Art.com is not acting like a company in pre-IPO mode, or at least that's how it appears to this observer. The company recently announced changes to its contract with self-representing artists only to get a loud, rancorous response as typified by a month long 13-page thread on the Online Visual Artists board titled AR & Sistino firings. Apparently, many staff members of Art.com subsidiary sites, Sistino and Artist Rising were fired en masse on May 10, 2007. These firings might be construed belt tightening as the company moved closer to its IPO. But, in concert with other goings on, it seems less likely the case.
The company bumped the commission on art from 10% to 15% at the same time it took away the lucrative 10% it formerly paid for framing sales. Anyone who has been around the print business, or had a print custom framed for that matter, knows the larger portion of the cost is in the framing. The change has the net effect of cutting artist's income from Art.com.
Further exacerbating the situation are new policies governing which art gets shown on Art.com. When artists originally signed up for paid galleries, it was with the assumption their art would be seen on Art.com. Now the company is saying it will move some art and artists exclusively to the ArtistRising.com site. Also, traffic to the Sistino.com will be integrated into the ArtistRising.com site making it easier for buyers to find art on either site. But, for artists it's a blow to be moved to ArtistRising.com's site when they have come to rely on the visibility from the heavily trafficked Art.com site.
There are also reports of artists whose rankings on the Art.com Web site to have been relegated well off the top. This has the effect of chilling sales for those artists. There are reports of artists receiving favoritism, which while perhaps not democratic or maybe even the best way to operate, is the company's choice to make. Whatever right the company has to rank artist's work, it can be said it's not good public relations to do so in a way to anger artists and without explanation of why some are treated better than others when all are paying the same gallery subscription fees. You can only imagine the reaction this Non-Disparagement clause that has been added to the artist's contract:
You shall not make any negative or disparaging statements (orally or in writing or in any medium, including the internet) about us, the Website or the Program.
Dan, the intrepid erudite blogger who pens Empty Easel offers insightful commentary on the changes in these posts: Is Artist Rising Dead? and Changes in the Works for Artist Rising. If this weren't enough bad press, there are a couple of notable ongoing threads on Wet Canvas: Changes at Art.com/Sistino/ArtistRising and, An analysis of Web sites selling art online that delve into the changes going on at Art.com. Stirring up this much animus and angst is not what most would consider smart action for a pre-IPO company.
The company still boasts of its pending IPO (Initial Public Offering) on its Web site's Careers page and in its help wanted classified ads on Craigslist.org. However, a search on the Wall Street Journal, Google and Yahoo sites for "art.com IPO" yielded no fruitful results. A search for "art.com" on the Securities Exchange Commission's www.edgar.com Web site found zero results. On the pay for research Pro Edgar site a listing for Art.com dated January 26, 2005 is found. If you want to pop $300, you can sign up for a quarterly subscription and get the filing. Since this is around the time Allposters.com bought Art.com, it's safe to assume the dated information would be irrelevant.
THE HISTORY OF ART.COM IS A LESSON IN THE VALUE OF A URL
William A. (“Bill”) Lederer founded Art.com, an Internet-based company pioneering the delivery of online art, custom framing and art-related products in 1998. At the time, he paid a princely sum of and near record price of $250,000 to obtain the art.com URL from Advanced Rotorcraft Technology, Inc. Most thought it was pure folly on his part to put so much money in a name. Most were wrong as Lederer went on to sell the company to stock photo image supplier, Getty Images. The sale price was purportedly $200 million. However, after negotiations over the valuation concluded, according to Getty the final price was $115.7 million, which it paid in stock for Art.com in 1999. Whatever the final sale price, Lederer's vision paid off incredibly well.
Getty did not fare as well with Art.com as did Bill Lederer. Its purchase of the company came at the time the investment lunacy of the dotcom era imploded in tulip bulb mania fashion. The company was sold to the founders of www.allwall.com. Allwall was founded in 1995 by then-young entrepreneurs Joshua Chodniewicz and Michael Marston. They bought the Art.com name and assets from Getty Images in 2001 for far less than Getty's purchase price from Lederer. According to the Internet Archive Wayback Machine, the www.allwall.com site first appeared on the Internet in 1998, although it's home page back then claimed on the Internet since 1995. Whatever the case in 'Net time it is ancient history.
Chodniewicz and Marston cashed in their investment in Art.com in 2005 splitting nearly $10 million in investment firm dollars between them and corporate jobs to boot. Neither are listed on the current Art.com's leadership team page. The latest iteration of Art.com is what artists are grumbling about today. It is a most unhappy group of campers and making a messy most unlikely scenario for a company purportedly in pre-IPO status. With the current state of affairs, it appears they made a good decision to sell when they did.
What is not being grumbled about on the artist's discussion boards is the word that payments to poster publishers are being held up. In some cases, shipments to Art.com are being withheld until accounts are brought current. Also, orders to poster publishers have slowed which may mean the company's cash flow is impeded and may be part of a vicious cycle problem with the slow pay to publishers. Anecdotally, more than one gallery has reported using Art.com only as a last resort because posters too often are damaged when received .
Art.com is selling wall decor. Virtually every category of home decor is suffering now as we work through the plunge in home values, overbuilding by developers and the fallout from years of ill-advised sub-prime lending on mortgages. Home Depot recently announced deep profit loss projections for 2007. Home builder stocks are tanking. It's probably not the best time to go IPO anyway.
It would seem far better advised for Art.com to use this time to get its act together. It is an incredible franchise, but right now it needs work. Let's hope for the sake of those artists and publishers that have come to rely on Art.com as a chunk of their annual income that the company rights the ship, starts growing sales and mends its fences with artists and publishers alike.
