Thomas Kinkade, Painter of Light™, gets the full-on
takedown treatment in the LA Times today. I’ve long been fascinated by this
man, his art, and his marketing. I still have vivid memories of walking into
the Thomas Kinkade shop at the South Street Seaport, and getting the hardcore
sales technique, complete with dimmer switches so that every painting could
be looked at in various degrees of illumination. (You’ll find that pretty much
everyone with a Kinkade has it mounted under a spotlight on a dimmer. They love
nothing more than to turn the light up and down, and see how that changes the
painting.)
Kinkade is an art-world punchline, of course, but that doesn’t necessarily
mean he deserves to be a punching bag too. It seems to me that Christensen is
a little bit too tough on Kinkade, who is probably more of a bad businessman
than an evil one.
Kinkade took his business public in 1994, with a $110 million IPO. Between
1997 and 2005, according to Christensen, he earned more than $50 million in
royalties. And at the end of Jauary 2004, just over 9 years after going public,
Kinkade bought back his company for $32.7 million – a price which actually
about $14 million higher
than the company’s market capitalisation at the time. People who bought Media
Arts Group at $20 per share, of course, weren’t particularly thankful that Kinkade
paid them $4 rather than $2.30 for their stock. But the fact is that Kinkade
was more optimistic about the outlook for his company than the markets were.
When a company goes into a steep decline like that, it will sometimes get desperate
and maybe start violating self-imposed principles. One of the chief complaints
against Kinkade, for instance, is that he sold art to a discounter called Tuesday
Morning, which then onsold the art at retail prices below what the official
Kinkade stores were allowed to charge.
I can see how Kinkade’s store owners would be upset at such a decision. Essentially,
Kinkade’s company was doing everything it could to make money, including forcing
its shops to buy expensive paintings which simply didn’t sell, and refusing
to accept returns unless they were accompanied by orders for three times as
much art as was being returned. Obviously, it was hard for the shops to make
money in such circumstances. But I get the feeling they’re missing the forest
for the trees: they weren’t losing money because of the decisions being made
by Kinkade’s company, so much as they were losing money because they’d hitched
their wagon to a company which was in a tailspin.
Much of the rest of Christensen’s article is devoted to anecdotal evidence
concerning whether or not Kinkade is a bad drunk. And this is where the moralistic
tone starts creeping in: essentially Kinkade is being accused of hypocrisy here.
This man, who espouses his Christian faith so loudly, in reality gets drunk
and does things a good Christian shouldn’t. And then his company behaves in
an unChristian manner towards its own stores.
Personally, I’ve never expected better behaviour from Christians than from
non-Christians, so this kind of rhetoric leaves me cold. If Kinkade’s store
owners feel particularly betrayed because they were given to believe that they
were part of a Christian group, there’s a logical weakness in their argument.
Christian companies don’t perform better than non-Christian companies. And any
company, once it starts failing, is going to result in people losing money.
Kinkade was clearly good at selling to his dealers – not only art, but
the whole company story.
"I took a bloodbath, an absolute bloodbath," said De la Carriere,
the Los Angeles art dealer, who said she invested her inheritance in Media
Arts Group stock at more than $20 a share.
In other words, this woman not only decided to bet her income and her career
on the success of Thomas Kinkade; she also decided to bet her inheritance on
it as well. It’s a tragic story, to be sure, but De la Carriere has to take
a certain amount of responsibility for her all-eggs-in-one-basket approach to
life. She knew that if Kinkade failed, then she would too.
Do I think that Thomas Kinkade is a good man? No. He’s a rich man, who has
become wealthy even as people trying to piggyback on his success lost money.
But what’s lost in the LA Times story is that virtually everyone who entered
the Kinkade industry did so out of greed – not just Kinkade himself.
The store owners saw a booming market, and then lost money when the market
stopped booming and the internet made secondary-market values of Kinkade’s work
much more transparent. Suddenly, the enormous growth in past Kinkade sales was
no longer a good thing: there were a lot of Kinkades to go around, and many
of the buyers were people who bought on the assumption that their paintings
would increase in value and they could make money on their investment. Up until
the arrival of the internet, that worked for Kinkade, whose company set the
prices for all his paintings and would raise them steadily. After the arrival
of the internet, a whole industry arose buying and selling Kinkades at market-set,
rather than Kinkade-set, prices. And that was the end of the success days for
the company: without monopoly pricing power, Kinkade was nothing.
The stores failed, ultimately, not because Kinkade treated them badly, and
not because other stores were undercutting them. The stores failed because Kinkades
are a commodity, and anybody wanting to buy one could get a second-hand Kinkade
online at a much lower price than that charged at retail. Buyers no longer believed
that their paintings would increase in value, so they bought fewer than they
used to. And when they did buy, they were likely to buy already-existing Kinkades
rather than new ones.
As a general rule, no retailer has ever consistently been able to make money
by selling the proposition that his goods are going to increase in value after
they’re bought. Kinkade managed it for a few years, but then, inevitably, the
bubble burst. And when bubbles burst, people get hurt. It’s not the fault of
Thomas Kinkade, it’s simple market dynamics.