ArtExpo Las Vegas & Decor Expo Atlanta Shows Mirror the Market - Part Three

New Capitalism, the Future of Tradeshows (Part Three)

I assume there will be another ArtExpo Vegas show next year. That said it's doubtful, unless the economy magically revs beyond wildest expectations, a majority of exhibitors this year will invest more heavily in it next year. There was plenty of guessing about how the results of this show would affect the ArtExpo New York show, little of it with a positive vibe. That is, West Coast artists and publishers tired of the travel and expense of going to New York would love to have a viable show in the region. The question for them now is do they continue with the headaches and expense of distant travel to New York, or do they speculate hoping Vegas will grow into something more promising?

Regarding speculation, the rumor persists show owner, Summit Business Media LLC, has its art and framing properties on the block or has advanced to negotiation on a sale. Given the art & framing group is the equivalent of a redheaded stepchild among the financial media properties owned, being pursued and assembled by the still relatively new self-styled financial services media business, it seems a reasonable guess.

Rumors Even in the Best of Times Run Rampant

Such rumors gain credibility when there have been no public statements from the ownership to indicate otherwise, or that it has long range plans for its art and framing properties. Whenever a vacuum exists, rumors rush in to fill the void. In this case, they look to be more on the accurate than the wild side to many observers. Time will tell as an entire industry waits to learn what will become of flagship shows and magazines that help form and lead it.

Tradeshows are designed to be opportunities to write new business and make new contacts for exhibitors. Over time, this model for art & framing tradeshows has evolved into less selling opportunities, but has remained viable for opening new accounts. Decor Expo New York was such a show, especially for meeting international buyers. However, as buyer levels dropped and expenses continued to rise, exhibitors began to abandon ship and ultimately caused this cornerstone show to come to a sad and somewhat surprising end after more than 25 years.

Getting the Shows Back on Track is Paramount

ArtExpo New York remains a moderately strong show for both new and repeat buyers and some decent retail sales for exhibitors geared up for it. But, it is also well off its high and with the continual rise in cost to exhibit and attend it will be hard for it to regain traction in booth sales and buyer traffic, especially since increasingly unfun and expensive travel is involved.

Although arguably still the most important show for fine art reproductions and mid-range price originals, ArtExpo’s pace is slowed by changes in the industry, the economy and housing market. While well-established players can make a go of it, newer exhibitors have fewer buyers to form relationships and open accounts with. And, the buyers who do come open to buy are very selective in what they are looking for. This is a viability problem for the show producer with results extending to all who stand to profit from a successful ArtExpo New York.

For years, the Atlanta Decor Expo show was a counterpoint to New York for most art publishers in that it was an order writing show. But these days most publishers sample their best buyers in advance of the show, so it too has slipped from order writing to a make new introductions and open accounts type show. That works for a while, but when a show starts to lose buyers and fewer orders are being written as in the past, exhibitors rethink how much they can afford to spend on a show.

Exhibitors experiencing rapidly rising costs against diminishing returns is what ended the Decor Expo New York show, and the same slightly less accelerated pattern is now causing noticeable ripples in the Atlanta Decor Expo show. To check that concept, one only need to look at how many important art exhibitors took less space in Atlanta, or in some cases skipped the show altogether. This is a systemic problem that goes beyond the cheap oils knockoffs mentioned earlier.

Counting advertising pages in all the magazines tells a similar story. For instance, the September issue of Art Business News, which would get distribution at both shows -- a huge selling point -- was a skimpy 78-pages with cover. In better times, the page count would have been at least double if not triple. The low ad page count implies low expectations and confidence that a decent ROI (Return on Investment) can be had from advertising in trade magazines. Trade advertising and tradeshow exhibiting go hand-in-hand. Given the report here on the shows it is no surprise the magazines also are struggling.

Certainly, no one who has an interest in the well being of the industry takes pleasure in watching these types of results unfold. All have too much to gain from good shows and too much to lose from poor ones. The inference from observing a reversal of fortune for the tradeshows and trade magazines that serve our industry is that they are a direct reflection on the fortunes of the industry as a whole. It can be debated what transpired to put the industry here. But, if it is to recover, it needs to be understood how it got to where it is. Changing market conditions are at the forefront, but changing ownership of the media and tradeshow properties have had an effect as well. As mentioned before, it’s difficult, if not impossible to fix long-term problems with short-term thinking and goals.

Market Forces Have Hurt Our Industry – New Capitalism Doesn't Help

It seemed a fitting time for an appearance by John Bogle, the 77-year old esteemed mastermind and creative force behind The Vanguard Group on Bill Moyers' Journal the same weekend as the Vegas show. The rest of program with its reports on the War in Iraq was compelling and I commend it for watching online using the link above. Bogle's insights were telling and apropos to the what's happening to the largest magazines and tradeshows that serve the art and framing industry. Here's a partial transcript:

JOHN BOGLE: What we've done is have you know, what I call in the book, a pathological mutation of capitalism from that old traditional owners' capitalism to a new form of capitalism, which is manager's capitalism. The evidence is quite compelling that today corporations are run in a very important way to maximize the returns of its managers at the expense of its stockholders.

BILL MOYERS: Its CEOs.

JOHN BOGLE: Its CEOs, well, the upper level of five or six top officers. And they get enormous amounts of pay for actually doing very little. I'm a businessman. Listen, we all-- we chief executives get an awful lot of credit that we don't deserve. Real work in companies is done by the people who are getting themselves together and doing the hard work of making companies grow—

BILL MOYERS: And, yet, these--

JOHN BOGLE: every day.

BILL MOYERS: These are the people who most often get laid off, right?

JOHN BOGLE: They get laid off. And, of course, the ironic part of that is they often get laid off — used to be called downsizing. But, of course, in today's America, it's called right sizing. They get laid off. That reduces expenses. That increases earnings and that means the CEO gets more. Just think about the country for a minute. For an agricultural economy, 95 percent, 98 percent agricultural when this country came into existence. And even by 1850, half agricultural.

Now it's about, they moved from agricultural economy, to a manufacturing economy, to a service economy. And now to a financial service economy. And the financial service economy is what troubles me. Because it's diverting resources from the investors to the capitalists. To the entrepreneurs. To Wall Street. To the investment bankers. The hedge fund managers. To mutual fund managers. And that is a negative to our societal values.

Where agriculture and manufacturing and services, I mean, I'm perfectly willing to give a high value, for example, to art and poetry and literature. They add value to society. It may not be easy to measure it in a society that measures too much of what's not important. And not enough of what is important. As the sign in Einstein's office says-- "There are some things that count that can't be counted. And some things that can be counted that don't count."

Another quote attributed to Einstein is: “We can't solve problems by using the same kind of thinking we used when we created them." The industry and the shows and magazines that serve them are in flux. They have been owned and managed by those who have a short term mentality with regard to maximizing profits in the manner John Bogle called "New Capitalism" has had an effect.

To be fair, Summit Business Media in its year of ownership has not offered insight regarding its stance on long term investing or how it sees the art & framing group fitting into its matrix of otherwise financial services products. Nevertheless, it's an easy and likely a safe guess long range plans for the art & framing group are not in the cards.

Changes to Make the Industry Stronger and Better Must Be Fresh, Be Committed and Come from Within

If there is a fix that can be made to help the industry find a reliable model of growth for artists, publishers, exhibitors, tradeshows and magazines, it has to come from courageous creative thinking. Further, it's who would believe anything less than a dedicated long-term multi-year commitment to fixing the problems can truly have any meaningful effect.

For me, and many others, there is no better example of how to profitably run a company with long-term goals than warehouse retailer, Costco. Against the advice and will of Wall Street, it’s CEO, Jim Sinegal, has bucked the trend of lowering pay and increasing margins. He has adamantly kept pay well above industry averages. The average Costco hourly wage is $17.50 with terrific benefits. Not surprisingly, morale is high and turnover low.

Sinegal stubbornly refuses to mark up any item in the chain more than 16%. Coupled with low prices and quality goods the company absolutely stands behind, it engenders tremendous customer loyalty. With an average HHI (Household Income) of $75,000, the company is the envy of its rivals. Costco’s better than average 3rd quarter results sent the stock soaring to new highs proving Wall Street naysayers and “New Capitalist” champions all wet and wrong.

The reality is quick fixes and short-term solutions are not likely to have any effect in turning art and framing tradeshows around. If that’s the case, then we need to ask what will. Maybe things are just broke and can’t be fixed or turned around. Maybe it's a matter of riding out rough times and waiting for the housing market to rebound. Or, maybe the whole paradigm around what the magazines and shows mean to the market needs to be re-examined. My money is on the latter. Whatever the case, having those with long-term thinking in place is the best way to ensure the best outcome for the industry.

It’s obvious doing things in the same ways as always is not working well. The recent Las Vegas ArtExpo is an example. Undoubtedly, those who worked on organizing, selling and promoting the show, did their best to deliver the best show possible using the same methods as always. I heard complaints the show was not well promoted. I doubt that that was the case as it's in the best interest of management to put out the best show possible whether to gussy it up for sale or drive interest for next year. Further, I'll venture a wild guess that doubling the budget for promotion would have made a big difference. The problems go beyond throwing money at them.

I asked one veteran exhibitor what his thoughts about the Vegas show were. He responded with, “High hopes and low expectations.” No new show can sustain or gain necessary momentum based on low expectations. We have to change the latter to high expectations for all the shows if they are to remain a viable source for bringing together wholesalers, retailers and consumers. By extension, the magazine’s are in the same boat. It’s often been said tradeshows are living magazines and both entities are in need of some resuscitation.

Just going along doing things the same way and hoping and waiting for better days is a prescription for disaster. What worked in the past is not working so well now. We need to understand what are the new dynamics regarding how art gets on a buyer's wall. What new distribution channels are disrupting the old ones? Can the old ones be used in new ways to augment and support new channels? If we start asking and getting answers to these kinds of questions, there is hope traditonal media and shows will not fade away.

More of the Same Is Not a Recipe for Future Success

While Summit Business Media's plans for the art and framing group remain confidential, it’s probable less than pretty outcome for anything it does will be predictable as long as they are made with short-term goals in mind. The art business, as with other industries constituted primarily of successful entrepreneurs who got there doing it their way, is never short on those with opinions. This includes influential people from the ranks of gallery owners, publishers, artists, art reps, art dealers and others who profit from the business. Despite doing it "their way,” common attributes in how they arrived at their level of success could be ascertained and cataloged in the past. It's safe to say because of the changes within the industry virtually none could follow the same path today and enjoy the same results.

That said, if these strong willed mavericks could be brought together to discuss and brainstorm what the future holds and how to cooperatively work together with the shows, media and each other, it might produce some thinking beyond what has landed us where we are today. Short of such summitry and input, as long as important shows and magazines remain under ownership that decides not to report on newsworthy items about itself and holds short term gains as discussed by John Bogle with Bill Moyers above, the outlook will remain far from rosy.

We need to start looking at new ways of doing things. I had a blog post a while back titled, “Prince and the Art of Monetizing Free Stuff.” It described how he gave away 3 million copies of his new CD in England through newspaper inserts and more than made it up on concert ticket and merchandise sales. The band, Radiohead, which currently is perhaps the best band in the business, is selling its latest album exclusively through its Web site rather than through traditional distribution channels, i.e, record companies, Wal-mart, iTunes, etc. What make things far more interesting, the band is letting its fans choose the price they wish to pay for the download. Yep, you can pay nada, zip, zilch if you so choose. You can be sure players from every aspect of the industry are watching to see how this paradigm shift plays out.

Impending Catastrophe or Inspiring Challenge?

In case you haven’t noticed, Larson-Juhl, has launched an art Web site called Artaissance. L-J is the world’s largest picture frame moulding supplier. Berkshire Hathaway, which is the parent company for Warren Buffet’s extensive holdings, wholly owns it. Long the most influential company in the art & framing market, especially on the framing side, it’s now set its sights on the art market. Is this ominous? Of course, to a degree any time such a large company makes a big move, it’s ominous for anything in its way. Ask any small town retailer about Wal-Mart.

From a business perspective, Artaissance is a smart move. CEO & President, Steve McKenzie, is an artist and art aficionado himself, so it plays on a level of true personal interest. More to the point, having an online art site curated by Larson-Juhl allows the company to send the open edition giclée prints it sells to one of its local frame shops to be finished. It’s a neat piece of business to compete in the art space and use the product to help keep its retail operators in business. Could L-J have collaborated with existing art publishers and artists? Yes, but only at the risk of losing control or never having control of the product it is sending to picture framers.

Maybe the decision is not the most industry partner friendly move to make, but inarguably the best for its ultimate goals. For one, its decision is aligned with my longstanding vision of not limiting giclée prints, and that alone may have been enough reason for many hidebound publishers to not want to work with Artaissance. Meanwhile, Artaissance takes full advantage of one of print-on-demand’s best selling features by offering art printed to any size they want within printer and aspect ratio limits. How friendly? How smart?

These examples don't necessarily translate to convenient solutions to fixing this industry's problems. But, they are talking points and nudges for those who care, have a stake and want to be in the conversation on what the future of the shows and magazines will look like. Hopefully, these examples can be used to stimulate their thinking on how to shake things up and drag the old business model out of the last century.

The industry is faced with tremendously complex problems right now and out of them we stand to either have a meltdown or to rise to new heights by following new paths to help unite artists with galleries and collectors with art appropriately framed make its presentation most grand. How those with the greatest ability to influence the outcome act now will shape the future of the business.

In the meantime, those artists who can are using their own online sites and commercial sites such as www.art.com, www.boundlessgallery.com, www.imagekind.com and www.ebsqart.com to name just a few. Basically, they are being proactive and are not waiting for an outcome on when and if the shows and magazines will return to form as premier vehicles to help them market their art.

Not unlike the aforementioned Radiohead, forward thinking artists and publishers are using blogs and eBay, painting-a-day sites, ACEO art cards, and other methods to find collectors on their own. It seems surprising these online sites are cropping up all around traditional media when traditional media ought to be creating them or acquiring them. To that end, F+W Publications, the very large media company with a stable of art-related media properties, including industry leader, The Artist’s Magazine, recently got in the game when purchased Wet Canvas. WC is the largest artist discussion board on the Internet. As the first serious foray from old media to new, it will be fun and interesting to see how nimble and adept it is in meshing the two very different formats.

Priceless Free Advice

The best advice I can give artists and publishers is to know what you want to achieve with your business model, know who your customers are, know who and where your prospects are and to utilize every available means to reach and influence them.

If you haven’t begun a plan to brand yourself or your company, start now. A blog is perhaps the easiest and single best means of doing it. Engage new media such as blogs and Web sites with vigor. Challenge old media to come up with new ways to help you achieve your goals. Find ways to take your art direct to your customer and prospect base.

Create art you can work with to stealth or guerrilla market where you are succeeding in ways not obvious to competitors who will seek to take market share from you. Use publicity extensively and wherever possible. Stay nimble and creative to take advantage of niches you can exploit.

Don't give up on the tradeshows and magazines. Use them fittingly to help you brand yourself, but don’t plan on them providing the marketing muscle they once did, at least not until you see viable signs of change with them. Become inspired by the challenges to get out of your comfort zone and find new ways on your own to get your art to market. Stay tuned here, I'll be offering all the best advice I have and can find from others.