Commercial Art and Graphic Design

SIC 7336

Companies in this industry

Industry report:

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.

Industry Snapshot

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 frescoes, 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.

Organization and Structure

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, or 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, created their own art and graphics departments. These departments allowed firms to exercise more control over the commercial art process. Moreover, an abundance of commercial art and graphic design firms entered the industry. The number of freelance artists declined as the number of specialized design departments and firms increased.

Artists have been using high-technology equipment such as computers, plotters, and printers since the 1960s, but the technological revolution of the 1980s made such devices as color copiers, scanners, still video cameras, and desktop publishing software widely available for use as artistic tools. By the end of the twentieth century, high-tech equipment had basically replaced paint brushes and drawing pens for commercial art and graphic design at magazines, newspapers, and advertising agencies.

Desktop publishing (DTP) is a good example of how technology changed this industry. DTP became one of the most widely used forms of creating commercial and graphic art in the late twentieth century. 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 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 allowed magazines, newspapers, and advertising agencies to create in-house graphics departments. Moreover, smaller entrepreneurs 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, 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 a contract to be considered valid, it 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, or 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 many outlets, or 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 such as 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 will not conflict with one another in the use of the work. The duration of the copyright is 28 years, and it 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 is ordinarily be created. The title to the material remains with the bailer, or the artist. The liability of the bailee, or the studio or individual, can 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.

Background and Development

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 around $25,000 in the 1990s, compared to $17,000 to $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 that employed about 51,300 people. Revenues for 1996 were estimated to be about $6.1 billion. Six years later, in 2002, revenues had grown to $8.0 billion, the number of establishments had increased to 15,828, and employment had risen to 61,883.

In the late 1990s, the Graphic Communications Association (later renamed the IDEAlliance) developed GRACoL: General Requirements for Applications and Commercial Offset Lithography. GRACoL encompassed a series of specifications that ensured uniformity of color. By the early 2010s, the organization's role had extended to " improve communications and education in the graphic arts by developing best practices that reflect the influence and impact of new technologies in the workflow of commercial offset lithography," according to its website.

Computers continued to change the face of the commercial art and graphic design community. Hard copy mechanical art was replaced by electronic mechanicals, and film-based photography was virtually replaced by digital photography. In the mid-2000s, one survey by TrendWatch Graphic Arts found that 82 percent of commercial photographers used digital cameras. The most common application for digital photography was the capture of high-resolution images for print advertising. As digital use increased, so did technology for storing and printing images. By the mid-2000s, printer makers Canon, Epson, and HP all had developed printers that were equal to or better than traditional commercial chemistry-based photo printing processes. Digital fine art (DFA) printing was one new arena for these and other printing companies, creating "museum quality" prints.

One 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 in the mid-2000s found that more than 60 percent of firms with fewer than 10 employees did not offer benefit programs.

By 2007, there were 16,452 establishments providing graphic design services, according to the U.S. Census Bureau. Together these firms employed 57,148 workers and generated more than $8.2 billion in annual revenues.

Current Conditions

Because the graphic design and commercial art industry relies on advertising for a large portion of its income, the economic recession of the late 2000s--and businesses' resulting cut-backs in spending--produced a drop in revenues. However, industry experts predicted a recovery into the early 2010s. The largest growth area, according to a report by IBISWorld, was the Internet. According to the report, "The publishing sector is increasingly taking its products online, thus creating a new segment and demand for qualified designers." Forecasts for revenues in the industry were expected to "brighten but remain in a mature state."

According to the Bureau of Labor Statistics, employment in graphic design was expected to increase about as fast as average through 2018, with number of jobs increasing about 13 percent to 323,100. The most demand was expected for artists with website design and animation experience. In 2009, the average salary for a commercial graphic designer working in advertising and public relations was about $43,540 a year.

Industry Leaders

According to Hoovers, the graphic design services industry was highly fragmented in the early 2010s, with the 50 largest companies accounting for less than 20 percent of total industry revenues. One of the larger firms that provided commercial art and graphic services was QuadGraphics Inc. of Sussex, Wisconsin. The firm provided everything from design, photography, and desktop publishing to printing, wrapping, and distribution of catalogs, brochures, direct mail, and other commercial materials. QuadGraphics expanded in 2010 when it acquired former rival World Color Press. Revenues for the company in 2009 totaled $1.7 billion. Another large company, Chicago-based R.R. Donnelly & Sons, provided graphics and prepress services in addition to printing services. With 56,800 employees R.R. Donnelly had annual sales of $9.8 billion in 2009.

Smaller companies that focused more on the creation of commercial graphics included Schawk Inc. of Des Plains, Illinois, with 150 facilities in North America and about 12 more overseas. The company provided graphics and related services for commercial use, including packaging and advertising. With 3,100 employees, Schawk had revenues of about $452 million in 2009.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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