Why it's MANDATORY to Own Your Own Distribution Channels & Customers

In this episode, Nick and Patrick passionately discuss the importance of artists and photographers owning their distribution channels and customer relationships. The duo explains how relying on indirect sales through galleries and third-party platforms can be detrimental, particularly in unpredictable times like the COVID-19 pandemic. They stress that building a direct business is the only sustainable strategy for consistent income and long-term success. They share insights from their own entrepreneurial experiences and emphasize the critical need for artists to shift their focus away from indirect channels to avoid future pitfalls. The episode also highlights their free consulting sessions and a special offer for joining Art Storefronts.

Podcast Transcribe

Patrick Shanahan: I wanted to rant a little bit about this concept of why it's mandatory to own your own distribution channels and customers, and I suppose we dragged on the business model, which is a direct business model. I think the reason why I'm so charged up about this is that you and I assumed this was common knowledge. It is not common knowledge; it is not uncommon knowledge. Let me give you sort of the intro, the easiest way to think of it. If you're an artist or a photographer with your business and decided you need to raise a little bit of money to go to the next level, and you walked into a bank and said you needed a loan, or you walked into a venture capitalist's office to raise money for your business and said, "My business is selling art or photography. I sell it online and offline, but I don't own any of my own customers, and I don't own any of my own traffic," meaning you sell through galleries, they control all the customers and the traffic. You sell through online galleries, Etsy, Saatchi, Fine Art America—any of those—they control all the customers, they set all the rules, and you don't own any of your customers yourself. You would get laughed out of the room by both the bank and by the venture capitalist.

Nick Friend: It's not that we're suggesting a photographer or an artist needs to go raise money or that's a part of what you're doing, but it suggests they would not be inclined to give you money because the odds of that business surviving are not worth investing in. That's not a path to a viable, long-term, sustainable business. It's just not, right?

Patrick Shanahan: Here's the thing: anybody that's ever run a business in any industry knows that there's only one way that you want to go, and it's direct. End of story. You watch Shark Tank, you'll hear Mark Cuban talk about it: launch your website and sell direct and start marketing direct. It doesn't matter who you talk to; you build a direct business. What we have found, though, in our live sessions with non-Art Storefronts members, because every Art Storefronts member is going direct, every single one, because that's what we do, right? We're helping them go direct. What we didn't understand is how this isn't even common sense in the art industry. We need to unpack that, we need to talk about that and unpack that as to why, but let's do that in a second.

Nick Friend: Selling direct is the only way that you end up with consistent income, a business that you can count on. This is the source of the starving artist problem. I'm telling you straight up, you guys want to know what it is? This is it. This has always been it. Ninety out of a hundred people that we talk to are building an indirect business, which is the wrong strategy and is going to end up with no consistency and usually failure. Especially during this pandemic, right?

Patrick Shanahan: Dennard got wet, took people that were only selling indirect, like the galleries, and brought them to zero dollars in sales in a heartbeat. All the shows were shut down, all the galleries were shut down, they just got totally shut down. That is an extreme example of what happens when you don't sell direct and market direct and have a direct business. You can be pulled out at any time, any plan, any time about it.

Nick Friend: It's been the number one lesson. You have to get your strategy right upfront. If you don't get this right as a photographer or artist, and for those of you that are listening or watching and you've been wondering why you haven't had consistent sales for the last five years or three years or ten years that you've been after it, just think about it. You have been probably running an indirect business. You've always been suspending your mind, sharing your thoughts and your energy, and even money on selling indirect. You want another look, more galleries, more online galleries. You're always uploading to third parties. Can I get a distributor? Can I get a commercial interior designer or something like that? It's always third parties.

Patrick Shanahan: We should define distribution channels. You have your business and you have the sales channels, the distribution channels that you sell in, right? Let's say you're going to craft fairs and art shows, that's one channel. Then you've got sales on your website, that's a channel. Then you've got a gallery down the street, that's a channel. Maybe you've got yourself up on Etsy, that's a channel. You only own the ones that you own. Everything else can have the rug pulled out from under you in two seconds, and it's not sustainable. It is building a castle in a swamp. That's what it is; it's going to sink down into the swamp. It might be safe for a couple of weeks or a year, but it's going to sink down into the swamp.

Nick Friend: Exactly, and look what's happening right now. The governor of Texas just came out, we're in Austin, Texas, and he just said yesterday that everyone should stay home unless absolutely necessary. Only for essentials and emergencies. Here we are again, right? The governor of New York said yesterday that if you come in from Texas, Arizona, Washington, Florida, there's a chance you have to quarantine for 14 days in New York. We are not out of this. A week ago, there was a salmon coronavirus that emerged in China, and they just locked down again. This is a wild time that we're in. You cannot wait for anything.

Patrick Shanahan: We were on one of our Zoom sessions with non-Art Storefronts customers, providing free art business consulting. If that's you and you need help, we will be doing this tomorrow again. Patrick and I are doing it tomorrow, so get on our email list and like us on Facebook so that you can get notified and join the Zoom call. We'll help you for free. We had somebody a couple of days ago, and it's a perfect person to talk about this. She came on and said, "All my galleries are shut down and I can't do any art shows. How are you guys like Saatchi Art?" I couldn't believe my ears. This guest is from Palm Springs, California, and she got the whole rug pulled out from under her. All these galleries and shows are shut down, and she's asking for another gallery. Have you not learned your lesson?

Nick Friend: She didn't understand. It was the first time anyone told her. She didn't realize that her whole business was running an indirect business strategy, and that's the reason she's in this position right now during this pandemic. She needs to understand that because she's about to continue it with what she's asking. The way she built her business is why she's in this position. It's her fault she didn't understand. Nobody ever told her that an indirect business model is the worst way to build a business, and it will always fail. You'll always get the rug pulled out from under you because you don't own anything. You need to move to the direct business model and invest in it. Even if it's the first time you've done it, you have to start ASAP because it's the only way. This is the biggest lesson we can pass to everyone we talk to. If you get this decision wrong upfront, you're literally going years down the road and it's not like you can just jump over. You lose all of that time.

Patrick Shanahan: Exactly. You lose all of that time because when you decide to start building a direct business, you finally learn the hard way. You might make some progress, get some galleries to represent you, but then some of them drop off. They don't represent you anymore, they take less of your work, or they can't get the traffic they used to. You don't get as many sales from them. All these things happen, and you're just in this hamster wheel constantly. You're like, why is it going nowhere? Because you got the strategy wrong from the start.

Nick Friend: It's like you're settlers in the 1200s, and you build your little settlement with your house and crops. Everything's fine until you hear the war drums, and the barbarians run in and destroy your whole city, your crops, everything. You have to build a moat and walls. The moat and the walls are when you own your own distribution. Whenever the barbarians are at the gate, like the next pandemic or more protests that shut everything down, you've got a moat and walls to defend yourself. Your business is sustainable at that juncture.

Patrick Shanahan: It's infuriating, but the reality is no one tells you. No one tells you it's not a sustainable future to not control your own distribution channels. If it was extremely difficult, I'd understand, but it's not. Own a couple of them and market so you have attention. Every single photographer and artist can and should do it. If you don't, you're just leaving your city open to get conquered. If something like this happens, I could take any photographer or artist right now, anyone, and if they have problems, I can tie back their problems to this. Every time.

Nick Friend: Exactly. The reason you've been struggling for so many years is because you didn't understand. Nobody ever told you this, you never learned this about business or entrepreneurship. It's the saddest thing. Having been in the art industry for 20 years, to sit here and see this, you go, I can't believe this. This doesn't happen in any other industry. It's happening in this one. Why? Because you have the art galleries, publishers, online art galleries like Fine Art America and Saatchi Art. It's not like anyone conspired to do this. It's just that photographers and artists just go, "I guess I should upload to these sites. I guess I'm supposed to go after galleries ." Everyone else is doing it.

Patrick Shanahan: Exactly. You're following sheep off a cliff. That's what you've done. Straight up, you have followed sheep off a cliff. We're stopping it right now. If you're listening to this, you're getting gold information. Gold information. We're not in the slightest suggesting you ignore the distribution channels you don't own, but they are part of an overall blended revenue stream. Eighty percent of your revenue should come from channels you control, the other 20% from the rest. Great, we love that. But you do not do it in lieu of building your own that you own.

Nick Friend: It's like you and your neighbor. Someone explained to you that you need to put money away in a 401k because you're not going to be 30 years old forever. Eventually, you're going to get old and need to retire. No one told your neighbor, and all of a sudden, you're 65 and it's time to retire. You're sitting there with this giant pile of cash, and your neighbor is going to be working for the next 10 years. He hasn't saved for retirement. All someone needed to do was tell you to incrementally put money into this account. If you do that, you're set. It was that simple. You lived the same lifestyle as your neighbor did for 25 years. They could have done it too; they just didn't know. That's how you save for retirement.

Patrick Shanahan: They have to get this one right. No one told them. No one has told these people that you need to do this, hence why we're doing this right now.

Shandell: If I'm a new artist and I'm starting to put my art out, should I try direct and indirect sales or stick with only direct sales?

Nick Friend: Eighty percent to a hundred percent of your sales should come from direct. What Patrick and I are saying is the indirect is the gravy. You're not out there pursuing galleries. If you get some galleries, awesome, amazing. If you get some third parties who want to sell your artwork for you, congratulations. But just understand that will not last forever, and it will go away. One hundred percent guaranteed it will go away, which is why it's not worth your time to spend money, effort, or energy on a channel that can get taken away from you. Ninety percent, if not a hundred percent of your time, should be on the direct. Period. Look at any photographer or artist who's making real money. They are one hundred percent direct. They're not even ninety-nine percent. They're literally one hundred percent direct. They have their own galleries, their own art gallery website, and that's it.

Patrick Shanahan: Exactly. Some of them might sell in other galleries, but it's five to ten percent of their total sales. Shandell, focus on direct and direct only. If a gallery contacts you or you happen to be walking by one, great, but don't put your time, energy, or effort into anything you don't own. Direct is what you own.

Nick Friend: It takes time to build. Realistically, it takes three to five years until you start running and firing on all cylinders. Then, seven to nine years to build a sustainable business. Once you understand that and start working towards it, you're making substantive daily progress in your business. Everyone thinks they're going to get going in month three and have a brand new Mercedes in the driveway. Tell me who has a brand new Mercedes in three months? No one, except people in the inheritance business.

Patrick Shanahan: Aside from that business, there's no one. There's no one that even does it in two years or three years. They go to jail afterward. Three to five years to start picking up steam, it's not that much time. In the grand scheme of things, it goes by like that.

Nick Friend: We have to leave it there. Do you have anything else?

Patrick Shanahan: Just another question on YouTube. Do you guys have comparisons of Art Storefronts compared to other similar solutions like Printful?

Nick Friend: We are not like Printful. We are nothing like them at all. I would suggest requesting a demo if you're interested in joining Art Storefronts or looking into more of what we do. Request a demo. One of our team members will go over everything we do very slowly and in detail, learning about your goals and what you're trying to do. That's the best way to understand exactly what we do.

Patrick Shanahan: When we do one of our live Zoom sessions with non-customers, which we are doing tomorrow, you can come on and talk to us. Come on and talk to us about what you're up to, Shandell. You can do that too.

Nick Friend: I'm sending them information on how to get in.

Patrick Shanahan: Okay, great. There's absolutely not an age limit. You can start in your 70s or 80s and build an asset that you can pass off to someone. Are we getting fired up?

Nick Friend: We are. Do you know what though? Patrick and I started a clothing company when we were 18 together.

Patrick Shanahan: You were 16 and I was 17, maybe something like that.

Nick Friend: Here's the thing though. Do you know what drove me nuts back then, and I know it drove you nuts as well? We had to sell through all the retailers. There was no online yet, the internet hadn't happened. We were forced to go to trade shows and convince individual clothing stores in Southern California to sell our stuff. Meanwhile, we were doing direct promotion ourselves through our friends and parties and colleges. That was very good, but we had no other way of getting distribution. I think that's what set us off from the beginning, learning a hard lesson. Here we are 24 years later, many businesses later, hundreds of millions of dollars in sales later, and we've lived it in so many different ways. I've lived it with every company I've started. It's such a visceral thing, a painful thing, and that's where it comes from. We've learned the hard lessons. Every other entrepreneur and business owner understands direct versus indirect. We've all been burned by indirect.

Patrick Shanahan: Exactly. When you understand that, you go, I'm never spending a minute on indirect again. When it gets pulled out from under you, you're like, what just happened to my life? Everyone who is reliant on galleries and shows, everyone during this pandemic. The reason you're in this position is because of a strategic decision you made or didn't know you made, whether you built your business on sand, which is indirect, rather than on rock, which is direct. All we care about is helping artists and photographers build businesses that are direct. End of story. If you do this, you will thank us in two, three, four, five years. You will be thanking us going, oh my goodness, nobody ever taught me that lesson.

Nick Friend: Okay, so tomorrow, what time are we on for non-Art Storefronts customers?

Patrick Shanahan: We haven't set it. Should we do the same time? They like the afternoon. Let's do the same time.

Nick Friend: We normally do 11 AM Pacific and 1 PM Central on Fridays, but we could do 1 PM.

Patrick Shanahan: Let's do 1 PM. Alright, guys, so we'll do 11 AM Pacific, 1 PM Central, 2 PM Eastern tomorrow. If you're not an Art Storefronts customer and you want free art business consulting, tell your friends. Anybody else struggling, they want some free art business, art marketing consulting, that's what these are for. They're with Patrick and me. You get on the Zoom call, we unmute you, and you're able to talk to us directly about your biggest struggle, your number one question, the number one thing in your way. That's what we want to know, so think about that and bring that to us. Get on our email list, that's how you'll get the Zoom link to join us, or like us on Facebook because Facebook will notify you when we go live.

Nick Friend: Aside from that, for anybody else interested in joining Art Storefronts, our summer special is ending at the end of this month. We have a summer special, a phenomenal deal to join at a discount. If you're interested in that, request a demo as soon as possible. You can go to our website, it's always in the upper right-hand corner. There's a big button that says "Request a Demo." Is there a link in this post?

Patrick Shanahan: Yeah, there's a link in this post on Facebook and YouTube. On Instagram, there's a link in the bio to request a demo.

Nick Friend: Get that in there as soon as possible because it's going to be madness. There are only three business days left after today, so the schedule gets filled. If you want to get a discount, join, and change your art business, get it going. We'd love to have you.

Patrick Shanahan: Done. We leave it there. See you guys.

Nick Friend: Alright, guys, sell direct. Sell direct.