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December 2007

Expectations of Exclusivity

Dear Harriete,
What is a reasonable expectation of exclusivity for a gallery/store? I am negotiating a contract with a store in another state and they want me to agree to them being my exclusive rep in that state. This doesn't sound reasonable to me. Am I crazy or what? I feel I'm being taken for a ride.
Sincerely,
Afraid of Being Taken Advantage Of

Dear Afraid of Being Taken;
Exclusivity can be a very complex issue.  In simple terms, Exclusivity means that the gallery will be the only agent representing the artist’s work usually within a defined geographical area or for a defined group of work.   In practice, Exclusivity can have many nuances and variables.  Ultimately, an agreement (contract) between the artist and the gallery spells out the specifics of the relationship regarding Exclusivity and other items (see Professional Guidelines sample contract).

It is fairly common for galleries to request some degree of exclusivity when agreeing to represent an artist’s work.   From the gallery’s point of view, they may be planning to invest in marketing efforts to promote your work such as retail display space, an opening event, mailings, advertising, or direct communication with their collectors.  For such effort and expenditures, the gallery is justified in seeking to avoid being circumvented and losing commission income on sales that they have generated or supported.

FROM THE ARTIST'S POINT OF VIEW
From the artist’s point of view, a gallery that diligently promotes your work can be invaluable, especially if you could not or would not generate the same level of visibility to sell work.  However, the gallery should be expected to earn the privilege of this Exclusivity.  In a real sense, the gallery is working for you – and you need to evaluate what sales opportunities you gain or sacrifice by granting exclusivity to this gallery.  If you realistically do not lose any sales from another venue or opportunity, then the granting of exclusivity does not really cost you anything.  If the requested exclusivity creates a conflict or is inconsistent with arrangements with other retail venues or exhibition opportunities, then you should negotiate further to minimize such conflicts. 

LIMITATIONS OF EXCLUSIVITY
In an agreement with a gallery, exclusivity may be limited to a state, city, art show, or by a particular group of work (such as jewelry or sculpture) or by a particular series of work (e.g. bracelets from the “blue group” and not the “red group”).   In exchange for the grant of exclusivity, the agreement should also acknowledge or specify the gallery’s responsibility for promotion.   Exclusivity may be granted initially, but may be contingent on a time limit (such as 12 months) or on a minimum dollar volume sold during a specific period of time.

Going back to your specific situation, it is not unusual for a gallery to request exclusivity within a state. However, the real issue is whether the gallery will adequately represent your work and generate enough sales from the entire state to justify this exclusive relationship.

SOME QUESTIONS TO CONSIDER:
Does the gallery have visibility and a reputation sufficient to cover that entire state? 
How are they able to adequately promote your work and attract attention throughout the entire state?
Do they advertise statewide? 
Is there another gallery in the same state that would like to show your work? 
Are there wholesale/retail shows in that state in which you would like to sell your work?
Who is their competitor?
Would you be able to participate in special exhibition opportunities at other galleries, non-profits or museums within their exclusive territory?
Will the gallery allow you work to be shown at another gallery or special exhibition within their  exclusive territory ?
How would potential purchase of your work at a special exhibition opportunity be handled under your exclusive relationship with this gallery?

WILL AN EXCLUSIVITY ARRANGEMENT AFFECT PREVIOUSLY ESTABLISHED ACCOUNTS?
If you do not have any previously established accounts (gallery or shows) in this state, then perhaps you are thinking that you MIGHT lose sales from other sources.  If this is your primary concern, then a positive business relationship  with the gallery – including some degree of exclusivity – seems like a reasonable decision.

On the other hand, if you have pre-existing accounts with other stores, galleries or shows, then you should have some idea how much money is generated on average from these other venues.  If you would lose these existing sources of revenue by granting exclusivity to the gallery, then what is the net gain – or loss?  Tell the gallery that you have these existing sources of revenue (they may not be aware of them).  The gallery may be willing to exempt these specific sources or compromise.   Or they may decline to represent you at all if they realize that they can not compete with these other retail locations.   Be professional about the discussion.  The gallery is seeking to maximize their revenue and so are you.   You are offering to sell your artwork through this gallery and they are offering a market in which to sell your work.  It should be a mutually beneficial relationship.   

Another option would be to agree to the exclusive relationship for a specific group of work.  Grant exclusivity to the gallery for a particular line only, or a series, or make a special group of work. This way the gallery would have an “exclusive” of some of your work though not on everything. Some galleries may think this is just fine, others may not agree.  Remember everything is negotiable.

EXCLUSIVITY AND THE INTERNET AND COLLECTORS
Two challenging areas to define under an exclusivity clause in a contract -- the Internet and collectors.   

The INTERNET
The Internet has no state  boundaries.  If you invested time and money into your web site to expand your marketing sphere, how would customers attracted to your web site fall under the exclusivity definition of your contract?  One compromise could be that the gallery receives the full commission for any customers who live in the same state as the gallery; but no commission for residents of any other state.  There is no perfect tradeoff, but give a little and get a little.

COLLECTORS
Collectors often travel nationwide and buy from galleries in various states.  What if a collector from the same state as the gallery came to your studio to buy work or bought your work from a gallery in a different state?  Don’t assume this won’t happen or that the gallery won’t find out about it.  It is impossible to itemize every possible scenario, but if you already know about specific situations, then work with the gallery to find a reasonable compromise.  For everything else, try to have a simple guiding principle or two in the contract and be ready to talk through future situations with the gallery if and when they arise.   A good working relationship requires some ongoing effort.

SEARCHING FOR SOLUTIONS
A possible path to resolving some of these issues is to ask the collector interested in your work, “How did you find out about my work?”, in a casual conversational manner. If the collector replies that they first saw your work at the gallery that represents your work, you likely owe the gallery a commission.  This may be a full commission or a partial commission (say 10% to 25%) depending on how the collector found you.   Especially if your gallery has been using images of your work in their advertising for the gallery, getting you into shows at museums or non-profit spaces, arranging articles about your work in the magazines or  arranging for your work to be purchased by a museum, then it is more likely that you owe them a commission.

On the other hand, a collector may have seen your work at several different galleries, non-profits, museums magazine, or books over several years. This  purchase may be the result of your own extensive efforts to promote your work well prior to any of the gallery’s promotion of your work. 
The merit of an “exclusive” with the gallery is that they want the work to be unique for their area. They don’t want to have the same work as the place down the street.  If the gallery is perceived as showing the best or most interesting work, and your work is shown in this establishment, it can enhance your reputation also.

Ultimately, the decision is yours, but I would recommend signing an agreement with an exclusivity clause if it is balanced by sensible limits, reasonable promotional commitments or minimum dollar volume for the artist.