For the Love of Posters

SAN FRANCISCO (01/04/2000) - In the basement of a former furniture warehouse on the fringe of Philadelphia's business district, Wilbur Pierce is making a strong bid to turn his passion for posters into a profitable business - despite competition from much-larger rivals.

The white-haired, moonfaced entrepreneur is no dot-com wunderkind. But his company, BuyEnlarge.com, has the requisite combination of a few dozen pixel artists and artful programmers who turn out posters on both coated paper and stretched canvas. All you have to do is look at his office walls, barely visible beneath a mosaic of 20-inch by 30-inch posters, to see what makes this pop-art collector and his company click.

"Posters are nothing more than expensive wallpaper," an affable Pierce jokes.

The idea of online art sales caught fire over the past year as merchants sought to move low-cost items onto the Web. Major players including Art.com and Corbis offer thousands of framed prints or reproductions of famous photographs for under $25, with framed versions selling for about $100.

After selling his small toy store, Pierce joined the competition but added a twist. Instead of following the inventory model of his competitors, he opted for printing on demand. He knew not everyone wanted the same poster, unlike the way people buy the same book title or CD. So he bought a high-end printer to quickly produce single copies of posters from a wide selection of 10,000 images - from Monty Python and King Features cartoon characters to old book covers and advertising posters. A local hotel is decorating its walls with Pierce's posters made from historic Philadelphia photos.

"We don't have inventory but we can create content in seconds," he says.

"Because you don't sell deep on the Internet. You sell wide."

But producing posters is easier than selling them. Consumers recognize that an online poster image may be quite different from the real thing, particularly in terms of color. And delivery of a framed poster is a logistical challenge.

"The bottom line is not sparkling the way people anticipated," says Debra Smith, marketing director for poster-industry giant Bruce McGaw Graphics. "Most people don't know how to handle art. It can crease and can't go back into stock. You could double your business and also have a customer service nightmare."

BuyEnlarge.com hopes to avoid these problems. Pierce's first break came in June when Barnes & Noble bought a 24 percent stake in the company for $3.5 million and featured it in the Prints & Posters section of its Web site. Almost all of Pierce's business - some 250 orders a day - comes through Barnesandnoble.com.

The company that leads in the online poster market, Chicago-based Art.com, launched some 18 months ago and today has more than 100,000 images, thanks to its acquisition by Getty Images in May. Getty also went public in May with an offering price of $39 a share, and after a steep midsummer drop the stock rebounded by Dec. 27 to above $40. (Like many other art sites, posters are only a part of Art.com's business, which includes photographs and prints.) Michael Kahn, Art.com's VP of marketing, would not disclose whether the company is profitable, saying only that it is investing in its brand. To that end, the site has been very promotional, offering free shipping and a free print along with a $100 purchase. The company has partnered with AltaVista, America Online and iVillage. It's top-selling posters have been household names, such as Ansel Adams, Monet, Picasso and van Gogh.

"The goal is to create a consumer brand that will make finding and buying art easy, fun, accessible, and yet cool and sophisticated," notes Kahn. "This is a very fragmented industry and it can also be intimidating. Art has been sold the same way for a thousand years and now it's changing."

Another player, Microsoft subsidiary Corbis in Bellevue, Wash., benefits from its parent's deep pockets, other online ventures and marketing reach. Corbis sees a future in digital reproductions for computer screens, not just paper posters for walls, says David Rheins, VP of consumer operations at Corbis Productions, the company's consumer products division. For the first nine months of 1999, revenues at Corbis Productions were split evenly between tangible prints (photos and posters) and digital goods sold online.

Corbis.com attracts 2.5 million visitors per month and relaunched its site Nov.

1 to focus on roll-your-own art templates for electronic cards, screensavers and holiday decorations. Rheins further envisions an e-card, for example, that could be sent from a travel Web page, alerting family and friends to an upcoming adventure using a Corbis photo of the destination. "Our vision is digital," says Rheins. "The tangible goods model is a traditional retail model of buying wholesale, selling retail and pocketing the difference. That's not for us."

Though business models vary, all online image sellers face the same hard-to-crack market. Neither Art.com nor Corbis.com broke into the top 50 sites ranked by Media Metrix for October. Todd Bingham, a sales consultant to Web retailer Image Gallery, doesn't think many online vendors will be around for long. The poster market is primarily office or dorm-room walls and first apartments, he says, and competition will increase as offline sellers like museum stores and framers move to the Net. "It's a roll of the dice for these guys," Bingham says. "Art is the ultimate discretionary purchase."

Such dire predictions don't deter Wilbur Pierce. "No one has figured out the marketplace," he says. "But we expect to break even within two or three months.

With an 85 percent profit margin on each item, we only need to sell 350 pieces a day at an average price of $25."

And for Pierce, a small profit like that could be the beginning of the very big deal.

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