go running off to auctions immediately. You need to get things started, pick up your education on grading, etc. There is more access to coins and more information on coins thanks to the internet so young folks do not even need to be hand held and learn from mistakes as much as i did starting out. Even with the push to promote civic volunteering, service clubs are still seeing drop in membership. Perhaps it has more to do with so much more interesting stuff is going on than we were growing up.
WS
Some of the things that turn me off in this hobby are the hypocrisy amongst dealers and collectors where if someone in the circle creates a fantasy coin it’s the best thing ever, but if someone on eBay does it it’s the devil incarnate.
Second is the almost requirement like need for fourth party grading such as CAC to have your coins seen as being worthy.
Another is the cliques that seem to be more prevalent in this hobby than in others. There are many “kiss my ring” dealers and collectors out there that make it impossible for newbies to get involved without severe asskissing. The responses to newbie questions on this board alone are proof of that (granted some posters won’t / don’t listen to reason, but some just get destroyed for no reason).
I love this hobby and have made some great friends through it, but if I’m young a new at it I wouldn’t see it as worth the effort.
Jerry McGuire moment over, have at it.
Recreation has become cyberized to an enormous younger population.
Glad to hear about all the younger collectors on Reddit, Discord and Instagram!
I remember back in the very early 1970's Stacks charged 10% and only 5% on gold coins.
Yea...Right after I take my young nephew on a crack-house tour.
My Saint Set
Auction houses (and their fees) have zero to do with encouraging or discouraging new collectors. Frankly, no new collector starts there. At least I've never known one. Well, maybe Bill Gates's kids.
IMO, I also don't believe the current political climate has any lasting impact either.
Dave
1) New collectors don't buy from major auction houses. They buy at local shops and ebay. Also, in my opinion, you don't lose money when you buy at those high fee places, you lose when you sell there. You can set your own buy price, so you can factor the fees in. You are at their mercy when selling though.
2) Current politics has made young people question the honor of older generations? Are you kidding me? I'm 34, and think the older generations have a LOT more honor that the current youngsters trying to do away with what is great about America. Politics has nothing to do with coin popularity, but a changing lifestyle, etc, can.
Coin collecting isn't cool, period.
I don't think a new collector yet contemplates the auction house fees when they start. I know that when I started to seriously collect in my early 30s' (20 years ago), Ebay had the mechanism to buy online, sell online and to do so with almost no "round trip commission".
That model is dead and without a mechanism to buy coins without losing a lot of money, the hobby will fizzle too IMO. I may dabble, but I am getting my coins off to Great Collections for sale while their fees are low. Who knows if another opportunity to unload will be available in the future given that states are seeking Sales Tax on everything, exorbitant auction house commissions and the lopsided retail vs true market prices of coins.
Another collector leaving the buying side of the hobby. I now collect coin images - which is how I enjoy my current coins anyway.
I have tried a few times to get new collectors. However, by the time I explain the concerns about fakes fake slabs CAC, PCGS NGC etc etc their eyes roll back and they loose all interest. Collecting has become too complicated and if I had not started as a kid I would never want to start today
That's why one prominent dealer who tries to get new collectors tells them grades don't change. It's not true, but they do it to help create new collectors. Perhaps they believe it's the lesser evil?
Another way is to try getting them into modern collector bullion and they may get into classic coins over time.
When the next recession hits it will be interesting to see which payment types will be preferred and which will be consigned to the trash heap of history. When will it hit? Car loans are now starting to have problems with many 90 days past due. My local housing market, especially the recently built "bigfoot" house types, are clearly slowing down though the real estate agents will deny such a thing is happening.
Bullion is the least complicated way to enjoy coins and precious metals (for the young, old and age-unsure) ....A win/win.
I am older and there’s no way I’d throw my nimble feet into the swamp of collectibles.
I agree new collectors don't buy at major auction houses; but, at some point they ask themselves how can I buy well and how can I sell and then they start realizing the old saying, "Easy to buy and hard to sell." It takes more energy and talent to sell well.
When mentioning older generations I was going back much further and referring to the current controversies involving Columbus' interactions with the indigenous people he labeled “Indians”, the early presidents being slave owners, and our Confederate leaders. Those controversies are not encouraging new collectors of American History keepsakes.
If that is true, that people will stop collecting something that has lost its usefulness, then why do people buy art?
For the same reason we buy clothes, groceries and fuel. Because we want to. The belief that it will gain or maintain value is an illusion. Or delusion.
I agree Dave. Hard to tell if there is actually waning interest, or just changing interest, but my observation is mostly old geezers at the coin clubs and shows. One thought that must surely be an influence; people just use cash and coins far less. My observation is thought that most people are still fascinated by old coins, but seems to me collecting is probably a dying hobby/investment practice.
Art has the same use as hundreds of years ago. You look at it and talk about it.
People seem to be hung up on the auction angle here, I’ve been collecting for 30+ years and have never been to or done an online auction from a major auction house, just eBay (and yahoo auctions back in the day). Using major auction houses is irrelevant to most casual collectors.
I don’t know about you, but I have to buy those things to survive. Coins and art, not so much.
OK exclude groceries and fuel. You have to have good clothes, fashionable clothes to survive.
If coins have gone up in value to much why did the vig go up so much as well?
Shouldn't have the increased value of the coins allowed the auction houses more profit?
The vig is totally ridiculous it seems when coins have gone up so much.
what confuses me is why auction houses need to go so far to obfuscate the cost. Is it to hide how little work they actually do?
The juice they call it ,
Why should the house deserve to make 10 times as much on a 1000 dollar coin sale as it does on a 100 dollar coin?
Its 2019 the costs are a fraction of what they once were. Running an auction is minimum wage job . The bidders do all the work.
Guess I’m doomed then. Fashion doesn’t fly at 40 below.
When the states quarters first came out one pundit suggested pushing NJ colonials on buyers of NJ quarters as though the only difference between them was a couple of centuries.
That mind set still exists.
I think it is more of a psychology thing for the less astute. "The seller's fee is only 5%." "The buyer's fee (as opposed to your fee) is 20%." And for the less oblivious customer, "we usually charge 25% all in, but since you are such a great customer we'll cut you a break and only charge you 20%" or "no seller's fee for you." It sounds better than "we're taking 20% of your proceeds."
With all of this said, I think auction fees do a lot more than you give them credit for doing. Sometimes it is all about advertising and knowing who to target with listings. Their auction archives and customer records are a potential gold mine. To be sure their services don't make sense for many coins, but for ultra rarities, in demand top pop rarities, and esoteric issues, the services can be invaluable. There are also expenses: producing and mailing catalogs, website hosting and maintenance, security issues with lot viewing, legal fees for dealing with stolen merchandise/problem consignors/bidders, risk with the extension of credit, a collections department, etc.
I wonder how many of these 'new collectors" are really just collectors or just looking for a short term financial gain flip. Nothing wrong with the flip aspect though, it allows dealers to move product.
I think most new collectors end up paying tuition for a while....
I agree. My "schooling diploma" was earned many, many, years ago via a 32-D and 32-S Washington counterfeit purchase from the same dealer. More to that story. Also direct from the mint, proof set purchases in the early 70's. I got off cheap I think. But still sours your enthusiasm.
Wow, 2 counterfeits. Was this a B&M dealer? I'm guessing the dealer didn't make you whole?
Was a mail order purchase from an ad in Coin World. Both coins were graded Good. Was to complete my Wash. circulated set. Did take the loss.
Auction house commissions are confusing and Seller's commissions are not always posted. A few years back my experience was 17.5% to the seller AND 17.5% to the buyer. If I buy an expensive coin from Heritage they currently offer 0% seller's commission only on that specific coin.