Category: Selling Art

How to sell your art in 2018 and beyond?

7/1/2018

I read a post by Barney Davey on Facebook yesterday which I thought highlighted some really key issues about selling art that would:

resonate with quite a few artists who working hard at trying to sell their art.
provide a great briefing for those starting out in terms of "need to know" factors.

So I asked Barney whether I could reproduce it on this blog and he said 'Yes' (for which many thanks) - so here is it. Except I added in some bold which you can't do on Facebook to make it a slightly easier read!

How to sell your art in 2018 and beyond
by Barney Davey

How to sell your art in 2018 and beyond? Use galleries or sell directly to patrons? Here are my thoughts.

Galleries come and go. They don't share buyer info. Nothing comes between the relationship of patrons who buy directly from the artist. It might be easier at first to market to galleries, But, doing the work to build direct patronage is the best long-term solution. Own as much of your distribution as possible. Then you are in the cat bird's seat in choosing who and where you let your art get sold by third parties, including galleries. There were never enough galleries to go around in the best of times for galleries. Now, there are fewer with less clout than ever. I don't see a future without galleries. I see a future where smart marketing artists and galleries collaborate. An artist with a list and social media tribe of their own is a much hotter prospect for forward-thinking galleries than one with no following.

Just 50-100 patrons who buy directly from the artist might purchase up to 250 - 500 originals over the course of a career. A devoted direct buying collector base is the most valuable business asset an artist can possess. Those relationships can't be taken away on a whim with no remorse or recourse like deals with a gallery, licensor, publisher, or agent can. When artists market one-to-one with direct mail or email, they have no competition as with a gallery, publisher or licensor for their work. They own the relationship and the pipeline.

A visit to Henry Hudson's studio - you can entertain prospects and show your work outside a gallery

Consumer interest in buying directly from the source is only going to increase. Take advantage of the movements to support local businesses and indie artists to build a pool of patrons in the warm market around you. Then leverage those sales to expand your reach and add secondary channels like galleries as a way to help sell all the art you make.

There is room to sell direct and through galleries. Be respectful, honest and transparent in your dealings with third-parties. Trust but verify and don't dally when you see red flags. Having your own customers makes it easier to negotiate and to just say no when dealing with third-parties. I hear that building list of direct buyers in a warm market is hard. I reply it's much easier than trying to convert strangers into buyers or to put together a string of galleries that you must monitor and support to keep your sales going.

Selling art is like all sales. It's a numbers game. If you get enough qualified eyeballs on your work, you hit your sales quotas. So, the question comes down to who controls the process of getting the traffic and who controls the relationships that ensue from them. Not so long ago, actions like these would be career suicide.

Smart, ethical galleries today are willing to work with artists who also sell direct. If everyone plays fair in such relationships, everyone wins.

REFERENCE:

You can find Barney Davey and his books and courses on Art Marketing News and on his Facebook Page
Read about my take on art galleries on A Guide to Art Dealers and Art Galleries
This is my guide to Open Studios
This is the website of Henry Hudson who makes paintings out of plasticine (see above image) - hence why my studio visit was so informative! Interestingly this was an event for collectors organised with the help of a magazine that helps promote art to collectors.

Subscribe to Art Business Info. for Artists - NEWS by Email
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The Artist as Market Maker - Damien Hirst

8/12/2017

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I've always maintained that Damien Hirst's real talent lay in marketing and selling. For me he is a classic example of an artist whose ability to work out how to market his art - and to manipulate the art market for his benefit - considerably outweighed his talent as an artist.

RECOMMENDED READ:
The False Narrative of Damien Hirst's Rise and Fall
by Felix Salmon in the New Yorker (6th December 2017)

This article is a "must read" because it highlights how Hirst has fundamentally challenged the notion of:

how art is sold
the role of the art gallery
the relationship between artist, art gallery and art collector
how much the artist gets when his or her art is sold to a collector

With the 2008 auction, Hirst moved out of the world of commodities, which are bought and sold speculatively with a profit motive, and moved into the world of luxury goods, which are bought to be consumed and enjoyed. Which is exactly what art should be!

It also focuses on the fact that by moving art sales to "direct sales" between artist and art collector, a considerable amount of art market data has moved out of the reach of those who purport to know about 'value'. All they know about now is the amounts which are in the public domain because of art sold at auction. That's not always where the important sales are done any more.

After (his 2008 auction sale) Hirst started selling his work directly to collectors, at scale, and stopped playing by the established gallery-system rules. Hirst’s galleries were furious, but there was nothing they could do about it. Freed from gallery constraints, Hirst could make the work he wanted to make, and sell it at whatever price his collectors were willing to pay.

Hirst is obviously an artist operating at the very high end of the market. He's ripped up the rule book and started to reinvent the art market.

After partnering with an auction house in 2008 to create a gigantic sale of his work, in 2017 he partnered with a Francois Pinault (the French luxury goods billionaire) and took over two museums to create an enormous thematic show and made the Venice Biennale an explicit commercial venue for buying art.

Hirst says that sales from his latest show, in Venice, reached a jaw-dropping three hundred and thirty million dollars as of early November.

One has to ask to what extent artists operating further down the food chain can do the same thing:

make what they want,
sell it where they want - and
dictate their own prices?

To my mind it's perfectly possible - but only if artists hone their marketing and selling skills as well as those related to creating art and partner with the right people and platforms.

We've already seen it to some extent with the achievements of those who have created a credible art business by selling direct to collectors online.

Now we need to see whether artists start partnering with venues to sell their art in new ways - just like Damien Hirst...

Like I said - it's a recommended read for those who acknowledge that marketing has a lot to do with how value is created in the art market.

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Want to set up an online art gallery with ecommerce?

28/4/2017

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I got an email this morning asking questions about the tax aspects of setting up an online art gallery and ecommerce which involved artists and paying customers who might be located anywhere in the world

Below you can read:

the email I got and the "short sharp" response I sent below.
a checklist for anybody thinking about setting up an ecommerce facility to sell art

What are the tax implications of selling art online?

This is the email. I've numbered the questions to make them more accessible online in a blog post

Dear Katherine,

Firstly, I owe you my sincerest gratitude for all the information you have presented on this website. It has answered many questions I had and for that I am grateful.

I am on the verge of launching an e-commerce online gallery and I was hoping you could answer a few questions for me. This my first time dealing with anything to do with e-commerce and selling online so there is still a lot I don’t understand.

1) Some of the artists who I represent do not reside within the UK or the EU, and there is no guarantee that any paying customer would reside within the UK or EU either. How would this affect me regarding tax?

2) When this business takes off, I plan on becoming location independent. How will this affect my tax status as I won’t be living within the UK but my business will be registered in Britain?

3) How would it work when it comes to putting an address on my invoice if I’m only in the same location for a limited amount of time?

Thank you again,
Kind regards,

Mr Gallery Man ( a pseudonym)

It generated a very "to the point" response from me!

Dear Mr Gallery Man

If you are setting up a business you need professional (i.e. paid) tax advice from an expert to make sure that:
- you are aware of all your legal responsibilities tax wise
- where you live and where you operate are tax efficient given who you expect your customers to be
- you get to keep your house because the tax man doesn't come looking for the tax that you have avoided - with penalties and a possible prison sentence
This is serious. You need proper advice. That's not going to come from me.

The next point I'd make is that I have seen any number of people have the bright idea of setting up an online art gallery operating through ecommerce in the last 10 years. I'd say round about 95-99% of them no longer exist.

I think you need to do more research about the marketplace and what sort of investment you need to make in time and effort - and contacts / social media following - to make it work.

My one piece of advice for you is if you have never run a business before and if you have never been involved in the art market before, run away fast before you waste an awful lot of money for no return.

Regards

CHECKLIST:
How not to get stung when setting up ecommerce!

Do thorough research first. You should never be starting any business where you don't fully understand the full implications. Those that do go out of business very fast. How anybody could be contemplating starting an ecommerce business without what understanding what they are getting into is beyond me!
Get professional tax advice if you plan to set up a business. You're an amateur. You haven't got a clue what you don't know about tax. Tax experts exist for a reason. Paying for tax advice is a legitimate business expense which is deductible against tax - so long and only if it is related to the business and not your personal income. If you can't afford the tax advice you definitely can't afford to set up in business involving ecommerce.
Understand the competition - you need to research and understand the business model adopted by your competitors. Those who are still in business after few years either know what they're doing, have good advisers, are prepared to keep going even if they're not making much money - and/ir the tax man has not yet caught up with them. Take a look at how where they are located and how they deal with local taxes on transactions for people living in different countries. Don't assume that what they are doing is correct, however it gives you a basis for an intelligent discussion with a tax expert!
There is no escaping tax liability - make sure you don't get landed with an enormous tax bill! - Governments have woken up to the fact that they are losing out massively on tax revenues through the amount of business which is now transacted online. Tax authorities are now paying a lot more attention to online businesses. You should assume that anything you are doing which evades payment of tax (whether deliberate or inadvertent) will result in a tax bill plus penalties plus a possible prison sentence. They are getting very serious about this.
Understand the differences in tax treatment of private sales vs sales via art dealers and galleries. What quite a few people don't understand is that private sales - between an sole trader artist and a paying customer are very different from sales via third parties. There's also a difference between a third party which hosts a site that enables artists to make contact with paying customers and those where the artist is represented by a gallery and sells art via the dealer/gallery online. The differences largely relate to thresholds for payments of additional taxes; liability for additional taxes unrelated to thresholds and whether they way the ecommerce is configured is deemed to be an evasion of tax.
Understand why Tax gets much more complicated when transactions are online. You have to make sure you observe the tax regime for where you live, where your business is located - and also where your paying customer lives. For example, with respect to the pursuit of lost income from tax on online transactions for digital services, the EU changed the treatment for all digital transactions in 2015. Now VAT is payable based on the place where the customer lives NOT where the artist or the business is located - and there is no minimum threshold for registration in another country (a total nightmare!). They're also not at all keen on people trying to get round this by saying they won't do business with anybody outside the country where they live - and were threatening penalties for this last time I read up on this!

EU VAT rule change
From 1 January 2015, the rules around the European Union (EU) VAT place of supply of services will change. This will affect the sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities for example, public authorities or charitable bodies). The place of taxation will be determined by the location of the consumer.
VAT: businesses supplying digital services to private consumers

Bottom line, if you are

operating as a sole trader as an artist or art tutor involving ecommerce
or you are hosting an online gallery with ecommerce facilities for selling art for artists you represent and/or other artists,

you need to be very careful that you have sought professional advice and checked out all relevant tax aspects for your particular set-up - which you have explained very clearly to your tax adviser. (NB Only telling them what you think is relevant isn't a helpful approach since you don't know what you don' know!)

Just because somebody says they operate in a particular way doesn't make that right or legal - unless they can produce the letter from their tax advisors explaining what they can and cannot do!

BTW I'm NOT a professional tax expert. You should make sure you also read the note below about what this site does not do.

You can learn a lot from authoritative tax sites online - but they don't have all the answers!

More information about tax and vat for artists

You can read more information on this website on the following pages in the Money and Tax section

Tax Tips for Artists
VAT for Artists

The information I collect, collate and organise on this website largely relates to information accessible to anybody from authoritative sites - either formal government tax authorities or professional tax advisers. Plus some common sense advice from me about how to organise your tax affairs.

What this site does not do

This site does NOT provide:

Definitive answers on all matters relating to tax records for where you live.
"Professional advice" available from somebody with a tax qualification and current expertise of tax affairs anywhere in the world.

I recommend that you pay a professional for tax advice IF:

your tax affairs are complicated
you have a specific tax query which you can't find an answer to from official information available online.

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Income Tax: The nine badges of trade

29/1/2017

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In the UK Income tax is charged on “the profits of a trade, profession or vocation”.

You are assessed as trading and therefore must do a tax return if you exhibit one of the nine badges of trade. But do you know what these are? See the box below for an explanation.

First you need to note that a lot of tax law focuses on "the asset”. However there isn’t a lot of tax case law relating to artists - so what follows is my interpretation.

Please note that I’m NOT a tax accountant and if you need professional advice you should pay a professional!

For what it's worth, in the case of an artist I read “ the asset” as meaning either your stock of equipment and materials used to generate sales (which has a balance sheet value); or your stock of artwork (which has a balance sheet value) which is exhibited and sold over time via exhibitions, online, art fairs or wherever to generate an income.

The nine badges of 'trade'

One of the reasons why HMRC wants to know whether or not you are trading is because it needs to know what sort of tax to apply to your income.

For example, money you receive can be a taxable receipt that can arise in a number of ways. These are:

self-employment income subject to income tax and class 2 and 4 National Insurance contributions (NICs);
capital subject to capital gains treatment;
some form of investment income, taxation depends on the taxable status of the individual or organisation that received it

Or it might be a non-taxable receipt.

Below are the Nine Badges of Trade which HMRC have declared to be indications of trade - and my interpretation of how these apply to artists.

Please also remember that at the end of the day what matters is if you generated trading income or intended to trade - NOT how much profit you've made.

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Be smart about Vanity Art Galleries

15/1/2017

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The Vanity Gallery is a new page on my website.

Take a look If you'd like to know which artists vanity galleries tend to target and how they operate.
Plus how to be smart if one of them contacts you or you need to check a gallery out.

I've extracted all the information relating to Vanity Galleries from my Alternative Options for Exhibitions page and created a page which is entirely focused on the characteristics and risks associated with Vanity Galleries.

It covers:

What is a Vanity Gallery? Plus reasons to avoid them.
What's NOT a Vanity Gallery - legitimate options where artists 'pay to display'
How to recognise a Vanity Gallery
PLUS How You can be Smart about Vanity Art Galleries - Checklists of questions to ask covering Target audience, marketing, gallery artists and exhibitions, financials and paperwork - including consignment contracts.

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Art Business Info: NEWS

How to sell your art in 2018 and beyond?

How to sell your art in 2018 and beyond
by Barney Davey

The Artist as Market Maker - Damien Hirst

Want to set up an online art gallery with ecommerce?

What are the tax implications of selling art online?

CHECKLIST:
How not to get stung when setting up ecommerce!

More information about tax and vat for artists

What this site does not do

Income Tax: The nine badges of trade

The nine badges of 'trade'

Be smart about Vanity Art Galleries

Art Business Info. News for Artists

Visitors so far

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Art Business Info: NEWS

How to sell your art in 2018 and beyond?

How to sell your art in 2018 and beyond by Barney Davey​

The Artist as Market Maker - Damien Hirst

Want to set up an online art gallery with ecommerce?

What are the tax implications of selling art online?​

CHECKLIST: ​How not to get stung when setting up ecommerce!​

More information about tax and vat for artists​

What this site does not do

Income Tax: The nine badges of trade

The nine badges of 'trade'

Be smart about Vanity Art Galleries

Art Business Info. News for Artists

Visitors so far

Author

Archives

Categories

How to sell your art in 2018 and beyond
by Barney Davey

What are the tax implications of selling art online?

CHECKLIST:
How not to get stung when setting up ecommerce!

More information about tax and vat for artists