Why You Should Launch a Direct Art Business ASAP

In this episode, Patrick and Nick discuss the importance of launching a direct art business immediately. They explain the difference between direct and indirect art sales, highlighting the risks associated with relying on third-party platforms like galleries, Etsy, and art shows. Using analogies and real-world examples, they illustrate how the COVID-19 pandemic accelerated the need for artists to have their own online galleries and direct customer relationships. They emphasize that building a direct business takes time but is crucial for achieving consistent income and long-term success. The conversation also touches on the misconceptions of an easy path to success and the importance of sustained marketing efforts.

Podcast Transcribe

Patrick Shanahan: Yes, yes, I'll get all right. What do you say to everybody? Hope we're having a good day. Yeah, so we've got a specific topic here that we are after, right? And it is why you should launch a direct art business ASAP. Why it matters to do that, why it matters to do it right away, okay, most importantly, and not wait and what it all means. That's what we're going to talk about. So let's get into it. Should I kick it off?

Nick Friend: Yeah, you kick it off and then I'll pile on.

Patrick Shanahan: Okay, so let's talk about what a direct art business is first of all. Right, you have to understand what direct and indirect is. Indirect is when you're selling through third parties to ultimately reach your consumer, okay, and you don't own your distribution channel, right? Typically, the third party does. So who are the third parties in the art business when you're selling art? Right, offline art galleries, online art galleries, and online art galleries like Fine Art America, Saatchi Art. So all those people are just online galleries. Then you can also talk about Etsy, right? Etsy is like, like just a marketplace, right? They're all other parties, they're all just galleries, right, third parties. Another third party that's emerged is the art show, right? The art festivals, the art shows that you do in person, right?

Nick Friend: Now, you are selling direct to your customers at the art shows, but there's a third-party component to them which became very clear during the lockdown, right? The third-party component is that if you rely on the organizers to actually set up the show and do a good job and you rely on the show to actually exist, right, which means when the lockdowns happen, those shows got canceled and the rug was pulled out from underneath you. So the whole point about the third-party distribution, right, the indirect versus direct, indirect always gets pulled away from you. It's just a matter of time. Etsy, people talk about years ago how Etsy, they sold so much art ten years ago. And then what happens? Etsy changes its algorithm, all of a sudden you get no traffic anymore, you get no action and you're not selling anymore. Same with Fine Art America. Years ago, people talk about, "Hey, I was in the bestseller section and I got some sales, I got some sales." But guess what? Eventually, you're not in the bestseller section anymore, it's an algorithm change, right? The same algorithm changes happen offline with the art galleries, right? When they decide to hold less of your pieces or to stop carrying your work, that's an algorithm change the same way, right? In all of these cases, the rug gets pulled out from underneath you and nothing has been more obvious than during the lockdowns how bad, you know, the indirect third-party strategy is, right? How dangerous it is, how risky it is, you know? When the whole economy got shut down and you couldn't sell through the third parties anymore because they got shoved out, right?

Patrick Shanahan: When's the last time you saw Forrest Gump?

Nick Friend: Been a while.

Patrick Shanahan: Oh, many years.

Nick Friend: Many years for me too. But the analogy is so interesting. So Forrest Gump and Lieutenant Dan have the shrimp boat, right? And they're way out at sea in a massive storm, right? The boat's getting rocked and everything else. You know, Lieutenant Dan's cut himself and taped to the mast and he's screaming and yelling like sort of wants to die, has some suicidal theories, whatever. Forrest is just down there. They survived the storm and what the storm did is it came into the harbor where all the boats were sitting safe and destroyed every single solitary one of them. So they were the only boat left. They were the only boat left, right? So everyone's inside the harbor. Okay, there was only one boat left and as a result of that, they were just catching everything, right? And it turned into a huge gigantic business. It's the same thing with this pandemic situation that hit. No one was doing their marketing, no one was set up with their own, their own, their own website, no one had the direct representation and all of a sudden their offline sources, the frickin hurricane came in, the pandemic came in and just wiped out every son of them out there that was young about it. See that boat out at sea was sewing direct on its own distribution, was marketed on a regular basis and look where they are now, right?

Patrick Shanahan: Yes, exactly. So we've gone through the indirect. The direct is guys that Patrick is talking about here, right, is when you have your own proper art gallery website, right? That's dialed in, ready to receive art buyers, you know, with the right experience, okay? And you're doing your marketing direct, right? You're doing direct marketing to your audience, right? And expanding that audience and then you're bringing them to your art gallery online and you're capturing the sale and that all the profits are going to you. You're not sharing them with anyone, right? So you own the customer names, you own the customer list, not the third party, right? You have something that you can actually grow long term. Now, the key thing here, guys, is that building a direct business is not like, this is not like a magic secret, right? This is how entrepreneurs in every industry grow a consistent stable business. You sell direct, you own your own customer list, you have your own distribution channel. 80% or more of your sales should be direct, right? Now, that's where everybody got caught is that most photographers and artists, you know, 80, 90, sometimes 100% of their sales are indirect with the third parties. They got killed. They got killed, you know?

Nick Friend: And so the lockdown, and here's the thing, this is the source of the starving artist problem, you guys. It's a very important decision on day one, right? Like, and you can make that decision today. I don't care if you've been an artist or photographer for 10 years or 20 years, right? This decision, you have to get it right. It's the highest, like the most important upfront decision for your business as an art seller, right? You got a fork in the road and both of those forks have long tunnels that you go down that take years, right? The fork is do you go indirect, you know, and rely on third parties and just go down that rabbit hole as far as you can, or do you go direct, you know, and go down that rabbit hole? Because if you go down the indirect rabbit hole, that tunnel, and at two years from now or three years from now, you decide like, "Oh my goodness, I got to start selling direct," you have to go all the way back to the beginning and start at the direct from day one. Because you don't just swap over, you know, and hop over into that tunnel two years down the road. Because you have to build an email list, you have to build a following, you have to do marketing, you have to learn the skill set that it takes to run your own direct business, right? And that takes time. That takes time. It's not a light switch that you just flick one day. And so the decision of doing that now is the most important decision you can make for you to have consistent income, you know, and a business that you can rely on at some point in the future. That's why this is so important.

Patrick Shanahan: You know, I was doing the example the last time we talked about this, what, like a week ago or so, maybe it was last week? You know, Nick Friend: and I are huge tech nerds, and so you end up following what's going on in startup land and, you know, new company land, new app land and all of that. And you know, in that world, everyone's constantly talking about raising money as a startup and going to see a VC. A VC is a venture capitalist, and they're essentially the ones that write the checks that get these startups funded and off the ground going. And if your idea was, "I'm going to be an artist and I'm going to go see the VC to get a bunch of money to get me launched," they'd start asking some pointed questions. They'd kind of say, "Well, what is your revenue source?" If you told them, "My revenue source is going to be third party galleries and online galleries and I'll occasionally do some art shows," they're gonna sit there and go, "It's been nice talking to you, no money for you." That simple. Because it's just not, it's, if you do not own your own customers, if you do not own your own distribution, you are by definition not in control. You're, you're not in control of the game.

Nick Friend: High risk. High risk. And what you're saying there, the abstraction of what you're saying is that, like, smart business people, experienced business people, know that the only thing that you should be doing is selling direct. So there's a question on Instagram, somebody asks, "You know, is it, is it okay to do both? Do you think doing both is a good idea?" And my answer to that is you always, like, there's nothing wrong with selling in galleries that want to offer your work, right? Like, if they're going to add value to you, then you should absolutely do it.

Patrick Shanahan: There's folks in your marketing wheel, right, but they're not the hub, right? So yes, you should, you know, you can absolutely sell through them, just treat it as the gravy, not the hub of the business, right? Treat that to you as a spoke. It's nothing that you're ever gonna rely on. Have the understanding in your mind that it's going to be taken away from you one day, the rug is going to get pulled out from you, okay? And you're gonna have to share those profits and all that type of stuff, right? And have that mentality, right? So when you think about that, you realize like, "Goodness, I gotta be spending 90% of my time building my direct business." You know, the time that I'm gonna spend on marketing, the time that I'm gonna spend on admin, which nobody loves doing, right? 90 to 95, maybe 99% of it should be on building a direct business if you care about your future at all, right? If you care about your future at all. And 1% to 10% should be spent on third parties, i.e. the galleries, online or offline or anywhere, I don't care where they are. But that's it. That's how you're going to solve your own consistent income problem. That's how you're gonna get to a great spot. And Pat, let's talk about this. It takes time. It takes time to build a direct business, right? It takes time to build any business. That's how you're doing is you're just an entrepreneur building a business. Your timeline is no different than somebody starting a jewelry business or a clothing business. Every business takes like three to five years, you know, in order to get somewhere where you really start rolling, you know?

Nick Friend: And so if you've never built a direct business, like, and you've been relying on third parties and getting 1099 checks, you know, or you've been relying on art shows, lugging your stuff around and those got all shut down, like, you gotta, you gotta build the skill set to learn how you market a direct art business, you know? And there's no shortcut. There's no shortcut. Everybody, everybody always asks a question too, like, "How long is it gonna take me to get to six figures in sales on a yearly basis, or six figures in net profit to my business? How long is that gonna take? How many people on the platform do you have that are selling over six figures?" Right, like, you can't compare your beginning to someone else's middle. That's not...

Patrick Shanahan: No.

Nick Friend: Yeah, that is not a recipe for success. Do not compare your beginning to someone else's middle. That's, that, you're shortchanging yourself. There is no shortcut. There never is a business shortcut. There never will be a shortcut. It's just a matter of how much time it's gonna take you to get there. And let me tell you, if you haven't started, it's gonna take you way longer, right? It's the oak tree adage. When is the best time to plant an oak tree? Thirty years ago.

Patrick Shanahan: Thirty years ago.

Nick Friend: When's the next best time? Today, okay?

Patrick Shanahan: Exactly.

Nick Friend: That's, that's right. And it doesn't, you know, it's interesting because we have people who come on our platform, you know, and they're like, "You know, I used to sell $100,000 a year, sometimes even more than that, they're like $200,000, $300,000 a year through galleries, right? And it all got taken away from me, right?" And good. How would you... straight up, if exactly...

Patrick Shanahan: And we have to tell them, we have to tell them the hard way where it's like, "You know what? Like, those galleries, they had their, every business has its own system of producing customers, right? Now, the galleries, they, they, they get people locally to come in, they, they schmooze them by giving them free wine and all that stuff. Some of them, they get them drunk, right? And art sells, right? You can't reproduce that algorithm. You don't have that. You don't have the retail space. You don't have the party that you're throwing. You don't have any of that, right? That's the magic that got your art sold in that gallery. You don't have the salesperson, the person that had the relationships with these people. You don't have any of that. So when you go direct, you can't leverage this machine that was selling your art before or this group of galleries that have their own business models, right? Now you have to start your own and go direct."

Nick Friend: And it's why, it's why so often, you know, people who join Art Storefronts and start selling right away, oftentimes, they're not even, they've never even sold in galleries. They're oftentimes beginners, you know, they've only sold a couple of pieces, are you know why? Because they come in with a beginner's mindset, understanding like, "I gotta go build a business right now. I gotta go build a business." And they don't sit there and go, "Oh, you know, I've been selling for so long that this is gonna be easy. I'm gonna just throw up one post on social media and expect fish to jump in my boat. And if it doesn't happen, then, you know, oh, the online market doesn't work or it doesn't sell or whatever." All this nonsense that we've been hearing for like ten years, right? That's been stopping so many people from being successful, even though there are, you know, plenty of artists and photographers and we work with a ton of them who are selling over $100,000 a year from home, right, through their own art gallery websites, selling direct, right? Who, who got, who did not get the rug pulled out from underneath them during the pandemic, who are benefiting from the Black Friday levels of sales right now, right now, for the last couple of months, you know, since the pandemic began.

Patrick Shanahan: Then, right up Google Trends. We've talked about this almost every day, right? Go to Google Trends, trends.google.com, you type in "buy art online." It is the highest it's ever been, ever. Higher than three times as high as 2019 Black Friday and the fourth quarter, right? Wrap your head around that, right? The world has completely changed, you know? There are more art buyers online than ever before, and the market has shifted. And of course, the lockdowns created the situation where habits changed, you know? People started buying online, buying things online they never bought online before. You know, we've talked about how like my in-laws, they bought groceries online for the first time. They're seniors, right? They used to never do it, and now they're doing it regularly. Like, habits change. You know, the lockdown, you know, a lot of the VCs were talking about, you know, venture capitalists have talked about how, you know, the lockdowns accelerated technology adoption by ten years, right? How true is that with all the consumption of our, you know, social media and our devices and all the different things that happened? The Zoom calls, Zoom meetings, you know, distributed work. Like, CFOs have talked about how they did it. They did a study with Fortune 500 CFOs, and seventy-five percent of them said that they are going to be shrinking their office spaces and allowing more distributed work, right? So there's gonna be more online, more of these Zoom meetings are gonna continue. It's just, it's crazy what's happened. But all of this, all of this benefits, it directly benefits the artist or photographer who built a direct business or who is focused on building a direct business right now. And for the next three to five years, that that's the segment of customers that are going to crush it and succeed, you know, in the next three to five years. The ones who are still focused on the indirect are the ones that are going to pay a heavy price. They're the ones who are like the people, you know, after the 2008 pandemic, they were like, I'm sorry, the 2008 financial crisis that were like, "The art market is gone. The art market's gone. It's never returned." And, you know, I'm talking to these people in 2012 and they're still saying that, right? It's because they were, they were still working under the premise of the pre-2008 art market. You have to move to where the market goes after these macroeconomic shocks happen. And the place where it is going is exactly what we're talking about. It is direct, direct, direct. And it's online, it's online. Nobody can take away the online. Now, you should have an offline direct business as well, right? You should have an offline direct business as well. No question, no question about that, right? But the online is amazing because it can never get taken away from you.

Nick Friend: Yeah, it's, it's, it's a profundity. And, you know, we see, as we talk to thousands of photographers and artists, you know, onboarding to you on the phones, us in the group, us with non-customers in the Zoom session. So we also get a ton of emails, right? And I got one recently where he, the guy emailed, he's like, "Wait a minute, so I'm responsible for bringing in my own customers? I actually have to do some work to bring in my own customers? I'm out. That's ridiculous." And he left. Where does that person go to? Where does that person go to? I don't know where they go to, right?

Patrick Shanahan: They go to... there's no customers there.

Nick Friend: They're, they're either, they go to Failure Island. They go to Failure Island with all the other people who thought the same thing. And, and somehow people just, they have it in their head, they have it in their head that because you're a creator and that you create something, you just have to create it and that's it. Your job is done. That's the end of it. Everyone's gonna come and bang on your door and serve you breakfast in bed and tell you how happy they are that you created something. It's not the way it works. Who is selling this bill of goods? It's like dehydrated water. Just add water, right? Like, customers in a box.

Patrick Shanahan: Got bad customers. How are you gonna get the customers?

Nick Friend: I just don't understand it. And by the way, it's not any different than anything else. A guy Nick Friend: and I went to high school with writing a book right now, and he's like, "What do I do?" He asked me, called me, asked me for some advice in marketing. I told him what to do, had a conversation with his publisher, and his publisher's like, "We'll help you here, here, but we're not gonna market the book for you." So it's no different in this scenario, right? Just because you created the thing doesn't mean customers are gonna be banging down your door. You've got to go and get them, and it takes work.

Patrick Shanahan: Yeah, yeah. Okay, I'll get fired up, start going on a rant, but like, where do you think you're gonna go where you don't have to grow your own damn business? Tell me where that is.

Nick Friend: That business in a box, turnkey, you know, you're gonna make hundreds of thousands, give me a break.

Patrick Shanahan: Yep.

Nick Friend: It doesn't happen. And you know, that creates all sorts of mindset problems. It demotivates people, right? Because they do one little thing and they don't realize, like, you have to have a consistent marketing strategy. You actually have to have a strategy. You have a coherent marketing strategy and a plan, and you have to do it consistently. And the first question, you know what, you know what always blows my mind?

Patrick Shanahan: Yeah.

Nick Friend: You guys, let me tell you this. The greatest part about the direct business is that you have almost no competition. You have almost no competition. Why? Because 99.9999% of the artists and photographers out there, they don't want to do any work. They don't want to do any of the direct work. I can tell you that with 100% certainty, because all, I've been in the art business for 20 years, okay? We've been running Art Storefronts for seven years. We have over 3,500 members, but we have spoken personally, you know, to over 100,000 artists and photographers on phone calls, like live phone calls for like 20 or 30 minutes, understanding where everybody's head is at. No one wants to do the work. No one. And, you know, like, I'm just telling you, if you want to be one of the rare few, if you want to be one of the rare few, that's the advice I can give you. Go and build a direct business and do the work. Do what we're talking about, right? Don't be the person that's like, you know, "Hey, what's the least amount of time I can put into it," right? Whenever I hear that, I just go, "You, you just don't get it. You just don't get it." You know, like, of course, we all want to cook. Like, everyone wants to create and do what they love to do. I want to do what I love to do every single day, right? But there's always a little bit of BS in there that you have to deal with, right? That's how life works. That's what, like, if you're gonna build anything that's valuable, you're gonna have some of that in there. But you know what?

Patrick Shanahan: What's, what's, what I think is so interesting is the marketing, when you start doing the direct marketing, people don't realize how rewarding it is. Like, when you're actually doing it the right way, right? You get so much feedback from your audience, right? Like, when you, when people subscribe to your list and you're doing what we call hand-to-hand combat back to them and you start understanding why these people like your work and why they follow you, which, by the way, is how you start understanding how to expand your audience, right? And what type of content you should create, right? Like, you need to learn these things and know these things. Otherwise, you're never making steps forward. You're never taking steps forward because you don't know what, what, yeah, what type of content or subject matter it is, you know, or what type of poster or anything like that is actually resonating. Because when you start understanding what that is, then you start, you know, pouring gasoline on that and the snowball effect begins. And then, now you're really adding value to the world, right, with your work. And that's when your sales start really happening, when you start adding value. I'd hate to break it to you, but if your goal is to, like, make people happy that hang your art on the wall, if your sales aren't there, you're not making a lot of people happy and you just haven't figured that out yet. And if you don't do marketing and, like, direct marketing and get close to your customer, you will never get those answers and you won't do what you probably are setting out to do in the first place, right? Which is to make yourself feel better, but also make the world a better place through your art or make other people happy, right, in their day, inspire them, make them more motivated, right? There's this old saying, you know, that is so important. He or she who is close to their customer wins. Why? Because you get the feedback and the data in real time, not through a third party or a filter of what is really resonating right there on the spot. And you get that right, you get that directly right into your brain and you go, "Oh my goodness, this is the stuff people really love and I really understand why they love it, you know? And so I'm gonna do more of that." And you do more of it and it gets shared more, it resonates more, you know what I mean? Like, your audience grows. All of a sudden, instead of pushing a cart up a hill with the wind in your face, you know, it starts feeling like you're going downhill all of a sudden. And that's what happens over time. That's why it takes time to build a business because it takes time to learn and figure all of these things out. And you iterate and you iterate and you iterate over time. And every day you keep iterating, you get closer and closer to the target. And that's when it starts feeling so much easier.

Nick Friend: Yeah, I don't, I don't, I don't know where the misconceptions come from that we deal with on a regular basis, but they are so deeply ingrained and profound and it's sad because it's, it limits so many people from even taking a shot. They're just on the sidelines not even taking a shot.

Patrick Shanahan: Yep, exactly. So that's why you gotta, you know, that's why you need to sell direct, guys. That's why you gotta have a direct business. Otherwise, you know, you're building your house on sand rather than rock. The rug will get pulled out from underneath you. It's just a matter of time. And it takes time to build a direct business. It's not a light switch that you can flick. So, you know, back to the oak tree, back to the oak tree, right? When's the best time to like, to start selling direct and build a directness art business? Thirty years ago. If you haven't done it yet, the next best time is today. Don't wait. Don't be one of the people that, you know, is in the past in the pre-pandemic mindset. Be someone that understands where the market is going and what we're talking about, right? It's common sense. This is common knowledge. This is not rocket science. Ask any other entrepreneur or any smart business person, you know, they will tell you, sell direct, okay? That is the key to consistent income, guys. So take this lesson away, you know, and take action. Like, take action right away in your own business. You will thank us. You will thank us two or three years from now.

Nick Friend: See you in office hours at 3:00.

Patrick Shanahan: All right. See you then. Thanks, guys.

Nick Friend: Bye, guys.