In 2016, the British Museum granted the Chinese company Alfilo Brands exclusive rights to sell licensed products in Greater China. As part of the collaboration, Alfilo negotiated 34 different partnerships with Chinese companies on behalf of the British Museum, selling hundreds of millions of museum-branded products and generating tens of thousands of millions in sales. Neither the museum nor the licensing firm will disclose the British Museum’s cut in these sales, but we do know that the museum’s global sales in 2018 amounted to £ 21.5 million; in 2019, that figure rose to £ 37m.
In 2017, the Victoria and Albert Museum signed its own partnership with Alfilo Brands, while the National Gallery in London, the Metropolitan Museum in New York and the Museum of Fine Arts Boston ended their collaboration with the company in 2018.
This year, the founder of Alfilo Brands, Yizan He, created a new company, ARTiSTORY, to license products globally, and he has just secured global, exclusive rights to the Brooklyn Museum’s collection. We talked to him about collaborating with Western museums to sell branded goods.
KUNSTAVISEN: How did you start licensing museum products?
YIZAN HE: I started working with museums six years ago. At the time, I ran my own company, Alfilo Brands, and we worked on many Hollywood studios on their licenses and merchandise in China. The film licensing industry is tough, and the cost of working in large studios has always been high, so it was actually a money-losing business for me.
Then, in June 2016, one of my American colleagues called me in the middle of the night and said, “Yizan, get a plane ticket and come over to Las Vegas tomorrow. I want you to meet the British Museum.” I said, “What has that got to do with my business?” because I never thought about working with museums. But I still took a flight from Shanghai to Los Angeles and then drove all the way to Las Vegas to attend a major licensed exhibition.
I walked around the exhibition hall, which was mostly occupied by Hollywood studios like Sony Pictures, and I could not find the British Museum anywhere. Just as I was about to give up, I spotted a small table near the toilet with four small notepads on it. There was no stand. I was very, very disappointed. And there was no one from the British Museum there because they did not have the budget; instead, they had hired an agent to sit at the small table. So I sat down with him and he said, “Yizan, I know you’re disappointed, but that’s what I want to share with you. You’ve worked with Hollywood Studios, and they require you to create hundreds. of licensed products to be sold within a one week period because the way movies come and go usually only has days to sell your licensed products.But with the British Museum we talk about art and history.The British Museum has over eight million artifacts spanning multiple civilizations, and all of these properties are timeless. If you work with us, you will have the rights to use all of these assets. ” At that moment, I almost fell off the chair because it was so hard to curb my excitement. I talked to that agent for half an hour, and that half hour changed my life.
We do not just slap paintings on things. For it is not a way to engage the younger generation
I am very proud that three months later, on 30 September 2016, we signed the first master’s license agreement with the British Museum for five years in China exclusively for all product categories.
And has it been renewed?
Not only has it been renewed, it has been extended to eight years because the British Museum loved the program so highly. An online store that we run for the museum in China, Tmall, has an average of close to 24 million visitors a year – that’s four times more visitors than they visit the British Museum personally each year.
What products have you made for the British Museum and your other museum partners?
We have thousands of different products from stationery to home decor, fragrance diffusers, clothes, surfboards, bottled drinks. The products we put together are not souvenir-like products. These are not keychains or fridge magnets. Every single thing we do is a lifestyle product. We do not just slap paintings on things. For it is not a way to engage the younger generation; they want something new and something modern.
We do not fine-tune the entire collections of museums; it would be impossible. We work with international trend forecasting companies such as WGSN. They predict future trends; we look at those trends and put together our own themes; we prepare four to six each year. For example, a current theme is A Wave from the East, which is inspired by Hokusai’s The big wave. Then we work with all our museum partners to find works by Hokusai in their collections and will use these as a starting point. Our designers then create new patterns and illustrations inspired by the original print, and we apply these to a range of products that look modern and appeal to the younger demographic.
How much input do the museums have in the products you make?
We work closely with the museums’ marketing teams because our mission is to help them expand their global audience. So, for example, the National Gallery in London will be hosting an exhibition on Raphael in 2022. With that in mind, we are putting together themes and designs so that the license can support the exhibition. Many of the works we use are not protected by copyright; Hokusai’s Waveis already in the public domain, for example. Anyone can use it on any product. But they can not tell an authentic story that we can because we collaborate with museum experts. Every single licensed product we create must be approved by our museum partners before it enters the market.
What is your best-selling museum branded product in China?
It’s a product we created as part of a licensing agreement that Alfilo Brands had put together for the British Museum with a Chinese drinks company called President Group, which used images of a boy’s inspiration inspired by the museum’s Egyptian collection in bottles with classmate Xiaoming, a tea drink marketed for teenagers. We sold over 250 million of them. Now with ARTiSTORY we are working on very interesting projects, for example with a very large international white goods brand, which is trying to expand its coverage in six European countries and in North America. We are bringing them together with the National Gallery to launch a licensing program in these markets. We are going to do a lot of digital marketing, such as live streaming from the National Gallery; everything is digitally powered.
Can you give museums assurances about your supply chains and the working conditions of all the people who manufacture your products?
After working in Hollywood, I learned my lesson. Our film partners took work, labor and now environmental issues very, very seriously. So we learned that it is important not just to say “yes, we will comply with these requirements”, but to actually deliver the results and show the evidence and adopt an open book policy. We have a
internal compliance committee headed by our legal advisors and a few department heads. Their job is to make sure we deliver what we promise to our museum partners. Which means that when we sign licensees, if they claim their products are environmentally friendly, we have to make sure they are. We also work with many international factory audit firms. When the Hollywood studios I’ve worked with in the past work with local manufacturers, they need to see factory audit reports, so they hire specialized firms to review factory working conditions and go to dormitories where workers live to see conditions. These companies are experts in this field and are well-liked by global consumer brands. The reports they produce for us are shared with our museum partners.
How much money do your museum partners make?
Each museum receives different levels of royalties, but we commit to minimum guarantee amounts for them. So, for example, we have just signed an agreement with the Brooklyn Museum for exclusive global rights to their collection, and we have agreed to pay them a fixed royalty each year, no matter how many products we sell, because it shows them that we are prepared to spend a lot of resources on making our partnership a success.
More generally, can you tell us what a typical cut for museums in this industry might be? Is it 10% of net sales?
It’s lower than that, typically between 3% and 10% of net revenue because museums have the objects, but my company does all the actual work: We’ve created design assets such as illustrations, prints and patterns that can be easily applied to products. What we do is really innovative. It is now normal for the younger generation, Gen Z, to learn about art through social media. And they love products like ours. Our research shows that at least 70% of our customers are women and their average age is 25 to 30 years.