Sotheby's struggling online auctions going, going, gone to internet giant eBay

The auction website eBay is to take over the online auctioneering business of Sotheby's, the venerable British firm that has been beset by hard times and scandals.

In a capitulation by old money to the force of the new economy, eBay will handle all online transactions for Sotheby's, which has had trouble with its web auctions almost from their inception in 1999.

Under the deal, the two companies will unveil a new Sothebys.com site within eBay this summer, featuring the same high-end art, antiques, jewellery and rare books that Sotheby's now sells in auction houses around the world.

Sotheby's said the alliance with eBay would connect it with a much larger audience through eBay's 42 million registered users around the world. The new Sothebys.com website will incorporate eBay's Live Auctions technology, enabling real-time online bidding for many of its offline auctions in New York and London. The change will mean that anyone, anywhere in the world, could conceivably participate in Sotheby's auctions if they have an internet connection.

The 226-year-old British firm has had to face up to the invasive nature of the internet on its business: while eBay has been generating record profits, Sotheby's lost £5.7m in the first half of 2001, the latest period for which results are available. Sotheby's was beset by scandal after the conviction of Diana Brooks, its chief executive, on charges of price-fixing for its saleroom goods.

The US company has also been quicker to the punch: in 1999, while Sotheby's was still struggling with the question of how much and how to sell over the web, eBay bought Butterfield & Butterfield, another big offline auction house and a competitor of Sotheby's.

David Redden, Sotheby's vice-chairman, said: "We've watched eBay with enormous admiration over the years. I use eBay all the time."

Since its inception in 1994, eBay has become an internet behemoth. It began taking off in 1996 as PCs reached American homes. In 1997 online auctions were worth $96m (£68m), and for 1998 were estimated at $200m.