May 1, 2022
5 January 2022
In 2016, the British Museum granted the Chinese firm 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 millions in sales. Neither the museum nor the licensing firm will disclose the British Museum’s cut of these sales, but we do know that, in 2018, the museum’s global merchandise sales amounted to £21.5m; 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 finalised their collaborations with the firm in 2018.
This year, the founder of Alfilo Brands, Yizan He, has set up 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 partnering with Western museums to sell branded products.
THE ART NEWSPAPER: How did you start licensing museum products?
YIZAN HE: I started working with museums six years ago. At that time, I was running my own company, Alfilo Brands, and we were working with many Hollywood studios on their licensing and merchandise in China. The film licensing business is cut-throat and the cost of working with big studios has always been high, so that was actually a money-losing business for me.
Then, in June 2016, one of my US colleagues called me in the middle of the night and said “Yizan, get an air 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 took a flight from Shanghai to Los Angeles anyway and then drove all the way to Las Vegas to attend a major licensing Expo.
I walked around the exhibition hall, which was mostly occupied by Hollywood studios like Sony Pictures, and I couldn’t find the British Museum anywhere. Just as I was about to give up, I spotted a small table close to the toilet with four little notepads on it. There was no booth. I was very, very disappointed. And there was nobody from the British Museum there because they didn’t 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 that you’re disappointed, but this is what I would like to share with you. You’ve been working with Hollywood Studios, and they demand that you create hundreds of licensed products to be sold within a one-week window because the way movies come and go, normally you only have days to sell your licensed products. But with the British Museum, we’re talking about art and history. The British Museum has over eight million artefacts spanning multiple civilisations and all those properties are timeless. If you work with us, you will have the rights to utilise all of those assets.” At that moment, I almost fell off my chair because it was so hard to contain my excitement. I talked to that agent for half an hour and that half an hour changed my life.
We do not simply slap paintings on things. Because that is not a way to engage the younger generation
I’m very proud that three months later, on 30 September 2016, we signed the first master licence agreement with the British Museum for five years in China exclusively for all product categories.
And has that been renewed?
Not only has it been renewed, it’s been extended to eight years because the British Museum loved the programme so much. One online store that we operate for the museum in China, Tmall, has, on average, close to 24 million visitors a year—that is four times more visitors than go to the British Museum in person every year.
What products have you created for the British Museum and your other museum partners?
We have thousands of different products from stationery to home furnishings, scented diffusers, apparel, surfboards, bottled drinks. The products that we put together are not souvenir-type products. It’s not keychains or refrigerator magnets. Every single thing we make is a lifestyle product. We do not simply slap paintings on things. Because that is not a way to engage the younger generation; they want something new and something modern.
We do not sift through museums’ entire collections; that would be impossible. We work with international trend forecasting companies like WGSN. They predict forthcoming trends; we look at those trends and put together our own themes; we prepare four to six every year. For example, one current theme is A Wave from the East, which is inspired by Hokusai’s The Great Wave. Then, we collaborate with all our museum partners to find works by Hokusai in their collections and will use these as the starting off point. Our designers then create new patterns and illustrations that are inspired by the original print, and we use these on a range of products that look modern and appealing to the younger demographic.
How much input do the museums have in the products you create?
We work closely with museums’ marketing teams because our job is to help them expand their global audience. So, for example, the National Gallery in London is going to host an exhibition on Raphael in 2022. With that in mind we put together themes and designs so the licensing can support the exhibition. Many of the works we use are not protected by copyright; Hokusai’s Wave, for example, is already in the public domain. Anybody can use it on any product. But they cannot tell an authentic story like we can because we work in partnership with museum experts. Every single licensed product we create has to be approved by our museum partners before it hits the market.
What is your best-selling museum branded product in China?
It’s a product we created as part of a licensing deal Alfilo Brands put together for the British Museum with a Chinese drinks company called President Group, who used images of a boy pharoah inspired by the museum’s Egyptian collection on bottles of Classmate Xiaoming, a tea drink marketed to 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 home appliances brand which is trying to expand its coverage in six European countries and in North America. We’re bringing them together with the National Gallery to launch a licensing programme in these markets. We will do a lot of digital marketing, such as livestreaming from the National Gallery; everything is digital driven.
Can you give museums assurances about your supply chains and the working conditions of all of the people making your products?
After working with Hollywood, I learned my lesson. Our film partners took work, labour 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 actually deliver the results and show the proof and adopt an open-book policy. We have an
internal compliance committee which is headed by our legal counsel and a few department heads. Their job is to make sure that we deliver what we promise to our museum partners. Which means when we sign licensees, if they claim their products are eco-friendly, we need to ensure that they are. We also work with many international factory audit firms. When the Hollywood studios that I’ve collaborated with in the past work with local manufacturers, they need to see factory audit reports, so they hire specialised firms which audit the working conditions of the factories and go to the dormitories where workers live to see the conditions. These companies are expert in this area and are well trusted by global consumer brands. The reports they produce for us are shared with our museum partners.
How much money do your museum partners make?
Every museum receives different levels of royalties, but we do commit to minimum guaranteed sums for them. So, for example, we just signed an agreement with the Brooklyn Museum for exclusive global rights to their collection and we’ve agreed to pay them a set royalty every year, regardless of how many products we sell because that shows them that we are prepared to devote a lot of resources to make 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 sales, because the museums have the artefacts, but my company does all the actual work: we have created design assets such as illustrations, prints and patterns that can be easily applied on to products. What we do is truly 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 female and their average age is 25 to 30.