Artist of the Year Gallery: Artwork for Sale

This year the Artist of the Year team at Storyvault Films Ltd (SF) have developed the offering to artists past, present and future by creating a website which enables pod artists to sell their artwork.

It has some good points - and some significant weaknesses on the finance side - but nothing which cannot be addressed. Better sooner rather than later.

Artist of the Year Gallery Website - Home Page

What's on the Gallery Website

You can see:

• the artists - Artists are listed in order of their appearance on our programmes, most recent first. However not all artists are participating - partly because this is a new initiative and partly because some artists will have existing arrangements for selling their art which they won't want to compromise.
• the artworks - are produced by artists who have participated in the programmes - but not all artworks have been produced for the programmes. 
• The How It Works explanation
• Terms and Conditions (very important) - The Terms and Conditions need to be accessible via a PDF printable document for Artists to file - for the record - which they are not at present.

It's an interesting proposition because one of the things many artists struggle with is selling their artwork online - which is much less straightforward to do properly than people might think.

Consequently, just as any artist has to who is trading online and distance selling artwork has to do, this SF ecommerce operation MUST comply with all the rules and regulations around

• trading law and regulations 
• e commerce law and regulations 
  
• VAT on Art

(Note: These links go the relevant pages of my Art Business Info for Artists website)

BUT IF they're doing everything properly (see below), this site could be a BIG saving in time and effort for an artist in terms of mastering all the ins and outs of online distance selling of artwork! 

I haven't checked the site out thoroughly for ALL the aspects in detail but I assume they've done the wise thing and had 

• an expert ecommerce lawyer advising on what they must do and cannot do - and 
• an expert ecommerce adviser telling them what's the best approach for an operation like this.
• a VAT expert checking to make sure they got all the VAT aspects right.

However on a quick review, I ended up feeling a bit like "a party pooper" as I have reservations about whether SF have been wise in the approach they have adopted to 

• robust and secure monetary transactions / payment processing
• money laundering regulations for art galleries / dealers / agents
• VAT liability, transactions and associated documentation

At the end you can see how it works. 

Immediately below is a summary of the financial weaknesses I spotted which I think need addressing.

Reservations over the approach to payment processing

Over the last 15 years or so I've been approached by and/or reviewed numerous online art gallery systems. I have also seen many online art galleries come and go over the years - and I  generally tend to wait and see whether they are suucessful before publicising them. Many never take off. Others don't last long.  This one is a bit different.

This site MIGHT have a good chance IF they have created a robust and trusted system and got everything right - which depends on:

• whether all the participating artists all understand 
• what they must do and 
• get that right
• Storyvault reflecting on WHY others use recognised ecommerce payment platforms

I have some qualms around the handling of money and payment arrangements in relation to both buyers and artists. Personally I can't see any reason why SF are handling the money and I think they may well come to regret this in time. I'd love to know who advised them to take this approach! I think SF might well have got this wrong. 

The main reason being recognised, respectable major payment platforms (eg PayPal) are trusted by both artists and customers - and promote sales and make life easier for all concerned.

Reservations over the approach to VAT

I'm concerned by what the T&Cs say about VAT - or rather DO NOT SAY ABOUT VAT!

• nothing about VAT in the Artists T&Cs
• nothing re VAT on commission which SF are liable for when they charge commission
• nothing re vattable and not-vattable artists
• nothing re documentation raised being VAT standard documentation - including VAT numbers
• etc etc

I'm NOT a practising VAT accountant. I hung up my financial qualification some 17 years ago when I retired. All advice I offer now is hedged around with "without liability" clauses in work I do for people. However I have suggested to artists, organisations and galleries selling art in the past that they may well be doing their VAT wrong (and compliance with various regulations wrong) - and they've changed their practices as a result.

Plus I have written VAT for Art and Artists - which I try to keep up to date as it's one of the most popular web pages on my Art Business Info for Artists website.

Reservations about money laundering

Art is a target market for money laundering and I can't see anything which defines how this is dealt with on this platform.

My "Money laundering and art" page for my website is in draft at the moment - but the only really important thing to know is that once this website passes a threshold in terms of transactions, it too must comply with all the recently introduced money laundering regulations for art galleries and dealers.

Summary

Whether this new online art gallery will be successful will depend on: 

• whether it attracts enough quality artists and artwork and gains enough traction 
• plus doesn't come a cropper in relation to 
• the payment arrangements 
• and/or online scams / fraud / takedowns (which are endemic in ecommerce without very robust defences)
• VAT - beware Customs & Excise having a different opinion of how things should work - and who is liable.
• The Financial Conduct Authority which regulates money laundering arrangements.....

This is how it works - in principle

Why am I buying an artwork from a television producer and not a gallery?
You won’t be buying the art from Storyvault Films – you’ll be buying it from the artist. We are simply assisting the artists who appeared in our series with selling their work.

Very sensibly they have limited sales to inside the UK - which makes life for EVERYBODY a lot simpler!

For the artist

These are the Terms and Conditions for Artists (scroll down past the T&Cs for Buyers. IMO these T&Cs need to be on SEPARATE pages to avoid any confusion!)

In summary:

• Storyvault Films acts as a commercial agent for the artist (that's something your other galleries might need to be informed about if you have gallery representation)
• the artist is selling the artwork to the customer - NOT Storyvault Films
• HOWEVER
• the artist must comply with the contractual terms and conditions as set out on the website 
• all money due to the artist goes via the commercial agent i.e. SF (so this is NOT like selling via Saatchi Art for example) i.e. they handle the money but they're not party to the contract and they're not accredited in any way in this respect.

Except as otherwise expressly provided in these Terms, we are not the agent, intermediary or other representative of the Seller. We are not a fiduciary or trustee of the Seller.

• there is no stipulated well known secure ecommerce payment platform being used which I personally think is a very BIG mistake. I'm assuming they didn't get advice from their lawyers as to why every other platform uses a payment platform separate from the website!

8.3 Liability

Storyvault is a venue and provides an online marketplace and gallery only.

The Platform is provided on an “as is” basis. Storyvault makes no representations or warranties of any kind to you relating to the Platform to the fullest extent permitted by law.

For the online customer

These are the Terms and Conditions for Buyers

These are the Frequently Asked Questions for Buyers

In summary:

• You review the artworks for sale on the website and select one you like
• the artist will aim to deliver the artwork to you within ten working days.
• If the artwork is damaged upon delivery, please take clear photographs showing the damage and the packaging, and contact us immediately.
• If you change your mind and wish to return an artwork, you can send it back within ten days for a complete refund of the purchase price. BUT ensuring a safe return of the artwork to the artist is the customer's responsibility and at their cost. If returned work arrives damaged, we reserve the right to deduct some or all of the original purchase price.

My reservations about the site relate to:

• why they haven't partnered with an existing gallery which has the expertise in online sales - and spotting scams etc
• why they haven't partnered with an existing secure, robust payment processing platform - to provide assurance to both artist and customer.
• why they haven't addressed the rules and regulations relating to VAT and money laundering.