This industry includes establishments primarily engaged in providing commercial art or graphic design services for advertising agencies, publishers, and other business and industrial users. Establishments primarily engaged in art, except commercial and medical, are classified in SIC 8999: Services, Not Elsewhere Classified; those engaged in medical art are classified in SIC 8099: Health and Allied Services, Not Elsewhere Classified; and those providing drafting services are classified in SIC 7389: Business Services, Not Elsewhere Classified.
541430 (Graphic Design Services)
The commercial art and graphic design industry encompasses the business of selling artwork for business (promotional) purposes, rather than for strictly aesthetic purposes. The artwork can be produced using a myriad of techniques, including hand painting, computer-aided design software, and video cameras. Commercial art and graphic design can be found on posters, packages, films, and television.
Commercial art remains subject to many of the same standards of "high art," regardless of its ultimate use or intended purpose. Therefore, a graphic designed for an advertisement may not be as significant as the Sistine Chapel murals, but the difference between them is one of degree rather than kind. Commercial art is similar to other art in that it is custom made, and it requires time, skill, judgment, taste, and background on the part of the artist to produce it; it is usually purchased before it is produced; and there are few fixed standards for evaluating the end-product. Personal taste and opinion determine the effectiveness of commercial art.
Commercial art differs from other art in value. According to Forbes , the value of commercial art diminishes quickly. For example, LeRoy Neiman's limited edition sports prints sold at commercial galleries for $2,000 to $20,000 when they were first produced. At an auction in 1992, Neiman prints sold for 5 to 20 cents on the original dollar price. In contrast, the value of paintings by Pablo Picasso or Vincent Van Gogh greatly appreciates over the years.
The structure of the commercial art industry is characterized by individual freelance artists and corporations who produce commercial art graphics as well as the businesses who buy the art. In the 1970s, this industry was characterized by many individual freelance artists who sold their work to agents—middlemen—who then found the ultimate buyer of the art work.
Due to vertical integration and advances in technology in the 1980s and 1990s, many companies, such as advertising agencies, have created their own art and graphics departments. These departments have allowed firms to exercise more control over the commercial art process. Moreover, an abundance of commercial art and graphic design firms have entered the industry. The number of freelance artists has declined as the number of specialized design departments and firms has increased.
Artists have been using high-technology equipment such as computers, plotters, and printers since the 1960s, but the technological revolution of the 1980s has made such devices as color copiers, scanners, still video cameras, and desktop publishing software widely available for use as artistic tools. In commercial art and graphic design, high-tech equipment has all but replaced paint brushes and drawing pens at magazines, newspapers, and advertising agencies.
Desktop publishing (DTP) is a good example of how technology has changed this industry. DTP has become one of the most widely used forms of creating commercial and graphic art. DTP can produce attractive, artistic pages using different typefaces and graphic elements in harmony. The advantage of DTP is that even the smallest firm can cost-effectively publish in-house.
The basic requirements to engage in DTP are a computer with the appropriate software package, a mouse, a scanner, and a color printer. In the late 1990s, the cost of a small, high-end desktop computer dropped to under $1,000 while a production system cost about $10,000. Due to these relatively low startup costs, desktop publishing has allowed magazines, newspapers, and advertising agencies to create in-house graphics departments. Moreover, smaller entrepreneurs have emerged to create spectacular art and graphics with little investment in capital compared to other businesses.
Frequently, situations arise where the law plays an important part in commercial art and graphic design. In most commercial art and graphic design businesses, a legal counsel is hired for nearly all actual and potential legal problems. The services of a knowledgeable lawyer can save time, money, and misery. The major issues in commercial art and graphic design include contracts, agents, copyrights, royalties, patents, bailments, and ownership of artwork.
Each time an artist accepts an assignment for artwork, he or she enters into a contract. For contracts to be considered valid, a contract must have three common elements: offer, acceptance, and consideration. An offer may be made orally, in writing, or by conduct. For example, if a publisher from Time magazine delivers a story manuscript to an artist who is aware of the prices paid by the magazine, the assumption is that delivery constitutes an offer to the artist to illustrate the story at those prices. Acceptance also may be communicated verbally, in writing, or by conduct. In the Time example, the retention of the manuscript by the artist may be construed as acceptance of the offer. However, a written document stating the artist's acceptance would give the artist greater leverage in the court system and greater protection. Consideration is defined by the publisher's implied promise to pay at the known rates and by the artist's implied promise to illustrate the story. The consideration constitutes one party promising to pay a certain sum in exchange for the other party's promising to perform a certain act.
An agent is someone who acts on behalf of another —the principal—in dealing with a third party. The types of agents most commonly found in the art business are salespeople, advertising agencies, representatives, galleries, and studios. Agents are used by commercial artists and firms to allow their art to reach may outlets—buyers—who may be interested in the work. Agents, therefore, are middlemen who find the parties who will purchase the Artists' or firms' work.
The relationship between the artist/firm and the agent may be created by an oral understanding, by written agreement, or by implication. The law states that a true agent may not serve two masters. Therefore, the agent for the artist may not serve a third party—another artist—who has negative competitive ramifications for the artist.
Copyrights protect artistic works against unauthorized copying. In certain circumstances, an artist is wise to gain a copyright or royalties for a work instead of an outright sale of the artwork. A copyright is a limited monopoly granted by the government to an artist. A copyright allows an artist to sell limited reproduction rights to several parties that would not conflict with one another in the use of the work. The duration of the copyright is 28 years and can be renewed for another 28 years. Specific artistic works that may be protected by copyright include works of art, models or designs for works for art, and reproductions of works of art.
A royalty arrangement with the manufacturer or publisher guarantees an artist a fee for each piece of his or her work that is sold. A royalty agreement may be most applicable when an unknown quantity of a product may be sold, such as in the sale of calendars, maps, greeting cards, and children's books. The royalty arrangement provides protection for both the publisher and the artist.
Design patents may be secured for new, original product designs that are novel and considered an invention. A piece of art is considered patentable if it has not been previously known or used by others in the United States, has not been patented in the United States or abroad, and has not been in public use for more than one year prior to the application for a patent, unless it is proven to be abandoned.
When an artist delivers a painting to an individual or studio for use as a sample of his or her work, the legal relation of bailment will ordinarily be created. The title to the material remains with the bailor, or the artist. The liability of the bailee, or the studio or individual, will vary. However, generally speaking, bailees' liabilities are in direct proportion to the extent of the benefit they are expected to derive from the bailment. Therefore, if the artwork is lost or damaged, bailees are liable for greater damages if they had been using it to procure work for profit, than if they had held the artwork for safekeeping without compensation.
In the absence of an oral or written agreement, the full rights of ownership belong to the purchaser. An artist can legally protect him or herself by presenting a specific written agreement. The artist can write into the purchase order any retention of rights or additional compensation requirements.
In terms of revenues and number of employees, commercial art and graphic design establishments are smaller institutions than other service industry establishments. Interestingly, the average payroll per employee in commercial art and graphic design establishments was in the mid $20,000, compared to $17-$20,000 for other service industries. These figures demonstrate that the higher salaries were justified by the significantly higher profitability of the commercial art and graphic design industry when compared to other service industries.
In the mid 1990s, the industry had an estimated 13,184 establishments, which employed about 51,300 people. Revenues for that year were estimated to be slightly less than that of 1995 — $6.12 billion, as compared to $6.2 billion in 1995.
California and New York had the most establishments, with 1,765 and 1,618, respectively. Other states with high numbers of establishments included Illinois (940), Florida (637), Texas (598), and New Jersey (507). Wyoming and Alaska had the lowest number of establishments, with 10 and 5, respectively.
Computers continue to change the face of the commercial art and graphic design community. Hard copy mechanical art has been replaced by electronic mechanicals and film-based photography has been replaced by digital photography. In fact, by the beginning of the twenty-first century, digital proofing represented 25 percent of the market. Additionally, the increased use of color printers by advertising agencies, corporations and design firms also has impacted the industry.
In the late 1990s, the Graphic Communications Association of the Printing Industries of America developed GRACoL, General Requirements for Applications and Commercial Offset Lithography. GRACoL is a series of specifications that ensures uniformity of color.
Another concern facing small, independent commercial art and graphic design firms was their ability to compete in the job market. A human resources survey conducted by the Printing Industry of America found that more than 60 percent of firms with less than 10 employees do not offer benefit programs.
According to the Bureau of Labor Statistics, jobs in desktop publishing are expected to increase by 72.6 percent in the decade ending in 2008. A 27.1 percent increase is expected for designers; 25.7 percent for commercial artists; 23 percent for advertising and marketing sales; and only .2 percent for printing jobs.
Most of the top 10 companies in the industry were privately held. The top 2 companies sold more than twice their nearest competition. Continental Graphics Corp. and Applied Graphics Technologies were the leading companies in the industry, with each posting in the neighborhood of $250 to $300 million in sales annually. Applied Graphics Technology is part of the communications empire headed by Mort Zuckerman, owner of U.S. News and World Report.
The other industry leaders were Creative Associates with $86 million in sales; Avionics Research Corp. ($80 million); GML Inc. ($17 million); Stanford Blaine Design Inc. ($10 million); Desktop Graphics Inc. ($9 million); T-Square Express Inc. ($9 million); King Graphics Inc. ($9 million); and United Letter Service Inc. ($8 million).
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