Inside the Print-On-Demand Industry
Introduction — Bootstrapping vs. Venture Capital in the Age of Profits
Fine Art America is one of the world’s largest art marketplaces and print-on-demand technology companies. We’ve been helping artists and photographers transform their images into museum-quality prints and other products since 2006, and we hold a unique position in the print-on-demand industry as the only major company that has never raised money from investors.
In fact, we’ve got a backstory like no other e-commerce company in the world:
Our entire business was built by a single programmer back in 2006 and continues to be run by just eight employees to this very day.
We’re profitable, don’t have any debt, don’t have any investors, don’t have any connections to Silicon Valley, and have spent almost two decades fending off competition from well-funded Silicon Valley corporations with hundreds of employees and millions in venture capital (VC).
We’re now one of the largest art sites in the world and power the online sales for millions of independent artists and iconic brands such as Vanity Fair, GQ, Vogue, Sports Illustrated, Major League Baseball, TIME, and many others.
Every few years, I like to pull back the curtain and discuss the current state of the print-on-demand industry using inside knowledge from our business plus publicly available information from other companies in the industry. Oftentimes, I’ll analyze the business models of various VC companies and then describe what we do as an independent business to compete against them.
Over the years, I have watched almost every single competitor raise millions of dollars in venture capital, chase top-line growth at all costs, fail to deliver on profitability, and then wind up a shell of its former self. Each time it would happen, I would think to myself, “Why do these companies keep doing this?”
In more recent years, I stopped asking why they do it, and instead, I started asking, “When will this end?”
At what point would investors recognize that the VC business model isn’t working for the companies that they invested in, and then what happens to those companies when the investment dollars finally dry up?
There are dozens of prominent companies in the print-on-demand industry that are unprofitable and lose millions of dollars every year. Many of them have been losing millions of dollars for more than a decade, but instead of going bankrupt and shutting down, their investors just keep pouring more money into them year after year in order to keep the lights on.
How long can that go on for?
In 2023, after almost two decades of watching this story play out over and over again, I could sense that things were finally changing. Suddenly, all of the unprofitable companies in the print-on-demand industry were being sold… or they began issuing press releases about their newfound focus on cost-cutting and profits.
Investors were waking up to a world with rising interest rates, a slowing economy, and no more government stimulus checks… and they were growing tired of throwing endless money at their unprofitable investments.
In rapid succession, Walmart sold Art.com for a loss just a few years after buying it… Graham Holdings purchased Society6 and then quickly announced that the purchase was a big mistake… and Redbubble introduced a new set of fees to dramatically cut their artist royalties while simultaneously laying off more than a third of their employees.
The end had arrived. The VC business model had run its course in the print-on-demand industry.
In early 2024, I remember reading a cover story from Fortune magazine about “The Age of Unicorpses.” Fortune created the cover to intentionally contrast it with a previous cover from 2015 about “The Age of Unicorns”.
You can see both covers, below.
The tagline on the 2024 cover tells you almost everything that you need to know about the state of venture-backed companies in early 2024: Billion-Dollar Startups and Even VC Firms are Going Bust
The free-spending days of venture capital were over, and many high-profile companies that were once worth billions of dollars on paper (i.e. unicorns in 2015) were now bankrupt or virtually worthless (i.e. unicorpses in 2024). Some of the investment firms that invested in those companies were going bankrupt, as well.
As interest rates rose and government stimulus money dried up, VC investors became less enthusiastic about pouring endless money into their unprofitable businesses, and as a result, the businesses needed to figure out how to become profitable, quickly.
VC companies in the print-on-demand industry started pushing for profits, and in order to cut costs, they began reducing their artist royalties.
It’s that push for profitability and its direct impact on artists that motivated me to write this article.
Fine Art America is home to millions of artists from all over the world, and if you’re reading this article, there’s a very good chance that a) you’re one of our artists or b) you’re an artist who sells through another print-on-demand website like Minted, Society6, Zazzle, etc.
Fine Art America is an independent company with no investors, and we’ve been profitable since our first month in business way back in 2006. If you sell through any print-on-demand website other than FAA, it’s very likely that the website is run by a VC company which, after many years of being unprofitable, is now scrambling in 2024 to figure out how to turn a profit and stay in business.
That scramble for corporate profits could have a long-lasting impact on artist royalties throughout the industry, and if you’re an artist who sells through any of the websites mentioned above, you’ve probably already noticed some changes to your monthly payments.
Let’s see how we got here and take a look at the current state of the print-on-demand industry in 2024…
Continue to Part 1 of this story…
Part 1 — Venture Capital Hot Potato
Part 2— The Pandemic and the End of an Era
Part 3 — Cost Cutting and Reduced Royalties
Part 4 — Squeezing Artists and the VC Double Whammy
Part 5 — What Can Artists Do?
Part 6— The Finale (The Future of E-Commerce)
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