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Business Plan
CC4115 Cultural Entrepreneurship
Business Plan
Group 9
Iris Kühn 417035
Margareta Liebl 409214
Lisanne Maliepaard 336219
Laura Naum 414932
Julia Tétényi 415953
Lecturer
Dr. Marilena Vecco
January, 2015
Rotterdam
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Executive Summary
There is a consistent lack of activity in the networking and managerial side of the arts
application market. pAiRT fills this gap by providing an innovative subscription-based
mobile app that aims to be the intermediary voice between young artists and galleries. In an
ever-changing environment, pAiRT connects young starting artists with galleries by offering a
platform to communicate and establish relationships. The app simplifies the searching process
for both parties as well as the interaction between them – pAiRT allows easy access, quick
communication, promotion and an extensive network. After both, artist and gallery, have
completed an advanced online form with criteria concerning work, art form, experience,
objectives, administrative information and location, pAiRT makes suggestions, based on their
matching criteria.
To be able to assure highest quality and to guarantee outstanding services, pAiRT will start
operating in the Dutch market, Rotterdam and Amsterdam, as these cities function as creative
hot-spots for artists. Hundreds of Dutch and international artists graduate in these cities every
year, and start their carrier - or, would start their carrier, if they could find a proper gallery to
co-work with. The gallery sector in the Netherlands is currently growing and therefore offers
a lot of potential. As a result, young artists and galleries need a proper intermediary to help
them connect with each other. Moreover, the application market has grown significantly as
well as the possibilities to generate money from it. Especially social networking apps are
popular among smartphone users and pAiRT falls within this category. Because of these
reasons and as pAiRT is the first app of its kind, we are confident that artists will highly
appreciate this service and we will be able to establish a strong position on the market.
Already in Q3 2015 the service will be expanded to Berlin and Vienna, promising markets, as
both are important cultural capitals in Europe.
This will be achieved by focusing on getting into personal contact with our target group,
young artists, as much as possible. We understand the challenging situation of starting artists
and want to support them in finding acknowledgement. Regarding advertisement we will
cooperate with art suppliers, art fairs and magazines that are focused on the visual artists.
Furthermore, pAiRT will kick off with a spectacular launch networking event in the Van
Nelle Fabriek.
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Founded in 2014, pAiRT is a start-up company that is engaged in the creative sector of the
Netherlands. Highly committed to innovation, communication and creativity, we wish to
build a bridge between artists and galleries. We, the brains behind pAiRT, are a small, but
diverse team of 5 people with professional backgrounds in economics, business and art: Iris
Kühn, CEO (Chief Executive Officer), Margareta Liebl, COO (Chief Operations Officer),
Julia Tétényi, CFO (Chief Financial Officer), Lisanne Maliepaard, CMO (Chief Marketing
Officer) and Laura Naum, CCO (Chief Creative Officer).
We are seeking €160.000 in which the required starting capital (development and design of
software and website) of €100.000 is included and furthermore based on our estimations for
the next quarters of 2016 the capital is needed for establishing the office, running the
marketing campaign and to ensure further improvements of the service. If we maintain a
growth of 125% in sold matches and advertisements, we are able to pay off the needed
investment of € 160.000 within two years after starting the business.
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Table of content
1. BUSINESS DESCRIPTION ........................................................................................................................6
1.1. MISSION ......................................................................................................................................................6
1.2. VISION.........................................................................................................................................................7
2. ORGANIZATIONAL PLAN........................................................................................................................8
2.1. EXTERNAL ORGANIZATION .......................................................................................................................8
2.2. INTERNAL ORGANIZATION ........................................................................................................................8
3. HUMAN RESOURCE PLAN....................................................................................................................10
3.1. IRIS KÜHN, CEO (CHIEF EXECUTIVE OFFICER)....................................................................................10
3.2. MARGARETA LIEBL, COO (CHIEF OPERATIONS OFFICER) .................................................................11
3.3. JULIA TÉTÉNYI, CFO (CHIEF FINANCIAL OFFICER) .............................................................................11
3.4. LISANNE MALIEPAARD, CMO (CHIEF MARKETING OFFICER)............................................................12
3.5. LAURA NAUM, CCO (CHIEF CREATIVE OFFICER).................................................................................12
3.6. OUTSOURCED TASKS ..............................................................................................................................12
4. ENVIRONMENTAL AND INDUSTRY ANALYSIS .............................................................................13
4.1. POLITICAL FACTORS ...............................................................................................................................14
4.2. ECONOMIC FACTORS...............................................................................................................................15
4.3. SOCIAL FACTORS.....................................................................................................................................17
4.4. TECHNOLOGICAL FACTORS.....................................................................................................................19
4.5. LEGAL FACTORS ......................................................................................................................................19
4.6. ETHICAL FACTORS ..................................................................................................................................20
5. MARKET ANALYSIS ...............................................................................................................................21
5.1. THE APPLICATION INDUSTRY: AN OVERVIEW .....................................................................................21
5.2. DATA IN THE APPLICATION MARKET....................................................................................................22
5.3. MONETIZATION TYPES AND PRICES IN THE APP MARKET..................................................................23
6. COMPETITOR ANALYSIS......................................................................................................................25
6.1. PORTER’S FIVE FORCES..........................................................................................................................27
6.1.1. POTENTIAL THREAT OF NEW ENTRANTS: MODERATE..................................................................27
6.1.2. BARGAINING POWER OF BUYERS: MODERATELY HIGH..............................................................27
7. MARKETING PLAN.................................................................................................................................29
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7.1. SWOT ANALYSIS.....................................................................................................................................30
7.2. TARGET GROUP .......................................................................................................................................31
7.3. PRODUCT.................................................................................................................................................31
7.4. PLACE.......................................................................................................................................................32
7.5. PRICE .......................................................................................................................................................33
7.6. PROMOTION ............................................................................................................................................34
8. OPERATIONAL PLAN ............................................................................................................................41
8.1. OFFICE OPERATIONS (OFFICE MANAGEMENT; PHYSICAL RESOURCES) ............................................41
8.2. HUMAN RESOURCES OPERATIONS.........................................................................................................42
9. DEVELOPMENT PLAN...........................................................................................................................44
9.1. GENERAL OVERVIEW OF LIFECYCLE OF APPS.........................................................................................44
9.2. TECHNOLOGICAL DEVELOPMENT (APP / HOMEPAGE).........................................................................44
9.3. COMPANY DEVELOPMENT.......................................................................................................................47
10. FINANCIAL PLAN..................................................................................................................................49
10.1. EXPENDITURES AND BUDGETS.............................................................................................................49
10.2. ANALYSIS OF THE CASH FLOW .............................................................................................................54
10.3. POTENTIAL INVESTORS AND IN-APP ADVERTISERS ..........................................................................55
11. ASSESSMENT OF RISK........................................................................................................................57
12. REFERENCES .........................................................................................................................................61
APPENDIX ........................................................................................................................................................64
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1. Business Description (Kühn & Liebl)
pAiRT is a start-up in and for the creative sector founded in 2014 in Rotterdam. We, the
people and brains behind pAiRT, are a small team with background in economics, business
and art, passionate about visual arts. That is why we decided to combine our passion with our
profession to support young artists and galleries and to contribute to a flourishing art
environment. We believe that globalization is an engine that helps to foster relationships
among creative people all over the world.
pAiRT is a company providing an innovative subscription-based mobile app available for
smart phones and tablets. After completing an advanced online form with criteria concerning
work, art form, experience, objectives, administrative information and location, pAiRT makes
suggestions, based on matching criteria (e.g. same art form; similar interests) of an artist and a
gallery. Our strength is to be the first app of its kind that facilitates the often long-lasting
search for the perfect artist or gallery and makes it more transparent and interactive. As an
artist you can use pAiRT to display your creative work, as a gallery owner you can introduce
your exhibition space and interests and without any obligation they can accept the match and
get to know each other in person. Both parties enjoy the positive effects of easy access, quick
communication, promotion and an extensive network.
Core Values of pAiRT
Commitment to innovation
Commitment to art
Commitment to connect creative people
Commitment to facilitate communication and relationships
1.1. Mission
pAiRT is an app connecting young artists with matching galleries developed by people who
are committed to art, innovation and creativity. In an ever-changing environment we are the
intermediary voice for artists and galleries by offering a platform to communicate and
establish relationships. The app simplifies the searching process for both parties as well as the
interaction between them – pAiRT allows easy access, quick communication, promotion, and
an extensive network.
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1.2. Vision
pAiRT aspires to be the main intermediary who links artists and galleries on a global scale by
offering outstanding innovative services. The app intends to be the leading platform in
matching artists and galleries by facilitating the search process and the communication in a
reliable and trustworthy environment.
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2. Organizational Plan (Kühn & Liebl)
2.1. External Organization
The legal form of pAiRT is a Professional Partnership in the Netherlands. The members took
this decision after meeting with their legal advisor Peter Kühn (see 4.2. Economic Factors).
The advantages of this form are, especially for a small team of 5 people, that it has easy
management and administrative structures and moreover, the voting rights are divided based
on the percentage owned. In the case of pAiRT each member holds 20% of the company, this
results in equally spread power. Mag. Peter Kühn advised –although not legally required – to
set up a contract that clarifies the partnership agreement. The agreement can help to avoid
legal and personal misunderstandings and troubles. Additionally, if pAiRT is as successful as
expected it is still possible to change the legal form into a Ltd. (private limited company) for
example.
2.2. Internal Organization
The organization chart below describes the internal structure of pAiRT. The company consists
of 5 team members who are all responsible for different organizational parts. Although the
tasks are divided and every employee has a special role, it is clear that especially in the
starting phase all parts are strongly connected and dependent and the members have to closely
work together. Still the CEO has the final word in decision-making.
This friendly, uncomplicated and coherent internal organization can be led back to the
emotional intelligence of the whole team, but especially to the CEO. Iris Kühn was able to
establish a philosophy, which is encouraging and open on the one side and structured and
clear on the other side. Goleman (2000) identified six leadership styles (coercive
pacesetting, authoritative, democratic, coaching, affiliative) and the CEO of pAiRT manages
to adapt these various leadership styles in different situations. Furthermore, this accordance is
the result of several meetings, in which the team brainstormed about their future corporate
culture – according to Cameron and Quinn (2011) an organization can have four cultures:
hierarchy-control, ad-hoc, market-oriented and clan. This framework supported the colleagues
to think of their values, goals and objectives and they concluded that the best culture for
pAiRT is a mixture of ad-hoc (because of its flexibility), clan (because of its friendly and
familiar environment) and market-oriented (as it is the aim to reach artists and galleries and to
be successful).
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Below there is the organization chart, which reflects the flattened structure of the
organization, in which everyone has the same rights and everyone provides the same amount
of 2000€ (total 10.000€) as starting capital. However, without any misunderstandings, the
CEO still has the leading voice. In addition, the organization does not have a board yet.
Chart 1. Organization Chart
Ownership Outsourced
Iris Kühn CEO (founder) 20% € 2000 IT person
Margareta Liebl COO 20% € 2000 Legal advisor
Julia Tétényi CFO 20% € 2000
Lisanne Maliepaard CMO 20% € 2000
Laura Naum CCO 20% € 2000
At the moment, pAiRT only has one room as their office, in which the five colleagues work,
meet, manage and discuss. The CEO and COO are full-time engaged, whereas the other
members are part-time engaged, however, in the starting phase the working-hours and
engagement structures are not fully defined and the team is aware of the intense workload
especially in the beginning, which requires them to be always prepared and to come to the
office, even if they have not planned to be there.
Address:
pAiRT
Jacob van Campenplein 98
3067 LC Rotterdam
The Netherlands
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3. Human Resource Plan (Kühn & Liebl)
3.1. Iris Kühn, CEO (Chief Executive Officer)
Title and responsibility
After working and gaining first hand experience in a gallery, Iris came up with the idea of
pAiRT in 2014. She moved to Rotterdam where she met Marga, Laura, Julia and Lisanne,
who were also interested in enhancing the way of communication between artists and
galleries. After various discussions and meetings, pAiRt and its goals and objectives were
born. As she is the main driver behind pAiRT the team decided that she is going to be the
CEO of the company. Her main tasks are to give directions and to set up the long-term
strategies of pAiRT. On the one hand she is the person communicating with the external
environment meeting with key investors, stakeholders and other advisors, on the other hand
she is the leader of the team and responsible for the success of the company, as well as the
well-being and satisfaction of the employees.
Biography and experience
Iris is 23 years old from Vienna and has always been interested in the cultural sector. That is
why she decided to combine business and arts after school and started her studies in business
administration and art history, which she has finished as Bachelor of Science and Arts in
2014. During her studies she worked in several cultural businesses to gain deeper knowledge
about the cultural sector and did internships in museums and galleries. Working closely with
galleries and artists showed her that the communication between these two parties is often
complicated and long lasting and she realized that there is much room for improvement. She
is a good leader because of several reasons - she has not only outstanding cognitive and
technical skills in the gallery sector but also high emotional intelligence. Her skill to motivate
and engage other people, already become clear at a young age. Starting in school Iris has been
class representative for several years and was responsible for organizing various charity
school events. During her studies she improved her skills further by participating in several
courses concerning successful leadership and social skills improvement. Referring to the
DISC Profile Iris clearly takes over the role of the dominant and influential leader, as she is
confident, sees the big picture and is highly enthusiastic about her work.
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3.2. Margareta Liebl, COO (Chief Operations Officer)
Title and responsibility
Margareta is the COO of pAiRT, working closely together with Iris. She is in charge of all
operational processes of the company and takes care of all tasks concerning the internal and
external environment. Margareta makes sure that the operations inside the company run
smoothly and also deals with external customer problems. Her excellent organizational and
problem solving skills made clear that she is the right person for this function and in addition,
she will take over the role of the secretary.
Biography and experience
Margareta is 23 years old and is from Austria. She studied International Business in Vienna
and finished her studies as Bachelor of Science in 2013 and was always passionate about arts
and culture. During her studies she made several internships in different cultural sectors, for
instance, arts, music, movie and fashion, always dealing with organizational concerns. Her
insights and experiences in these fields make her the perfect COO and secretary for pAiRT. In
the DISC profile Margareta is dominant and conscientiousness, as she accepts challenges and
puts high emphasis on quality and details.
3.3. Julia Tétényi, CFO (Chief Financial Officer)
Title and responsibility
Julia is the CFO of pAiRT. She is responsible for managing all financial tasks of the
company, keeps records, deals with financial risks and plans and reports to the management.
Moreover, Julia has to be in contact with external financial partners as banks and outside
CPA’s.
Biography and experience
Julia is 26 years old and was born and raised in Hungary. In 2012, she finished her Bachelor
degree in Art History and International communication and media as Bachelor of Arts and
Science. Besides her passion for the arts, Julia has always been interested in the financial
aspects of a company. Therefore, she took an accounting class besides her studies and worked
part time in the financial department of the acb gallery in Budapest to deepen her knowledge
in this field. Regarding the DISC profile Julia is a steady person as she is sincere and calm.
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3.4. Lisanne Maliepaard, CMO (Chief Marketing Officer)
Title and responsibility
Lisanne is the CMO of pAiRT. The CMO is in charge of the marketing appearance of pAiRT
to the outside world. pAiRT’s marketing strategy mainly focuses on the promotion of the app
via various platforms as well as on a strong social media campaign.
Biography and experience
Lisanne is 24 years old and was born in the Netherlands. She finished her studies in Culture
Studies as Bachelor of Arts in 2012. During her studies she worked in different cultural
organizations and had the opportunity to gain deeper knowledge about marketing strategies
and promotions. Concerning the DISC profile Lisanne clearly is a dominant person as she is
focused on results, accepts challenges and gets straight to the point.
3.5. Laura Naum, CCO (Chief Creative Officer)
Title and responsibility
Laura is the CCO of pAiRT. She is responsible for all technological decisions concerning the
app. As the software and development behind the app is quite complex, pAiRT and especially
Laura has to closely work together with an outsourced IT person in Vienna.
Biography and experience
Laura is 25 years old and from Bucharest. She did her studies in Economics in International
Economic Relations and Foreign Affaires and finished it as Bachelor of Science in 2012.
Furthermore, Laura was always interested in programming and did a further education class in
Database Design and Programming. Since then she has been working on small projects in this
field and decided to build up her future career in this direction. As Laura is a sincere and calm
person and puts great emphasis on cooperation she clearly is the steady type in the DISC
figure.
3.6. Outsourced Tasks
IT students from TU Wien (Vienna)
Legal advisor Peter Kühn (Vienna)
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4. Environmental and Industry Analysis (Tétényi)
In order for pAiRT to enter the app market, an environmental and industrial analysis needs to
be conducted. The complexity of the product requires an analysis the application industry in
addition to a research in the field of galleries and artists based in Rotterdam and Amsterdam.
Under these conditions, a PESTLE analysis will be conducted.
Considering the strong governmental influence on artists and their work (Super
Individualism), it can be noted that political factors usually have negative implications for the
gallery system. On the other hand, the subsidy cut can inspire the commercial galleries to
establish more co-operations with artists and, therefore, a potential need for helpful
intermediaries can be determined. Additionally, simple taxation, local economic investments
and the growth of the app industry are factors that stimulate the economic environment, even
if the gallery sector has to face new challenges after the financial crisis. Nonetheless, the
relapse in the art gallery sector remained short, despite that it challenges the social support
and the co-operation between artists and galleries. Moreover, the support for entrepreneurs
also emphasizes the need for effective intermediaries. The most recent technological
innovations and the growing importance of technology in the professional lives of both artists
and gallery workers show that applications can help to increase businesses. Unfortunately,
copyright issues can be hard to protect, symbolizing a complex ethical factor. Finally, the
simple laws and support for start-ups contribute to a neutral environment and industry, where
pAiRT can be effectively marketed.
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Political Economic Social
+ Strong cultural policy
+ Subsidy cut increases artists’
taste for galleries’ services
offering growth potential for
both
+ Simple taxation
+ Growth in the app
industry
+ Increasing investments
- Small art gallery sector
+ Short period of decline
in the gallery sector
+ Support for
entrepreneurs, start-ups,
partnerships
- Co-operation between
galleries and artists
Technological Ethical Legal
+ Innovation and growing
support for applications
- Copyright rules are
complex, expensive
- Data protection is
demanding
+ Simple laws for start ups
Chart 2. PESTLE Analysis Summary Table (Source: own elaboration)
4.1. Political Factors
• Cultural Policy in the Netherlands
Since pAiRT contributes to the partnership between artists and galleries, an environment
mapping of the industry is required. Artists and art organizations are subsidized through the
Mondriaan Fund, the Basic National Infrastructure, the Cultural Participation Fund and the
Creative Industries Fund (The Ministry of Education, 2013, p. 6). The funds aim to encourage
innovation and excellence. In the last twenty years different funds have been available for
artists, such as the VVK, SBBK, BKR and the WW & IK. The Stichting Beeledend Kunst
Amsterdam has been supporting the art market, as it has worked as a library system, by
renting artworks for monthly fees. However, after 2012, many subsidies were cut in the art
sector (Artist subsidy, 2012).
Nevertheless, the still strong political influence in the art sector can be determined as another
tendency that emerged between artists and art galleries, called “super-individualism” (Super
Individualism). This phenomenon can be generated by cultural policies in the Netherlands.
The way super-individualism has been generated by the cultural policies is explained in more
detail later on in this analysis. The government – in the form of the national government with
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its Policy Document on Culture, as well as local authorities – has the major influence on the
art sector in the Netherlands, whereas in other countries the commercial industry has a much
more influential impact. Since the 1950s, art has been an important part of the political
strategy, as shown in several government subsidies (Super Individualism). Still, the decreased
level of governmental funds may determine a new way of co-operations between artists and
galleries.
4.2. Economic Factors
• Taxations
Members of a “Professional Partnership” pay income tax on their share of profit and are
entitled to various tax allowances, such as investment allowance and the tax-deferred
retirement allowance. However, they do need to pay SME profit dispensation and employer
deduction, while employee insurance is not required (Chambers of Commerce, 2014, p. 21).
• Local Economic Situation
After the financial crisis, the monetary policy has become loose, especially in Europe; when
interest rates become extremely low; ECB decides to apply a loose monetary policy. The goal
is to boost up the economic growth by stimulating investments through low rates, when the
danger of inflation is diminished (Monetary and fiscal policy interactions in a monetary
union, 2012, p. 51).
• Growth in the App Industry
A serious economic growth can be detected in the app industry (see 5.1. The Application
Industry: an overview). In the recent year Google and Apple run the most popular app stores,
and each offered 700,000 apps. Apps are becoming a determinative part of its users’
professional and personal lives, since it is estimated that consumers tend to spend two hours
on average per day by using apps. Global revenue from app stores is expected to rise from
62% to $25 billion in 2014. In addition to the economic growth, there is an unstoppable flow
of new categories and devices. With several innovations, opportunities and financial potential,
the app industry can still be considered to be in its early, still developing stages. Essentially,
the potential growth within the app industry has been noticed by most actors on the
digital/creative market, hence the increasing number of new competitors, small business and
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startups which are looking to enter the app industry (Jessica E. Lessin & Spencer E. Ante,
2013).
Nonetheless, attracting new consumers becomes harder and more expensive. In order to
follow the increasing market, innovation is also crucial. Businesses offer apps for tablets and
televisions, instead of focusing only on mobile phones (see 9. Development Plan).
Maintaining apps also requires serious financial investments and efforts. In the conditions of
such a competitive environment, app companies are struggling for new revenue streams and
to expand their income, other than advertisements and in-app purchases. New revenues can
come from deals with mobile operators, licensing audio-recognition technology, paid
premium version of the app and charging television advertisers to integrate campaigns
(Jessica E. Lessin & Spencer E. Ante, 2013).
It seems that the growing demand and the increasingly cheap prices determine the growth in
the app industry. In the last five years, more than 460.000 jobs have been created by the app
industry in the U.S (Russel, 2012). In addition to these international aspects, Rotterdam has
also started to organize „creative hubs” for start-ups in an attempt to determine the growing
number of the investments in the creative sector (Blotenburg, 2013). By offering co-working
spaces for young entrepreneurs, Rotterdam has definitely made some progress in this sense. In
the last year, 57 start-ups were established in Rotterdam, all of them producing technology-
based products, such as softwares and applications, although only one of them was art-related
(Rotterdam Startups, 2014).
• Financial Crisis in the Art Sector
The contemporary Dutch gallery sector is affected by the side-effect of the strong government
influence on the work of artists. The result is that the commercial sector, particularly art
galleries stagnated or even declined. Nowadays, most of the artists direct their works toward
the government, and not to galleries. In this way, young artists are forced to form small
groups in order to become visible; in addition, galleries tend to work with this kind of artists,
because young art sells well when it is part of a movement (Super Individualism).
After the subsidy cut in 2012 Dutch artists and galleries found themselves in serious
economic crisis. The government estimated that most of the cultural offering is created on the
free market by the actions of independent producers, artists and private funds. The total
turnover of the cultural sector was approximately 18 billion euro in 2009. It is also shown,
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that over two-thirds of this turnover is generated in the free market, e.g. in the form of income
from creative services and the entertainment industry (The Ministry of Education, 2013, p.5).
In order to maintain and increase activities in the private sector, the Dutch government
encourages donations in the form of Gift and Inheritance Tax Act (Geefwet). Through these
opportunities and donation campaigns, the government aims to motivate private donations to
cultural institutions, by presenting income tax benefits. Besides donations, the national
Culture Sponsor Code stimulates contributions between cultural organizations and
commercial enterprises. As another source of funding, culture sponsorship is a common form
of agreement between art galleries and large banks, such as ABN Amro and Rabobank. In
addition, Triodos Bank offers funds and loans for art galleries as well (Public institutions in
cultural infrastructure, 2014).
Despite the promising numbers of the total cultural turnover, at the beginning of the financial
crisis in 2009, economic problems could still be noticed in the art gallery sector.The cut of
200 million Euros in subsidies affected the art scene deeply and made the situation between
artists and art galleries even more complicated (The Ministry of Education, 2013, p. 6).
Today, there are no fee guidelines or models that operate across the Netherlands. Each gallery
and art organizations have their own fees policy as they face new challenges; nonetheless, the
positive economic environment and the growth in the app industry show that app innovations
have the potential to contribute to the economic growth of the art sector.
4.3. Social Factors
• Co-operation between galleries and artists
It was estimated that sales in modern art galleries declined with 35% and more than half of
the galleries reported a down-turn in their sales. Subsidy cuts and disadvantageous contracts
with galleries have forced many artists to take side-jobs or work outside of the art sector. The
artists who have managed to remain in the art sector and work with galleries had to accept
arrangements regarding their income on a sale (50% for the gallery, 50% for the artist).
During their co-operations with galleries, artists also gain non-financial opportunities, such as
fame and connections, which can lead to more financial opportunities. During a survey, it was
revealed that only one out of ten artists is satisfied with the current situation (Survey Visual
Artist’s Fees in the Netherlands, 2014).
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An interview with gallerists shows that especially young starting artists struggle with getting
represented and that contemporary art galleries will provide the biggest chance for starting
artists. As Jacob Witzenhausen, owner of ‘Witzenhausen Gallery Amsterdam’ states in an
interview: “We do take on work of starting artists, but as little as possible” (Hammers, 2012).
According to Witzenhausen the costs of promoting new work does not weigh up to the
income generated from it (Hammers, 2012). On the other hand Renée Pijpers, of ‘Gallerie
Albuslux Roosendaal’, states: “When you are looking for contemporary art, you automatically
end up with new starting artists” (Hammers, 2012). According to Pijpers there is a lot of
interest in art of new artists at art fairs (Hammers, 2012).
Rotterdam Amsterdam
Number of graduated artists /year
300 50
Number of contemporary art galleries
35 47
Chart 3. Young artists and galleries in Rotterdam and Amsterdam, number of graduated artists in Willem de
Kooning Academie and Gerrit Rietweld Academie. (Sources: www.rietveldacademie.nl; www.adformatie.nl )
Contemporary art galleries with homepages. (Sources: www.fuckinggoodart.nl; www.amsterdamsights.com )
• Spread of visual artists in the Netherlands
The CBS has up-to-date data on the population of the Netherlands and the latest update, Q4 of
2014, teaches us that the largest populations and the largest working populations are in
Noord-Holland and Zuid-Holland (www.cbs.nl, 2014).
Another source tells us that most of the visual artists are located in our targeted Noord-
Holland and Zuid-Holland as well (Research voor Beleid, 2011, p. 19). Unfortunately this
source is the latest information on the spread of visual artists in the Netherlands and it is from
2011. But since the total and employed working population was still the biggest in Noord-
Holland and Zuid-Holland in Q4 of 2014, we can assume that the information on the
populations of visual artists is still the biggest in these provinces as well.
• Support for entrepreneurs
The government officially states that the state offers opportunities and encourages start-ups
(The Ministry of Education, 2013, p. 7). The economic situation of the art scene offers new
careers for entrepreneurs and the ability to create new collaborations. Therefore, an
intermediary entity in the gallery-artist mechanism is extremely useful.
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4.4. Technological Factors
Since the technological innovations in the app industry are broadening, it seems that apps are
conquering new and new fields. Research and Development activities prove to be highly
helpful in this sense, as they produce fresh opportunities, such as new platforms. The new
innovations affect the costs of producing apps, as nowadays applications have to be created
for multiple platforms (iOS, Android, fixed platforms, etc.). Nevertheless, new platforms also
contribute to new opportunities for the company to reach more consumers on different
devices.
Similarly, it seems that more museums and galleries are open to use digital technologies to
reach and guide their own visitors (Barnett, 2013). Galleries and artists are also open to
promote and communicate on social networks and web-based platforms. Most official
websites of galleries based in Rotterdam and Amsterdam, have the opportunity for artists to
apply to get represented by the gallery. Next to that artists are also promoted on the websites
of the galleries they are represented by. Also, it can be noticed that art producers are more
open to different types of media, as they seem to confer an increasingly constant connection
between technology and culture. Nevertheless, reaching to technological tools in branding is
neither a rare nor a new example. Apps, websites and blogs can be found in the repertoire of
galleries and such digital intermediaries actively contribute to the growth of their business.
4.5. Legal Factors
• Laws for professional partnerships („MAATSCHAP”) and start-ups
In order to start a business in the Netherlands, the enterprise (or entrepreneur) has to register
their business at the Dutch Trade Register and the Chambers of Commerce; in addition, the
company has to decide on what type of legal form it wants to pursue. pAiRT chooses as its
legal form the “Professional Partnership”, which is determined by the Dutch law as a “form of
cooperation established by professionals”. It is important to mention that this legal form is
very popular among app-based businesses; the exception is made by companies such as Apple
Inc. and Google Inc. because they classify as “Private Partnership”. Nevertheless, each
partner of a business is required to contribute with effort, capital and assets; regardless of this
aspect, a starting capital is not required. The purpose is to share the income earned, on the one
hand, and the expenses incurred, on the other. The partnership contract stipulates various
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arrangements such as the matter of contributions, distribution of profits and allocation of
profits (Chambers of Commerce, 2014, pp. 18-19).
4.6. Ethical Factors
• Protection of personal data
pAiRT has to map the information about the protection of personal data, since the app is
going to require the users’ personal data in order to create their personal profiles.
All citizens have the right to know why and how an organization uses their personal data. In
some cases citizens can block their personal data from organizations, for example when
organizations use their data to send advertisements (De Rijksoverheid. Voor Nederland,
2006).
• Copyright issues
Another ethical issue, which pAiRT has to consider, is the copyright of the artworks and how
to protect it during the marketing of the application. The copyright of the application itself
also has to be protected. Nonetheless, it is of great relevance to mention that the Dutch law of
copyright is not considered to be extremely strict; it does not protects any idea, how original it
is maybe. It only protects literary, artistic and scientific works. Additionally, Dutch copyright
does not require any formal act of protection as the copyright is obtained by the creation of
the work/product; licensing is not required either. Moreover, property right entitles the owner
with exclusive rights, which enables the owner to monitor and act against copying, as well as
against external adjustments and translations (Blenheim Advocaten, 2014). Ultimately it can
be noted that the complexity of local copyright issues and data protection make the ethical
factor of the industry slightly mixed.
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5. Market Analysis (Naum)
5.1. The Application Industry: An Overview
As the contemporary world has become increasingly based on digital technologies, the mobile
industry has capitalized on such changes in the environment. What is more, such business
transformations offered possibilities for new market structures to emerge. By converting the
typical mobile phone functions into applications, a new market sphere (also known as the app
market) has been created. Often considered to be one of the most prospective markets, the app
store market provides users with the ability to download different types of applications
instantly (Janesen & Bloemendal, 2013). Apple was the first to access this type of market,
with their launch of the first iPhone, and, thus, by engaging the audience with a revolutionary
software. The small square-sized icons on touch screens were the new access to the basic
functions that consumers used to have on their mobile phones – camera, weather report,
address book, calculator, or other applications that assist users in accomplishing their
everyday-tasks.
The Internet and the app market have shown an incredible adoption rate, ever since the
market continues to grow and apps become a part of our society. The encounter between
Google and Apple has evolved into one of the most heated rivalries in the tech industry and
business world, and despite that Google has been providing Internet services from the very
beginning and Apple was originally focused on hardware, the two companies have
increasingly infringed on each other’s space ever since the introduction of both their
smartphones. Apple’s App Store and Google’s Google Play have created a sort of semi-open
platform, like a marketplace to purchase apps. However, they are the only ones to administer
it, and, as result, Apple and Google are responsible to both app developers and users, not only
to advertise and market an app, but to make everything accessible, as well. Both app stores
provide the customer with the same core functionality: they display apps listed in order of
popularity, sorting the apps according to a specific fixed set of criteria (“trending, most
popular, or free”), organizing them in a basic set of categories (The Pfeiffer Report, 2013).
In the current technological world, app developers and small ventures highly rely on app
stores as Google Play and App Store for their revenues. According to Godfrey and Morgan
Reed (2013), nearly three-quarters of the highest grossing apps are developed by small
businesses. These small companies are dominant in all previously mentioned categories.
Altogether, they contribute to the existence and the relevance of an app market.
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5.2. Data in the Application Market
According to the most recent reports issued by Statista, more than 75 billion apps have been
downloaded from Apple’s App Store, which offers more than 1.2 million apps to iOS users,
as of June, 2014. Additionally, the report shows that Google Play is the largest Android app
store with more than 50 billion downloads. Between the two application stores, revenue
distribution has always skewed towards Apple’s App Store, but Google Play was able to
make strong gains, and reduce the difference starting with 2013.
Another interesting aspect that can be noticed from Statista’s report is the data concerning the
projections of the app industry. Industry numbers project that the amount of global mobile
app downloads is going to reach 268 billion in 2017, as the number of free app downloads
will exceed 253 billion by 2017. These app sales are estimated to generate more than 76
billion U.S. dollars in global app revenue, up from 18.56 billion U.S. dollars in 2012.
Therefore, it can be stated that the current app market represents a viable and profitable
industry where more and more small ventures and start-ups can launch new operations.
However, analyzing the market from a singular source is not sufficient in order to adequately
understand the entire mechanism behind the app industry. Looking through recent App
Market Reports from Priori Data, figures on the Central and Western European AppStore &
Google Play activity can be used to gain an overview of the recent app development trends.
The percentage of downloads value from Charts 4 and 5 describes how many downloads are
generated by top apps in specific categories in proportion to total downloads generated by
those apps across all categories.
As it can be noticed, the decisions of users are not affected by price issues when it comes to
games and entertainment-related apps. Another interesting aspect is that iOS and Android
users share the same habits when it comes to price issues in the app industry.
Chart 4. Categories with the largest number of top free and paid apps, from iTunes’ AppStore in
Europe, October 2014.
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Chart 5. Categories with the largest number of top free and paid apps, from Google Play in Europe,
October 2014.
Based on research of the Dutch Central Bureau of Statistics (2012), which contains a sample
of 20.000 Dutch households, whose log data got collected by an app and got analyzed by TU
Delft we can see that networking apps are extremely popular in the Netherlands.. Networking
apps end up as second most used apps amongst app users in the Netherlands (CBS, 2012).
Both man and women have on average four sessions a day on social media (CBS, 2012).
When we look at age and the use of apps, it is clear that the people in the category younger
than 35 years old use social networking apps the most (CBS, 2012). They use these apps
almost twice as much as people in the category 35-50 years old and three times as much as
people in the category of 50 years and older (CBS, 2012). People in the category of 35 years
and younger have around 7.5 sessions a day on a networking app, which is almost two times
more than the average of total networking app use of the questioned population of this survey
of CBS.
5.3. Monetization Types and Prices in the App Market
Compared to mobile websites, mobile apps optimize the appearance of displayed data and
offer several monetization models for developers. There are four main monetization types in
the app market:
• Free Apps;
• Paid Apps: the pay-before-download model;
• Free + In-App Purchase: free app with the option of purchasing virtual goods from
within the app (pAiRT intends to use this pricing model);
• Paid + In-App Purchase: app monetized by a combination of pay-before-download
and the option of purchasing virtual goods from within the app.
Figures 1 and 2 reveal the in-app purchase item prices in the USA market, as well as the UK
and Europe. Our particular interest is in the European Market, as pAiRT will firstly focus on
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two Dutch cities: Rotterdam and Amsterdam. A relevant fact within this particular area of
expertise is that pAiRT will enter the market as a free app. However, by judging the in-app
purchase item prices in UK and in Europe, it can noticed that the average price of most sold
IAP items is relatively low; under these circumstances (and if the app proves to be successful
in its incipient, local stages), the pricing of the app could change in the future.
Figure 1. In-app purchase item prices, AppStore, free apps. Source: Statista, 2014
Figure 2. In-app purchase item prices, AppStore, paid apps. Source: Statista, 2014
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6. Competitor Analysis (Naum)
Rivalry among firms is essential as it determines the businesses’ competitive positions.
However, in order to have a better understanding of the ongoing development of pAiRT in the
app industry, it is necessary to conduct analyses of its competitors as well. Such analyses
should be operated on the most important competitors that pAiRT is facing; under these
conditions, it can be argued that Artsy represents the main competitor for pAiRT, whereas
Artnear, artCircles and Artfinder are other applications that follow a slightly similar business
model. After briefly assessing pAiRT’s competitors, the app’s competitive position in the
industry will be analyzed using Michael Porter’s Five Forces model.
Launch
Year
Description Strengths Weaknesses
Artsy 2013 Artsy features the
world’s leading
galleries, museum
collections,
foundations, artist
estates, art fairs, and
benefit auctions, all in
one place.
- popular;
- extended target audience;
- continuously growing
audience.
- no dialog between users;
- only curatorial features;
- only available on iOS
devices.
Artnear 2009 Artnear is a global
guide to art for the
iPhone platform where
you can find galleries
and museums around
the world, by browsing
and seeing images of
current shows,
openings and more.
- ability to use GPS;
- the Calendar feature is
integrated;
- useful for people who
travel.
- only available on iPhone;
- no dialog between users;
- does not have a user-
friendly interface;
- no possibility for artists to
expose their own art.
artCircles 2012 artCircles offers a
fascinating way to
navigate the world of
visual art, while
searching through
curated collections of
art.
- users can tag the images
as favorites;
- users can create their own
collection to be shared
with friends via social
media;
- users can purchase pieces
of art directly from the
app.
- only available on iPad;
- no dialog between users;
- no possibility for artists to
expose their own art.
Artfinder 2011 Artfinder is global
marketplace for
authentic art by
independent artists and
galleries.
- search through curated
collections of art;
- purchase pieces of art
directly from the app.
- no dialog between users;
- only curatorial features;
- only available on iOS
devices.
Chart 6. Competitors. Source: Own elaboration.
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• Artsy
Artsy’s mission is to make all the world’s art accessible to anyone with an Internet connection
and they consider themselves a resource for art collecting and education. It is interesting to
mention that, while Artsy has a more extended spectrum in terms of its target audience (the
app features the world’s leading galleries, museum collections, foundations, artist estates, art
fairs and benefit auctions), pAiRT would primarily focus on providing a network between
artists and galleries starting from Rotterdam and Amsterdam. This can either be considered to
be Artsy’s downside (Artsy fails to ensure this dialogue) or an advantage as well: Artsy aims
to follow a global based commercial/non-commercial art world. Moreover, Artsy mainly acts
as a review/curatorial entity rather than a practical business that could have beneficial
outcomes for the wellbeing and lives of artists, and, as a potential facilitator for gallery
exhibitions. Ultimately, another detrimental aspect of Artsy is the fact that the app operates
exclusively on iOS devices; by contrast, pAiRT wishes to include Android users as well in
their client-base. The platforms can be considered to share similarities when it comes to their
ability to find new art and artists.
• Artnear
Artnear’s website states that the application is planning on exhibiting functionality that should
allow art lovers to find a museum and/or gallery near their current location. Similarly, the app
allows users to find artists with current or upcoming shows in the area, and, by implementing
a bookmark tab, users are able to save favorite spots just in case they want to return and
revisit specific galleries and/or museums.
• artCircles
ArtCircles is an application that allows its users to discover their favorite type of art in a
brand new way. Users have the possibility to select a color, theme or room type from the
spiral selection wheel and let their fingers wander across a palette of curated art, and find their
new favorites - from classic masterpieces to contemporary prints.
• Artfinder
This new application works as a recognition mechanism of paintings. Their website provides
users with a digital catalogue of fine art that consists of 500,000 pieces of art. The primary
goal of the application is to facilitate the sale process of fine art in partnership with galleries.
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Porter’s Five Forces
6.1.1. POTENTIAL THREAT OF NEW ENTRANTS: MODERATE
When discussing the potential threat that is generated by new entrants on the app market, it is
important to note that they have the ability to add to the existent capacity of the market, and,
thus, reduce the profitability of the already existing players. Under the circumstances that the
app market is a continuously growing industry, companies are tempted to become more active
on the market. Similarly, the cheap or sometimes even non existent entrance barriers add to
this as any firm can display their product or service on the app market. By its nature, the app
market democratized the distribution phase in the supply and demand proposition, so access
to distribution for firms which want to engage in the app market is not problematic. Another
important point which has to be mentioned is that generally no (or, very few) governmental
policies actually have the capacity to block firms from entering the market.
Conversely, new entrants would find it difficult to challenge the apps promoted and
developed by already-established companies. Another aspect in relation to the potential threat
developed by new entrants is the fact that, despite an increase of apps that give the creative
role to users, there is a consistent lack of interest in the networking and managerial side of the
arts application market. pAiRT aims to fill this gap. In these conditions, our application would
face a moderate potential threat generated by new entrants on the market.
6.1.2. BARGAINING POWER OF BUYERS: MODERATELY HIGH
While the idea of virtual galleries seemed to be more of a conceptual solution to the
traditional way of seeing and admiring an exhibition in the past, the emergence of the Internet
as part of the normative lifestyle of the 21st century provides a feasible and genuine platform
that is capable of becoming the direct replacement of how these two categories interact in the
art world. In the case of pAiRT, the bargaining power of buyers represents a much more
complex situation. That is because the users of pAiRT are artists, as well as galleries.
Another interesting component in the bargaining power of buyers’ proposition is the fact that
the app’s functionality would work as a highly beneficial facilitator for both parties: on the
one hand, galleries can find new artists to work with, and, on the other, artists can find new
galleries where to exhibit their work. Similarly, it is important to note that in the artist-gallery
relationship, pAiRT could have a more significant influence in assisting artists to find new
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potentially empty gallery spaces where they could exhibit their art; in other words, pAiRT
could potentially become more popular among artists, so they would enjoy a more significant
bargaining power. Moreover, in addition to the fact that the app would facilitate a better
networking process in the art sector, both parties’ business models (artists and galleries) are
prone to change due to constant technological upgrades; in this sense, a virtual networking
platform could prove to be indispensable in the future.
Essentially, the fact that pAiRT would enter the app market as a free application should, on
the one hand, be tempting for users, but on the other, should lower the switching costs for
them. Therefore, consumers (or buyers) still have a significant, but not decisive amount of
power.
6.1.3. BARGAINING POWER OF SUPPLIERS: MODERATELY LOW
The relationship between the app industry and its suppliers is symbiotic; it must work for both
sides. In the case of pAiRT, its users are in fact the suppliers of the content; therefore,
similarly to the bargaining power of buyers proposition, artists and galleries are supplying the
content through the app. Artists become suppliers by contributing to the galleries with their
own art, and galleries themselves become suppliers by granting exhibition space (and job
spaces) to artists in a process that is offered by pAiRT. Considering the fact that in an industry
with many small suppliers (an extended range of independent artists would be more likely to
use the app at first) and few large buyers (a few well-established galleries would look to work
with artists through our application), the bargaining power of suppliers is diminished.
Similarly, the bargaining power of artists is weak as long as there is a limited range of similar
applications that are willing to provide a networking service between artists and galleries. As
pAiRT would exclusively ensure this conversation between artists and galleries, the
bargaining power of suppliers diminishes even more due to the fact that they do not have
alternatives to choose from.
6.1.4. THREATS FROM SUBSTITUTE: MODERATELY HIGH
When referring to the threats that pAiRT might encounter from different substitutes, it is of
great relevance to mention that substitute products are products that perform the same
function or satisfy the same need as an existing product (Friend and Zehle, 2009, p.59).
Within the app industry, the threat is low due to the fact that there are no applications that
ensure the same service. However, artists and galleries can still reach each other through
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traditional methods (direct physical contact at art fairs, submission of recommendations and
resumes, etc.), and modern methods (email, personal website, telecommunication
opportunities, etc.); all these methods are low-cost (or some even free) so consumers (both
artists and galleries) can easily switch from using pAiRT to the previously mentioned
substitute products due to low switching costs. Nevertheless, such methods are time-
consuming, so pAiRT aims to filter unnecessary information and ensure a better networking
service between artists and galleries.
The opportunity cost of using pAiRT is lower than using other techniques. Ultimately, it can
be argued that the increased digitalization and technological upgrades will persuade both
parties to use digitally-supported services (see 4.4. Technological Factors), such as pAiRT
does in the app market. Under these conditions, the threat of substitute products faced by
pAiRT is moderately high at the moment, but could diminish in the near future.
6.1.5. RIVALRY AMONG FIRMS: LOW
In the circumstances that pAiRT ensures a networking service based on an innovative and
exclusive business model (at least in the arts sector of the app market), it is obvious that the
intensity of the competition is lower. As in this sector of the app market, pAiRT ensures a
unique service, our app becomes part of an industry which is generally more stable than
fragmented; this is because pAiRT does not faces any competition from similar applications.
In other words, the diversity of competitors is relatively low. Current art applications fail to
share pAiRT’s main focus: the creation of a dialogue between suppliers (artists) and buyers
(galleries and users).
Despite a growth of art-orientated apps, most of these applications primarily focus only on the
curatorial process of art, or are based on user generated content (UGC) business models;
nevertheless, they fail to encompass the business behind it and connect artists with potential
new job spaces, and galleries with potential new exhibitions. Therefore, the rivalry between
firms on the app market is low at the moment, but could increase in the future, especially if
one takes into account the increased appeal towards digitization.
7. Marketing Plan (Maliepaard)
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7.1. SWOT analysis
Based upon the environmental and competitor analyses we have made a SWOT with our
biggest opportunities and threats. The strengths and weaknesses are based upon our current
situation and facilities.
Strengths (internal) Weaknesses (internal)
- High educated people
- People with passion for visual arts
- No knowledge on app technology
- Developed networking skills - Little financial capital
- Experience in the gallery field - No established reputation
- High commitment - Small target group
- Very user-friendly product
- Thoroughly tested product
- Only 1 Dutch entrepreneur
- Low user barriers
- High added value to users
- Lowering service costs for galleries
- No risks for participating galleries
- Unique product
Opportunities (external) Threats (external)
- Low competition - Moderately high bargaining power
consumers
- Worldwide growth of in-app
advertisement
- Low bargaining power for pAiRT.
- Growth of smartphone use in Europe - Competition with traditional habits within the
arts field
- Dutch art policy is pro-
entrepreneurship.
- Subsidy cuts in cultural sector
- Growth in the use of apps in Europe. -
lower chance on sponsorship
- Little network within gallery field.
Chart 7. SWOT Analysis. Source: Own elaboration.
pAiRT could become a success, since there is no such product on the market yet, it gives
artists the opportunity to be more entrepreneurial as is expected of them and smartphones are
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part of the daily habits of people. Next to that the risk of using the service of pAiRT is quite
low and the added value to an artist his career could be big.
On the other hand it has a down side of being a completely new player within the field, since
pAiRT has not proven itself yet, so why would people download the app? Without users we
do not have a product. The target group is very specific, which means less potential
consumers, therefore it is important that we can catch a large group of that small potential
consumers. For the marketing plan we have used the marketing mix with the four P’s. The P’s
of Product, Price, Place and Promotion. The P’s are completely focused on the target group of
pAiRT. At first the target group is described, secondly the product pAiRT, thirdly the price
rationale, fourthly the place and finally the promotion. This is the marketing plan for the
Netherlands only. For Vienna and Berlin a new plan will be created.
7.2. Target group
The target group for the app pAiRT is starting independent visual artists, located in the
Netherlands. With starting artists, we mean artists that have made the decision to wanting to
make a living out of their art, but are not capable of doing so yet. Another important factor of
the target group is that they want to be represented by a gallery, but have a hard time doing
so, because they do not have established their name yet. Our target group has already made
art, has a portfolio and dedicates a big part of their time to creating art works.
Between 2010 and 2012 the total population of artists in the Netherlands has grown
significantly and 60% of the population worked independently (CBS, 2014, p. 32). As is
mentioned in the environmental plan, subsidy cuts force artists to be more entrepreneurial.
Since all artists have to be more entrepreneurial, it can be assumed that it is even harder for
starting artists to stand out and get represented by galleries.
Based on our market analysis, we expect especially for young people between 20 and 35 to be
interested in pAiRT. The market analysis describes that especially people younger than 35
years old use social networking apps the most. pAiRT can be seen as a networking app. To
sum up the target group for pAiRT is starting independent visual artists between 20 and 35
years old, located in the Netherlands, who want to be represented by a gallery. Next to that we
have to promote the app amongst galleries that look for contemporary art, because they are
most likely to represent starting artists as is mentioned in our environmental analysis.
7.3. Product
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With pAiRT we aim to be a genuine and worthy addition to the process between galleries and
visual artists. We will only allow physical galleries to our database which are genuinely
looking for new artists. Digital exposition websites are not allowed on the app.
For artists the app functions as a mediator between the artist and an important gatekeeper
within the arts world. It can ease up that process for artists of trying to get a gallery to
represent them, but will not be a complete replacement of that process. For gallerists pAiRT
can lower search costs of looking for new protégés for their gallery, because they are assured
that they will only be approached by artists that match their gallery. For gallerists also counts
that the app will not replace the entire process of looking for new artists, even though it could
replace it, we do not expect this to happen.
Because the app is meant to be very professional, it will look stylish. We are dealing with
creative people, so the app will have a very creative design. The design should not affect the
user friendliness. The app has to “breathe” arts, with bright colors. This design counts for the
general pages of the app. Artists and galleries can adjust their own profile to their wishes and
desired colors. The profiles have to show as much personality of the gallery or artist as
possible; everything can be formed as the users want.
After a match is made, we will reach out to the artist and the gallerist to get information on if
the app was useful. We will do this via e-mail with a survey. Gallerists and artists can decide
for themselves if they respond to our survey of course. With this information we are able to
improve our app.
7.4. Place
pAiRT is an app which will at first be available for smartphones with the ‘Android’ system of
‘Google’ and the ‘iOS’ system of ‘Apple’. The ‘Android’ system is available for more
smartphone brands than all other smartphone systems. ‘Android’ system is available for
‘Samsung’, ‘HTC’, ‘Sony Ericsson’, ‘LG’, ‘Sony’, ‘Google’ and ‘Motorolla’
(www.androidvergelijk.nl, 2014). The chance that visual artists have a phone that runs on the
‘Android’ system is therefore bigger than the chance that they have a phone that runs on
another system. To complement this argument, research has shown that most people have a
‘Samsung’ in the Netherlands, which is an ‘Android’ smartphone. After the Samsung follows
the ‘iPhone’, which has the ‘iOS’ system (www.telecompaper.com, 2014).
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Chart 8: Market share smartphone manufacturers amongst Dutch consumers.
Of course if everything goes well with pAiRT we will come with an app for other smartphone
systems as well, but we start with the ‘Android’ phones. The app stores of both ‘Android’ and
‘iOS’ have a large range of apps and orders them by type of app. pAiRT will fall into the
following three categories within the app store: Social apps, Lifestyle apps and Business apps.
The app will be in the free apps section. The app can be found by the following keywords: art,
artists, contemporary and galleries.
7.5. Price
Gallerists are expected to have a lot of connections with frequent art buyers and are seen as
art experts by their environment. Therefore getting represented by a gallery could be very
beneficial for an artist. With the representation the artist will not necessarily benefit
financially, but the chance of getting acknowledged by other important parties in the art
sector, is of great value to an artist (Teeven & De Jong, 2014, p. 14). pAiRT will make a big
effort to find appropriate galleries in Rotterdam and Amsterdam and only wants to deal with
serious starting artists. Therefore the app cannot be completely free.
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It is free for artists to download the app and create an account without limitations, because we
want to keep a low downloading barrier. We only put galleries in the database after visiting
them personally. The gallery has to be open to new artists, otherwise it will not become part
of the app its database. When a match has been made, artists have to pay € 20 to see the
name and other information of the gallery they have been matched to. We have two reasons
for this fee. The first reason is that we only want really serious artists to use our app, since we
want to maintain a good relationship with the galleries we have in our database. Secondly we
offer quite a lucrative chance to artists once a match is made by the app and it is therefore of
high value to artists. “If something costs 20 Euros it will probably be good” is what we
believe users will think.
7.6. Promotion
We have to actively approach our target group and we expect to find them mostly in the
provinces Noord-Holland and Zuid-Holland, as the environmental analysis teaches us. We
will use different types of promotional tactics and materials and we have divided them in
subcategories. The most important tactic for us is to get into personal contact with our target
group as much as possible. The promotional tactics and materials are categorized into: person-
to-person selling, advertisement, printed promotion materials, in-app merchandising, tie-in
promotions, after-sales and online marketing.
7.6.1. PERSON-TO-PERSON SELLING
Networking events
Starting artists have to build a network of institutions and persons within the art world and
have to be very active in that process of building a network. Therefore an important way to
get into contact with our target group is attending networking events and art fairs. During
these events, we can actively approach artists and get to know their situation. This personal
contact gives us the chance to show that we are not purely commercial, but want to support
visual artists in their success. We will have to look for networking events in Noord-Holland
and Zuid-Holland constantly. A good way to find out information on networking events is to
get into contact with professional collectives of visual artists. In the Netherlands one of the
big collectives is ‘Beroepsvereniging voor Beeldende Kunstenaars’. It has a lot of members
and its board is build up out of professionals within the art-scene.
Networking gives us a chance to build a relationship with our (potential) users. Chances are
we will meet quite some artists multiple times at these events. We should not push too hard
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into using pAiRT, but have to win sympathy; when people like your personality, chances are
bigger that they will give a look at your product.
Approaching art colleges
Since pAiRT is mainly for starting artists, we have to go to one of the sources that provides
visual artists, which are art colleges. A quarter of the students that graduate at an art college,
becomes an artist (CBS, 2014, p. 19). We therefore do not want to decline this group of
potential users of pAiRT.
There are two main art colleges in Zuid-Holland, which are: Hogeschool der Kunsten Den
Haag (School of arts The Hague) and Willem de Kooning Academie in Rotterdam (Willem de
Kooning Academy). In Noord-Holland there are two art colleges as well both in Amsterdam,
which are: Amsterdamse Hogeschool voor de Kunsten (Amsterdam School of the Arts) and
Gerrit Rietveld Academie (Gerrit Rietveld Academy).
We have to approach all the colleges and get information on special networking events or
types of career days for students. A lot of colleges organize job fairs at their schools to give
future graduates the opportunity to network and get a sense of what is important in the art
scene. This would be a great opportunity for pAiRT to get notified by its target group. We
have to convince the spokesperson of the college that our app can be of true value for starting
artists, in order to get a place at an event for their students. If we act too commercial, the
potential value of the app will not be understood.
Approaching galleries for the database of pAiRT
We have to find galleries that are interested in selling arts of starting artists. It is important
that we send the right message to the gallerists. It has to be clear that pAiRT could be an extra
tool for them to find new artists, without any costs. It has to be clear as well that our goal is to
support starting artists and that we only send the artist a notification of a match if the gallery
has accepted the match first. The gallery will not be overloaded with disparate visual artists
and all the artists in the database will be serious artists. As the environmental analysis
showed, Rotterdam has 35 galleries that we have to select from and Amsterdam has 47.
In order to get into contact with galleries, we will do some cold acquisition. The cold
acquisition contains visiting galleries unannounced and make conversation about our app. We
will be selective in this approach, because it takes a lot of time and we want to prevent serious
agitation amongst gallerists. This selection will be made through online research. We will
approach young start-up galleries, but also galleries that are interested in contemporary art.
Business Plan
36
Next to doing cold acquisition, we will visit art fairs in Noord-Holland and Zuid-Holland. Art
fairs give us the opportunity to get into a less formal conversation with the presenting
galleries. The gallerists or represents of the gallery are already at the fair with the goal to
make contact with people and therefore getting into a conversation with them is easy. We do
have to make sure not to disturb their business at the art fair. The gallerists need to see our
passion for the arts so that we can get their sympathy.
Try to get the gallery’s information at the moment of contact with the gallerist. The gallerist
has to sign an agreement and we will create the account for him. After that the gallery can
personalize and activate it. We stay in touch with the galleries and call them a week after we
have created their account to make sure that they activate it.
7.6.2. ADVERTISEMENT
Since pAiRT is an app with quite a unique target group, the advertisement should not be too
broad. Advertisement is often expensive and it is hard to measure the effectiveness of it. We
can advertise in alumni magazines of art colleges and in the magazines of the professional
collectives of visual artists. When we advertise we have to make sure that it relates to the
content of the magazine. A lot of magazines have certain topics per issue. It only makes sense
to advertise for pAiRT when it is about the careers of visual artists, about networking or about
the profession visual artist in general.
Some magazines we can advertise in:
- Rex Alumni Magazine (magazine for alumni of Willem de Kooning Academy);
- BK informative (magazine for professionals in the visual arts, published by
‘Beroepsvereniging voor Beeldend Kunstenaars);
- Kunstbeeld (Magazine on contemporary art);
- kM (Magazine with technical and practical information for professional artists and the
latest trends within the professional field).
7.6.3. PRINTED PROMOTIONAL MATERIALS
We only need printed promotional materials for the person-to-person selling and external
communication. We have to have a very recognizable corporate identity. The lay-out and
design of the printed materials should be unique and completely match the design of the app.
For the person-to-person selling we need:
- Business cards with all our contact information.
Business Plan
37
- Flyers to hand out at school job fairs, which contains all the information of pAiRT.
- Flyers to give to gallerists we speak with at fairs.
- Banners to decorate an information stand at fairs.
- Stationery for external communication.
- Envelopes in our corporate identity.
7.6.4. MERCHANDISING
Merchandising in the case of pAiRT means the process of buying the match by the visual
artists. Since we do not have personal contact with app-users in the beginning, we have to
make sure that it is clear how the app should be used. The app has to be easy to use and all
options should be well described. This means that the guidance texts of all the possible
functions have to be clear. We provide a helpdesk that can be reached by telephone, chat and
e-mail.
The notifications artists get of a match should give them the feeling that they are selected and
got a true chance to present themselves to a gallery. This will be a short message and it has to
convince artists to buy the match. Below this text should be a button that says: “Buy your
match”.
7.6.5. TIE-IN PROMOTIONS
When we have more than 100 users, we will approach suppliers of useful materials for artists.
Think of suppliers of paints, brushes, exposition materials and so on. We can offer the
suppliers the chance to promote their goods in our app and make special discount offers to the
users of our app. This should all be suppliers which have an online store and all offers and
adverts should lead to a website or an online store. It would not make sense if pAiRT-users
need to print a coupon for example, because that takes too many actions for them to use it and
the chance of acting on the offer or advertisement will decrease.
In exchange for the possibility to advertise in our app, we ask the supplier to promote our app
in several ways. The promotion of pAiRT at art suppliers will depend on their possibilities for
advertisement of course. Two ways of advertising we could ask in exchange are:
- Let suppliers hand out promotion cards of pAiRT with a promotion code that
gives a 50% discount on their first match. On this card will also be a
description of our app.
Business Plan
38
- Advertisement of pAiRT on the supplier’s website.
The reason that we already have to have some users of the app is because otherwise we do not
have any potential buyers to offer to the art-suppliers. We need suppliers that can decide
independently if they will cooperate with us. When a store is part of a large chain it can often
not decide for itself if it will cooperate with another entrepreneur. Some well-known
independent art-suppliers are:
- Akkolades: makes frames for paintings and photographs and is located in The Hague;
- Levant Art Supplies: collection of supplies, has brushes, paint and more and is located
in Amsterdam;
- Harolds: broad collection of art supplies like paint, canvas, frames, brushes and is
located in Rotterdam.
7.6.6. AFTER SALES
Visual artists that use pAiRT
We want to use aftersales to keep developing the user-friendliness of pAiRT and to give users
the feeling that their opinion and well-being matters to us. As mentioned earlier we will send
a survey to everyone who has bought a match. When someone has not responded to our
survey after several weeks, we will send one e-mail to remind them. The reminder e-mail
contains the survey as well.
When someone has a profile for three months already and has gotten a match before but did
not purchase the match, we will send that person an e-mail as well. This e-mail will contain a
survey with questions about why they did not buy the match.
Galleries that use pAiRT
With the galleries we will maintain more personal contact, because we want to make them
feel important to us. Once every three months, someone of our organization will visit the
galleries and ask about the experiences of the gallerists with pAiRT. The information that we
get out of these visits, will be documented and used to improve the app.
Business Plan
39
7.6.7. ONLINE MARKETING
Our online marketing contains a website, connecting with influentials and app-rating.
Website
Our website will be designed after our corporate identity. It will not contain too many pages,
since our product is an app. One page will contain success stories of visual artists who have
found a gallery via pAiRT. This page will be called “Artists experiences with pAiRT”. For
this to work, we have to approach users who have bought a match. The idea is to give space
for comments in the aftersales survey we send and ask people to check a box with “I agree”
when they agree if we post their comment on our website. We will not modify the comments
people write. Moreover content will be provided by experts and other players in the arts
sector. More details on this subject are in the development plan.
On the homepage we will describe the concept of pAiRT and its mission and vision. On the
homepage will be a button that says “Download pAiRT in Google-Play Store”; this option
will only be of use if someone is visiting our website with his smartphone. Our legal
information, like the Chamber of Commerce number and contact information will be in the
footer of the homepage.
Connecting with Influentials
We will reach out to starting visual artists that also blog and have a large amount of followers
on social media. We will ask them to download and use the app for free. Once they have
experienced the app, we will ask them to write about it online. We have to invite the
influencers to an information session (blogger meeting) on the app and give them the feeling
that they are a part of something completely new. We will brainstorm with them about their
contribution to the success of pAiRT. Afterwards they will get a coupon for their own favorite
art supplier. We will link to their blogs on our website at the page with experiences of users.
Getting influentials involved will be when our app is new in the app stores
App-rating
‘Google-Play Store’ and ‘App Store’ give app-users the possibility to rate and review the apps
they use. Now it is even possible in the ‘Play Store’ to filter apps on the rating they got of
users (www.android.com, 2014). Apps with a high score are more popular than apps with a
low score. Apps can get a score of maximum four stars. Having a high score could affect the
amount of downloads an app gets, since nowadays it is possible to filter on high scores. It is
Business Plan
40
therefore that we want to point out to our users in the aftersales e-mail, that they can rate
pAiRT in both appstores.
Social media
pAiRT will be active in social media, using Facebook and Twitter. Twitter gives us the
opportunity to post and follow news articles on the work and living situation of visual artists.
We also want to use Twitter as a channel for our app-users to ask questions or give comments
about pAiRT. In this way we can interact with our users quite quick and direct. We do have to
be active in our respond to people in order to give them the feeling that they are heard. It can
also be a source of information, because if people have genuine complaints, we can use that to
improve our app. Facebook will give other parties to advertise with us on our page, but also
the connection with our users is an important benefit of Facebook. It will also be possible to
download pAiRT through our Facebook page.
Launch Event
When we are ready for operating and the app can officially go live, we want to organize a
network launch event. We invite all the galleries that already have agreed to be in our
database and the influentials, who want to be the first official users. We will ask the bloggers
to spread the word within their network about this launch event. Furthermore, we want to try
to get it on the event calendar of BBK (The professional association for visual artists) and ask
Art colleges that have a Facebook page to post it on their page. The invitation has to highlight
the networking part and also has to point out that a new unique service to support starting
visual artists will be presented. If people subscribe to our app that night, they will get a
discount of 50% on their first match.
For the launch event we will book the ‘Van Nelle Fabriek’ in Rotterdam. We give a
presentation with visuals about the app, but also about why we created the app. It should
become very clear during this presentation, that we are passionate about the arts and that we
find it important that artists find recognition. We want to make clear that we understand the
current situation for artists without government support. After the presentation, the app
officially goes live.
Business Plan
41
8. Operational Plan (Liebl)
The operational plan is crucial for a business and helps pAiRT to effectively plan and allocate
its resources. Clearly, resources of a business, either human or physical, are limited, which is
especially the case of the small start-up pAiRT (Friend & Zehle, 2009). The operational plan
of pAiRT will consist of first, office operations, including office management and physical
resources, and second, human resources operations. Further steps, as for example, how these
resources need to be allocated and to develop over the years will be discussed in the
development plan in more detail.
8.1. Office Operations (Office Management; Physical Resources)
• Office management
As already stated in the organizational plan, pAiRT has its office in Rotterdam, at Jacob van
Campenplein 98, 3067 LC, which is a private apartment of one of our members, who also
takes care of the rental contract. The team has one big office room, around 35qm2, which is
already furnished. Therefore the team did not have to care about tables, chairs, kitchen
equipment, etcetera. Additionally, it has a small kitchen and a bathroom. All members of
pAiRT have their own key - this allows the team to have flexible working hours and to be
independent of each other.
The culture of the start-up is very open-minded, friendly, spontaneous and reliable. However,
the team decided to have two weekly meetings, which have to be attended by all internal and
the developers of the app – via Skype. Especially during the starting phase this is important in
order to be updated and to keep on track of all current operations.
These meetings will take place:
- Every Monday, 8:30 – 10:30
- Every Friday, 8:30 – 10:30
During these meetings everyone has to report on her/his current and future steps, possible
enhancements and improvements. In addition, every evening the members need to send a
report via mail, in which they make a summary of the past day and a forecast for the future
day.
These guidelines are necessary, as not all members of pAiRT work on the project at the same
time and as human resources are limited, this saves a lot of time in advance and builds a good
base of trust. As a result, during the other days and working hours of the week, the team is
Business Plan
42
very flexible – they can freely plan their working hours next to their studies at Erasmus
University.
• Physical resources
Regarding movable physical equipment, the members of pAiRT agreed on using their private
laptops and phones in the first stages of the project. They all have updated and fairly new
laptops. However, the CEO registered one mobile phone and number for the start-up – this is
the official telephone number of pAiRT, which is also indicated on their homepage and which
will be used for the customer service and partner management.
As the development of the App and the homepage will be outsourced, there are no special
physical resources required for this part of the business.
8.2. Human Resources Operations
pAiRT is a small team, of which all five are still Master students at Erasmus University in
Rotterdam until July 2015. Strictly speaking, for four people of the team this master
programme is full-time (the CMO is doing the part-time programme), which means that
human resources need to be properly planned and precisely organised. The table below gives
an overview of the parts of pAiRT’s human resources, their positions and how many hours
per week are planned to be dedicated to the organisation in the first stage.
Chart 9. Human Resources. Source: Own Elaboration.
As already mentioned above, during the weekly meetings everyone has to be present,
however, the remaining working hours can be flexibly organized. Another important part of
the start-up is the daily report – although the official organizational chart (Part 1:
Business Plan
43
Organizational Plan) indicates a structure, in which the COO, CMO, CCO and CFO primarily
report to the CEO, it is clear that these daily reports are addressed to and aimed at all
employees of pAiRT.
The division and the main tasks of the roles is already mentioned in the Organizational Plan
however, the table above gives a good overview of the human resources plan of pAiRT.
Although still students, the CEO and COO will work full-time (40 hours) on the project – the
main parts of their studies have to be completed during the weekends and in the evenings. The
CMO, CCO, and CFO are working part-time (25 hours) for the organization. Nevertheless,
they are aware that they probably will have to spend more time on it during the next months.
This dedication is only possible due to three reasons: their high engagement to this business
idea, their friendly relationships and their flexible time management, which allows them to be
spontaneous and to help each other out. This flexibility is also reflected in the case of holidays
– if one member of the team plans to go on holiday, it will be discussed and approved during
a weekly meeting. During the first year of the project, though, the team decided together, that
a member should not miss more than 7 to 10 full working days in a row. Moreover, it is clear
that the other members of the team have to take over her/his parts during this period of time.
Regarding the communication with the app developers the CCO, Laura, will be in charge.
These external employees will work and be paid on an hourly basis – at the beginning this is
the most convenient solution. Laura will organize meetings, discuss further steps and will be
the main contact person in case of questions or problems. Particularly during the first months,
in which the app will be developed this task is of highest relevance.
To sum up, the Operational Plan of pAiRT has some strict guidelines, to which everyone has
to adhere to. If these rules are approved and accepted, though, the members of the team are
fairly free and have a lot of decision power. Furthermore, during the first year all members are
aware that they will work a lot without actually making revenues or earning salary. However,
they have discussed these points and are confident that it will pay off in the future.
Business Plan
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9. Development Plan (Kühn)
In the development plan pAiRT’s further actions are consolidated, according to the two main
developments of the business. These are the technological developments (app/homepage), as
well as the company developments. The development analysis examines a time period of two
years (2015-2016) on a quarterly basis.
9.1. General overview of lifecycle of apps
Regarding the mobile lifecycle of apps, there are four important points in time that need to be
considered. These are design / development, the testing phase, deployment as well as the
prototype phase. To make sure the app runs without any errors, the test phase plays a crucial
role in the development process. In this phase different tests as automated unity tests, device
tests, beta tests or scalability tests are conducted in order to guarantee the best outcome
possible. In the following deployment phase tasks as device management and customer care
have to be conducted to build up a solid network before the implementation of the app. After
these three cycles, the app is ready to go online and finally the prototype phase starts
(Archgate Computer Centre, 2015).
9.2. Technological development (app / homepage)
The technological development of pAiRT considers the progress of the app itself as well as
the implementation of the homepage. Currently two students from Vienna are working on the
project. The main developments of 2015 are shown in the following table.
Chart 7. Source: own elaboration
The team of pAiRT already had Skype meetings with the students from Vienna discussing the
software behind the app as well as the design. As the students have connections to the
technical university in Vienna, they made a deal with former IT students concluding that they
can use their already advanced technology for the basic software of pAiRT. Therefore, the
development costs of the app can be hold down, enabling the team of pAiRT to invest more
Business Plan
45
capital into the implementation of the homepage. The team, together with the experts from
Vienna, calculated that the initial development costs of the app are €60.000, the costs of the
homepage are estimated at €40.000. Moreover, the running costs of the app and the homepage
are calculated to be €100.000 per year. However, these figures will be discussed in greater
detail in the budget.
The App
The software behind pAiRT is quite complex, as many variables need to be considered in
order to find the perfect match between a gallery and an artist. In the next section an overview
of the general functioning of the app will be provided (Chart 8).
Table 1. Software Explanation (pAiRT, 2014).
In the first step both artists and galleries need to complete the advanced form about their
business for free. Then the searching process for the perfect match starts. If the app finds
suitable partners, the artist gets a notification that he “got matched” with some background
Business Plan
46
information about the gallery (art form, location). In the next step the artist needs to make a
decision: if he wants to get into contact with the gallery he has to pay a fee of €20. However,
if he is not interested in the gallery at all, the artist simply waits for the next match. In the first
case that is described as “scenario payment”, the artist pays the fee and at the same time the
gallery gets a notification that the app found a promising match. In the next step the gallery
needs to make a decision that is crucial for the further relationship between the two parties.
On the one hand the gallery can set up a meeting with the artist, on the other hand the gallery
might notice that the relationship will not work out in the future and therefore decides not to
meet with the artist. This shows that there is the risk for an artist not to meet with a gallery
even though he or she got matched and paid a fee. Nevertheless, since the software behind
pAiRT works with meticulous certainty this risk can be reduced. Moreover, as galleries do not
have to pay an extra fee to meet with an artist, it can be assumed that most of them will be
curious and simply take the opportunity to meet an artist who might be perfect for them.
However, if a gallery decides not set up a meeting with an artist more than three times, its
contact will be deleted from the system. If the two parties meet and find an agreement, pAiRT
helps them to promote further exhibitions and information over its website.
In the first quarter of 2015 (Q1/15) the IT students will finish the development of the software
and start the first test phase of the app. As the app itself is the main product of pAiRT, it
needs to function impeccable and therefore the test phase will be conducted over 5 months.
In order to go online pAiRT needs at least 30 galleries that will sign up for the app as well as
40 artists. The marketing department is working on this task, getting into contact with both
parties and promoting the app. Further developments of the app are to adapt it currently
according to new software updates provided by Smartphone and tablet producers.
The Homepage
Besides working on the development of the software, the students are also programming the
website (www.pAiRT.com). This website is a main part of pAiRT’s business. After a gallery
and an artist got matched, the website functions as a tool to promote the artist and give
background information about the gallery. Laura Naum, CCO of pAiRT, is responsible for the
content of the homepage. Besides the promotion of galleries, other experts and players from
the art world will be asked to provide posts on the homepage and some insider information. In
return, they get the chance to be the first persons to meet the emerging artists and see their
artworks.
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In the second quarter of 2015 (Q2/15) the implementation of the homepage will be finished
and the test phase starts. At the same time the software of the app runs through the final test
phase. At the end of this quarter the app and the website will be optimized. Then in the third
quarter (Q3/15) pAiRT goes online in Rotterdam and Amsterdam. In the last quarter of 2015
(Q4/15) the technological developments will mainly focus on adapting the software and the
homepage and fixing potential errors (Chart 7).
In 2016 pAiRT plans to expand to new markets. The app will be available in Austria, Vienna
and Germany, Berlin. The team decided to focus on these two markets as Iris Kühn (CEO)
has contacts to galleries and artists in Vienna and Margareta Liebl (COO) is well connected in
Berlin. In the first quarter (Q1/16) the software will be adapted to these new markets and also
the test phase takes place in Q1/16. Then in the second quarter of 2016 (Q2/16) the app goes
online in Berlin and Vienna. In the last two quarters of 2016 (Q3/16 and Q4/16) the
technological team focuses on the adaption of the software and the frictionless service of the
homepage.
Chart 8. Source: own elaboration
9.3. Company development
So far the headquarter of pAiRT is located in Rotterdam and the team exists of 5 people. All
of them are still doing a master program at Erasmus University and can therefore only work at
pAiRT part time. At the beginning of June the team will complete their studies and start
working on the project full time (Q2/15). As already discussed in the technological
development plan, the app will be first launched in Rotterdam and Amsterdam in 2015.
Laura Naum, CCO of pAiRT, who is concerned with the final development of the app and the
content provided on the website will need an intern who supports her in the months before
and after the launch. This intern will mainly work on the homepage and its content and makes
sure that everything runs smoothly in this matter. Therefore, starting in the first quarter of
Business Plan
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2015 (Q1/15) Margareta Liebl will start recruiting an intern for the creative department (Chart
9).
Chart 9. Source: own elaboration
Moreover, as the company plans to expand its business to Berlin and Vienna in the second
quarter of 2016, pAiRT needs people who know these markets and have connections. Liebl
will start with the recruitment of two experts in the second quarter of 2015 and will also look
for a small office in Berlin. In the third quarter of 2015 the personnel can move into this
office and start their business. They will work on partnerships and build up connections since
pAiRT also needs at least 40 galleries and 30 artists who sign up for the app before the new
launch (Chart 10).
Chart 10. Source: own elaboration
With the beginning of 2016 the team starts looking for an assistant in the marketing
department who will start his job in the second quarter. The company will expand into two
new markets in the second quarter and as pAiRT wants to provide a clear and coherent
marketing campaign, an assistant can travel between Rotterdam and Berlin and keep an eye
on the business. Furthermore, depending on the number of downloads of the app and the
traffic on the homepage the company will recruit some other interns supporting the team in
various matters. As the team grows, pAiRT is looking for a new head quarter in Rotterdam
that will open its doors in the third quarter of 2016 (Q3/16) (Chart 10).
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Business plan-group-9-pAiRT-cc4115

  • 1. Business Plan CC4115 Cultural Entrepreneurship Business Plan Group 9 Iris Kühn 417035 Margareta Liebl 409214 Lisanne Maliepaard 336219 Laura Naum 414932 Julia Tétényi 415953 Lecturer Dr. Marilena Vecco January, 2015 Rotterdam
  • 2. Business Plan 2 Executive Summary There is a consistent lack of activity in the networking and managerial side of the arts application market. pAiRT fills this gap by providing an innovative subscription-based mobile app that aims to be the intermediary voice between young artists and galleries. In an ever-changing environment, pAiRT connects young starting artists with galleries by offering a platform to communicate and establish relationships. The app simplifies the searching process for both parties as well as the interaction between them – pAiRT allows easy access, quick communication, promotion and an extensive network. After both, artist and gallery, have completed an advanced online form with criteria concerning work, art form, experience, objectives, administrative information and location, pAiRT makes suggestions, based on their matching criteria. To be able to assure highest quality and to guarantee outstanding services, pAiRT will start operating in the Dutch market, Rotterdam and Amsterdam, as these cities function as creative hot-spots for artists. Hundreds of Dutch and international artists graduate in these cities every year, and start their carrier - or, would start their carrier, if they could find a proper gallery to co-work with. The gallery sector in the Netherlands is currently growing and therefore offers a lot of potential. As a result, young artists and galleries need a proper intermediary to help them connect with each other. Moreover, the application market has grown significantly as well as the possibilities to generate money from it. Especially social networking apps are popular among smartphone users and pAiRT falls within this category. Because of these reasons and as pAiRT is the first app of its kind, we are confident that artists will highly appreciate this service and we will be able to establish a strong position on the market. Already in Q3 2015 the service will be expanded to Berlin and Vienna, promising markets, as both are important cultural capitals in Europe. This will be achieved by focusing on getting into personal contact with our target group, young artists, as much as possible. We understand the challenging situation of starting artists and want to support them in finding acknowledgement. Regarding advertisement we will cooperate with art suppliers, art fairs and magazines that are focused on the visual artists. Furthermore, pAiRT will kick off with a spectacular launch networking event in the Van Nelle Fabriek.
  • 3. Business Plan 3 Founded in 2014, pAiRT is a start-up company that is engaged in the creative sector of the Netherlands. Highly committed to innovation, communication and creativity, we wish to build a bridge between artists and galleries. We, the brains behind pAiRT, are a small, but diverse team of 5 people with professional backgrounds in economics, business and art: Iris Kühn, CEO (Chief Executive Officer), Margareta Liebl, COO (Chief Operations Officer), Julia Tétényi, CFO (Chief Financial Officer), Lisanne Maliepaard, CMO (Chief Marketing Officer) and Laura Naum, CCO (Chief Creative Officer). We are seeking €160.000 in which the required starting capital (development and design of software and website) of €100.000 is included and furthermore based on our estimations for the next quarters of 2016 the capital is needed for establishing the office, running the marketing campaign and to ensure further improvements of the service. If we maintain a growth of 125% in sold matches and advertisements, we are able to pay off the needed investment of € 160.000 within two years after starting the business.
  • 4. Business Plan 4 Table of content 1. BUSINESS DESCRIPTION ........................................................................................................................6 1.1. MISSION ......................................................................................................................................................6 1.2. VISION.........................................................................................................................................................7 2. ORGANIZATIONAL PLAN........................................................................................................................8 2.1. EXTERNAL ORGANIZATION .......................................................................................................................8 2.2. INTERNAL ORGANIZATION ........................................................................................................................8 3. HUMAN RESOURCE PLAN....................................................................................................................10 3.1. IRIS KÜHN, CEO (CHIEF EXECUTIVE OFFICER)....................................................................................10 3.2. MARGARETA LIEBL, COO (CHIEF OPERATIONS OFFICER) .................................................................11 3.3. JULIA TÉTÉNYI, CFO (CHIEF FINANCIAL OFFICER) .............................................................................11 3.4. LISANNE MALIEPAARD, CMO (CHIEF MARKETING OFFICER)............................................................12 3.5. LAURA NAUM, CCO (CHIEF CREATIVE OFFICER).................................................................................12 3.6. OUTSOURCED TASKS ..............................................................................................................................12 4. ENVIRONMENTAL AND INDUSTRY ANALYSIS .............................................................................13 4.1. POLITICAL FACTORS ...............................................................................................................................14 4.2. ECONOMIC FACTORS...............................................................................................................................15 4.3. SOCIAL FACTORS.....................................................................................................................................17 4.4. TECHNOLOGICAL FACTORS.....................................................................................................................19 4.5. LEGAL FACTORS ......................................................................................................................................19 4.6. ETHICAL FACTORS ..................................................................................................................................20 5. MARKET ANALYSIS ...............................................................................................................................21 5.1. THE APPLICATION INDUSTRY: AN OVERVIEW .....................................................................................21 5.2. DATA IN THE APPLICATION MARKET....................................................................................................22 5.3. MONETIZATION TYPES AND PRICES IN THE APP MARKET..................................................................23 6. COMPETITOR ANALYSIS......................................................................................................................25 6.1. PORTER’S FIVE FORCES..........................................................................................................................27 6.1.1. POTENTIAL THREAT OF NEW ENTRANTS: MODERATE..................................................................27 6.1.2. BARGAINING POWER OF BUYERS: MODERATELY HIGH..............................................................27 7. MARKETING PLAN.................................................................................................................................29
  • 5. Business Plan 5 7.1. SWOT ANALYSIS.....................................................................................................................................30 7.2. TARGET GROUP .......................................................................................................................................31 7.3. PRODUCT.................................................................................................................................................31 7.4. PLACE.......................................................................................................................................................32 7.5. PRICE .......................................................................................................................................................33 7.6. PROMOTION ............................................................................................................................................34 8. OPERATIONAL PLAN ............................................................................................................................41 8.1. OFFICE OPERATIONS (OFFICE MANAGEMENT; PHYSICAL RESOURCES) ............................................41 8.2. HUMAN RESOURCES OPERATIONS.........................................................................................................42 9. DEVELOPMENT PLAN...........................................................................................................................44 9.1. GENERAL OVERVIEW OF LIFECYCLE OF APPS.........................................................................................44 9.2. TECHNOLOGICAL DEVELOPMENT (APP / HOMEPAGE).........................................................................44 9.3. COMPANY DEVELOPMENT.......................................................................................................................47 10. FINANCIAL PLAN..................................................................................................................................49 10.1. EXPENDITURES AND BUDGETS.............................................................................................................49 10.2. ANALYSIS OF THE CASH FLOW .............................................................................................................54 10.3. POTENTIAL INVESTORS AND IN-APP ADVERTISERS ..........................................................................55 11. ASSESSMENT OF RISK........................................................................................................................57 12. REFERENCES .........................................................................................................................................61 APPENDIX ........................................................................................................................................................64
  • 6. Business Plan 6 1. Business Description (Kühn & Liebl) pAiRT is a start-up in and for the creative sector founded in 2014 in Rotterdam. We, the people and brains behind pAiRT, are a small team with background in economics, business and art, passionate about visual arts. That is why we decided to combine our passion with our profession to support young artists and galleries and to contribute to a flourishing art environment. We believe that globalization is an engine that helps to foster relationships among creative people all over the world. pAiRT is a company providing an innovative subscription-based mobile app available for smart phones and tablets. After completing an advanced online form with criteria concerning work, art form, experience, objectives, administrative information and location, pAiRT makes suggestions, based on matching criteria (e.g. same art form; similar interests) of an artist and a gallery. Our strength is to be the first app of its kind that facilitates the often long-lasting search for the perfect artist or gallery and makes it more transparent and interactive. As an artist you can use pAiRT to display your creative work, as a gallery owner you can introduce your exhibition space and interests and without any obligation they can accept the match and get to know each other in person. Both parties enjoy the positive effects of easy access, quick communication, promotion and an extensive network. Core Values of pAiRT Commitment to innovation Commitment to art Commitment to connect creative people Commitment to facilitate communication and relationships 1.1. Mission pAiRT is an app connecting young artists with matching galleries developed by people who are committed to art, innovation and creativity. In an ever-changing environment we are the intermediary voice for artists and galleries by offering a platform to communicate and establish relationships. The app simplifies the searching process for both parties as well as the interaction between them – pAiRT allows easy access, quick communication, promotion, and an extensive network.
  • 7. Business Plan 7 1.2. Vision pAiRT aspires to be the main intermediary who links artists and galleries on a global scale by offering outstanding innovative services. The app intends to be the leading platform in matching artists and galleries by facilitating the search process and the communication in a reliable and trustworthy environment.
  • 8. Business Plan 8 2. Organizational Plan (Kühn & Liebl) 2.1. External Organization The legal form of pAiRT is a Professional Partnership in the Netherlands. The members took this decision after meeting with their legal advisor Peter Kühn (see 4.2. Economic Factors). The advantages of this form are, especially for a small team of 5 people, that it has easy management and administrative structures and moreover, the voting rights are divided based on the percentage owned. In the case of pAiRT each member holds 20% of the company, this results in equally spread power. Mag. Peter Kühn advised –although not legally required – to set up a contract that clarifies the partnership agreement. The agreement can help to avoid legal and personal misunderstandings and troubles. Additionally, if pAiRT is as successful as expected it is still possible to change the legal form into a Ltd. (private limited company) for example. 2.2. Internal Organization The organization chart below describes the internal structure of pAiRT. The company consists of 5 team members who are all responsible for different organizational parts. Although the tasks are divided and every employee has a special role, it is clear that especially in the starting phase all parts are strongly connected and dependent and the members have to closely work together. Still the CEO has the final word in decision-making. This friendly, uncomplicated and coherent internal organization can be led back to the emotional intelligence of the whole team, but especially to the CEO. Iris Kühn was able to establish a philosophy, which is encouraging and open on the one side and structured and clear on the other side. Goleman (2000) identified six leadership styles (coercive pacesetting, authoritative, democratic, coaching, affiliative) and the CEO of pAiRT manages to adapt these various leadership styles in different situations. Furthermore, this accordance is the result of several meetings, in which the team brainstormed about their future corporate culture – according to Cameron and Quinn (2011) an organization can have four cultures: hierarchy-control, ad-hoc, market-oriented and clan. This framework supported the colleagues to think of their values, goals and objectives and they concluded that the best culture for pAiRT is a mixture of ad-hoc (because of its flexibility), clan (because of its friendly and familiar environment) and market-oriented (as it is the aim to reach artists and galleries and to be successful).
  • 9. Business Plan 9 Below there is the organization chart, which reflects the flattened structure of the organization, in which everyone has the same rights and everyone provides the same amount of 2000€ (total 10.000€) as starting capital. However, without any misunderstandings, the CEO still has the leading voice. In addition, the organization does not have a board yet. Chart 1. Organization Chart Ownership Outsourced Iris Kühn CEO (founder) 20% € 2000 IT person Margareta Liebl COO 20% € 2000 Legal advisor Julia Tétényi CFO 20% € 2000 Lisanne Maliepaard CMO 20% € 2000 Laura Naum CCO 20% € 2000 At the moment, pAiRT only has one room as their office, in which the five colleagues work, meet, manage and discuss. The CEO and COO are full-time engaged, whereas the other members are part-time engaged, however, in the starting phase the working-hours and engagement structures are not fully defined and the team is aware of the intense workload especially in the beginning, which requires them to be always prepared and to come to the office, even if they have not planned to be there. Address: pAiRT Jacob van Campenplein 98 3067 LC Rotterdam The Netherlands
  • 10. Business Plan 10 3. Human Resource Plan (Kühn & Liebl) 3.1. Iris Kühn, CEO (Chief Executive Officer) Title and responsibility After working and gaining first hand experience in a gallery, Iris came up with the idea of pAiRT in 2014. She moved to Rotterdam where she met Marga, Laura, Julia and Lisanne, who were also interested in enhancing the way of communication between artists and galleries. After various discussions and meetings, pAiRt and its goals and objectives were born. As she is the main driver behind pAiRT the team decided that she is going to be the CEO of the company. Her main tasks are to give directions and to set up the long-term strategies of pAiRT. On the one hand she is the person communicating with the external environment meeting with key investors, stakeholders and other advisors, on the other hand she is the leader of the team and responsible for the success of the company, as well as the well-being and satisfaction of the employees. Biography and experience Iris is 23 years old from Vienna and has always been interested in the cultural sector. That is why she decided to combine business and arts after school and started her studies in business administration and art history, which she has finished as Bachelor of Science and Arts in 2014. During her studies she worked in several cultural businesses to gain deeper knowledge about the cultural sector and did internships in museums and galleries. Working closely with galleries and artists showed her that the communication between these two parties is often complicated and long lasting and she realized that there is much room for improvement. She is a good leader because of several reasons - she has not only outstanding cognitive and technical skills in the gallery sector but also high emotional intelligence. Her skill to motivate and engage other people, already become clear at a young age. Starting in school Iris has been class representative for several years and was responsible for organizing various charity school events. During her studies she improved her skills further by participating in several courses concerning successful leadership and social skills improvement. Referring to the DISC Profile Iris clearly takes over the role of the dominant and influential leader, as she is confident, sees the big picture and is highly enthusiastic about her work.
  • 11. Business Plan 11 3.2. Margareta Liebl, COO (Chief Operations Officer) Title and responsibility Margareta is the COO of pAiRT, working closely together with Iris. She is in charge of all operational processes of the company and takes care of all tasks concerning the internal and external environment. Margareta makes sure that the operations inside the company run smoothly and also deals with external customer problems. Her excellent organizational and problem solving skills made clear that she is the right person for this function and in addition, she will take over the role of the secretary. Biography and experience Margareta is 23 years old and is from Austria. She studied International Business in Vienna and finished her studies as Bachelor of Science in 2013 and was always passionate about arts and culture. During her studies she made several internships in different cultural sectors, for instance, arts, music, movie and fashion, always dealing with organizational concerns. Her insights and experiences in these fields make her the perfect COO and secretary for pAiRT. In the DISC profile Margareta is dominant and conscientiousness, as she accepts challenges and puts high emphasis on quality and details. 3.3. Julia Tétényi, CFO (Chief Financial Officer) Title and responsibility Julia is the CFO of pAiRT. She is responsible for managing all financial tasks of the company, keeps records, deals with financial risks and plans and reports to the management. Moreover, Julia has to be in contact with external financial partners as banks and outside CPA’s. Biography and experience Julia is 26 years old and was born and raised in Hungary. In 2012, she finished her Bachelor degree in Art History and International communication and media as Bachelor of Arts and Science. Besides her passion for the arts, Julia has always been interested in the financial aspects of a company. Therefore, she took an accounting class besides her studies and worked part time in the financial department of the acb gallery in Budapest to deepen her knowledge in this field. Regarding the DISC profile Julia is a steady person as she is sincere and calm.
  • 12. Business Plan 12 3.4. Lisanne Maliepaard, CMO (Chief Marketing Officer) Title and responsibility Lisanne is the CMO of pAiRT. The CMO is in charge of the marketing appearance of pAiRT to the outside world. pAiRT’s marketing strategy mainly focuses on the promotion of the app via various platforms as well as on a strong social media campaign. Biography and experience Lisanne is 24 years old and was born in the Netherlands. She finished her studies in Culture Studies as Bachelor of Arts in 2012. During her studies she worked in different cultural organizations and had the opportunity to gain deeper knowledge about marketing strategies and promotions. Concerning the DISC profile Lisanne clearly is a dominant person as she is focused on results, accepts challenges and gets straight to the point. 3.5. Laura Naum, CCO (Chief Creative Officer) Title and responsibility Laura is the CCO of pAiRT. She is responsible for all technological decisions concerning the app. As the software and development behind the app is quite complex, pAiRT and especially Laura has to closely work together with an outsourced IT person in Vienna. Biography and experience Laura is 25 years old and from Bucharest. She did her studies in Economics in International Economic Relations and Foreign Affaires and finished it as Bachelor of Science in 2012. Furthermore, Laura was always interested in programming and did a further education class in Database Design and Programming. Since then she has been working on small projects in this field and decided to build up her future career in this direction. As Laura is a sincere and calm person and puts great emphasis on cooperation she clearly is the steady type in the DISC figure. 3.6. Outsourced Tasks IT students from TU Wien (Vienna) Legal advisor Peter Kühn (Vienna)
  • 13. Business Plan 13 4. Environmental and Industry Analysis (Tétényi) In order for pAiRT to enter the app market, an environmental and industrial analysis needs to be conducted. The complexity of the product requires an analysis the application industry in addition to a research in the field of galleries and artists based in Rotterdam and Amsterdam. Under these conditions, a PESTLE analysis will be conducted. Considering the strong governmental influence on artists and their work (Super Individualism), it can be noted that political factors usually have negative implications for the gallery system. On the other hand, the subsidy cut can inspire the commercial galleries to establish more co-operations with artists and, therefore, a potential need for helpful intermediaries can be determined. Additionally, simple taxation, local economic investments and the growth of the app industry are factors that stimulate the economic environment, even if the gallery sector has to face new challenges after the financial crisis. Nonetheless, the relapse in the art gallery sector remained short, despite that it challenges the social support and the co-operation between artists and galleries. Moreover, the support for entrepreneurs also emphasizes the need for effective intermediaries. The most recent technological innovations and the growing importance of technology in the professional lives of both artists and gallery workers show that applications can help to increase businesses. Unfortunately, copyright issues can be hard to protect, symbolizing a complex ethical factor. Finally, the simple laws and support for start-ups contribute to a neutral environment and industry, where pAiRT can be effectively marketed.
  • 14. Business Plan 14 Political Economic Social + Strong cultural policy + Subsidy cut increases artists’ taste for galleries’ services offering growth potential for both + Simple taxation + Growth in the app industry + Increasing investments - Small art gallery sector + Short period of decline in the gallery sector + Support for entrepreneurs, start-ups, partnerships - Co-operation between galleries and artists Technological Ethical Legal + Innovation and growing support for applications - Copyright rules are complex, expensive - Data protection is demanding + Simple laws for start ups Chart 2. PESTLE Analysis Summary Table (Source: own elaboration) 4.1. Political Factors • Cultural Policy in the Netherlands Since pAiRT contributes to the partnership between artists and galleries, an environment mapping of the industry is required. Artists and art organizations are subsidized through the Mondriaan Fund, the Basic National Infrastructure, the Cultural Participation Fund and the Creative Industries Fund (The Ministry of Education, 2013, p. 6). The funds aim to encourage innovation and excellence. In the last twenty years different funds have been available for artists, such as the VVK, SBBK, BKR and the WW & IK. The Stichting Beeledend Kunst Amsterdam has been supporting the art market, as it has worked as a library system, by renting artworks for monthly fees. However, after 2012, many subsidies were cut in the art sector (Artist subsidy, 2012). Nevertheless, the still strong political influence in the art sector can be determined as another tendency that emerged between artists and art galleries, called “super-individualism” (Super Individualism). This phenomenon can be generated by cultural policies in the Netherlands. The way super-individualism has been generated by the cultural policies is explained in more detail later on in this analysis. The government – in the form of the national government with
  • 15. Business Plan 15 its Policy Document on Culture, as well as local authorities – has the major influence on the art sector in the Netherlands, whereas in other countries the commercial industry has a much more influential impact. Since the 1950s, art has been an important part of the political strategy, as shown in several government subsidies (Super Individualism). Still, the decreased level of governmental funds may determine a new way of co-operations between artists and galleries. 4.2. Economic Factors • Taxations Members of a “Professional Partnership” pay income tax on their share of profit and are entitled to various tax allowances, such as investment allowance and the tax-deferred retirement allowance. However, they do need to pay SME profit dispensation and employer deduction, while employee insurance is not required (Chambers of Commerce, 2014, p. 21). • Local Economic Situation After the financial crisis, the monetary policy has become loose, especially in Europe; when interest rates become extremely low; ECB decides to apply a loose monetary policy. The goal is to boost up the economic growth by stimulating investments through low rates, when the danger of inflation is diminished (Monetary and fiscal policy interactions in a monetary union, 2012, p. 51). • Growth in the App Industry A serious economic growth can be detected in the app industry (see 5.1. The Application Industry: an overview). In the recent year Google and Apple run the most popular app stores, and each offered 700,000 apps. Apps are becoming a determinative part of its users’ professional and personal lives, since it is estimated that consumers tend to spend two hours on average per day by using apps. Global revenue from app stores is expected to rise from 62% to $25 billion in 2014. In addition to the economic growth, there is an unstoppable flow of new categories and devices. With several innovations, opportunities and financial potential, the app industry can still be considered to be in its early, still developing stages. Essentially, the potential growth within the app industry has been noticed by most actors on the digital/creative market, hence the increasing number of new competitors, small business and
  • 16. Business Plan 16 startups which are looking to enter the app industry (Jessica E. Lessin & Spencer E. Ante, 2013). Nonetheless, attracting new consumers becomes harder and more expensive. In order to follow the increasing market, innovation is also crucial. Businesses offer apps for tablets and televisions, instead of focusing only on mobile phones (see 9. Development Plan). Maintaining apps also requires serious financial investments and efforts. In the conditions of such a competitive environment, app companies are struggling for new revenue streams and to expand their income, other than advertisements and in-app purchases. New revenues can come from deals with mobile operators, licensing audio-recognition technology, paid premium version of the app and charging television advertisers to integrate campaigns (Jessica E. Lessin & Spencer E. Ante, 2013). It seems that the growing demand and the increasingly cheap prices determine the growth in the app industry. In the last five years, more than 460.000 jobs have been created by the app industry in the U.S (Russel, 2012). In addition to these international aspects, Rotterdam has also started to organize „creative hubs” for start-ups in an attempt to determine the growing number of the investments in the creative sector (Blotenburg, 2013). By offering co-working spaces for young entrepreneurs, Rotterdam has definitely made some progress in this sense. In the last year, 57 start-ups were established in Rotterdam, all of them producing technology- based products, such as softwares and applications, although only one of them was art-related (Rotterdam Startups, 2014). • Financial Crisis in the Art Sector The contemporary Dutch gallery sector is affected by the side-effect of the strong government influence on the work of artists. The result is that the commercial sector, particularly art galleries stagnated or even declined. Nowadays, most of the artists direct their works toward the government, and not to galleries. In this way, young artists are forced to form small groups in order to become visible; in addition, galleries tend to work with this kind of artists, because young art sells well when it is part of a movement (Super Individualism). After the subsidy cut in 2012 Dutch artists and galleries found themselves in serious economic crisis. The government estimated that most of the cultural offering is created on the free market by the actions of independent producers, artists and private funds. The total turnover of the cultural sector was approximately 18 billion euro in 2009. It is also shown,
  • 17. Business Plan 17 that over two-thirds of this turnover is generated in the free market, e.g. in the form of income from creative services and the entertainment industry (The Ministry of Education, 2013, p.5). In order to maintain and increase activities in the private sector, the Dutch government encourages donations in the form of Gift and Inheritance Tax Act (Geefwet). Through these opportunities and donation campaigns, the government aims to motivate private donations to cultural institutions, by presenting income tax benefits. Besides donations, the national Culture Sponsor Code stimulates contributions between cultural organizations and commercial enterprises. As another source of funding, culture sponsorship is a common form of agreement between art galleries and large banks, such as ABN Amro and Rabobank. In addition, Triodos Bank offers funds and loans for art galleries as well (Public institutions in cultural infrastructure, 2014). Despite the promising numbers of the total cultural turnover, at the beginning of the financial crisis in 2009, economic problems could still be noticed in the art gallery sector.The cut of 200 million Euros in subsidies affected the art scene deeply and made the situation between artists and art galleries even more complicated (The Ministry of Education, 2013, p. 6). Today, there are no fee guidelines or models that operate across the Netherlands. Each gallery and art organizations have their own fees policy as they face new challenges; nonetheless, the positive economic environment and the growth in the app industry show that app innovations have the potential to contribute to the economic growth of the art sector. 4.3. Social Factors • Co-operation between galleries and artists It was estimated that sales in modern art galleries declined with 35% and more than half of the galleries reported a down-turn in their sales. Subsidy cuts and disadvantageous contracts with galleries have forced many artists to take side-jobs or work outside of the art sector. The artists who have managed to remain in the art sector and work with galleries had to accept arrangements regarding their income on a sale (50% for the gallery, 50% for the artist). During their co-operations with galleries, artists also gain non-financial opportunities, such as fame and connections, which can lead to more financial opportunities. During a survey, it was revealed that only one out of ten artists is satisfied with the current situation (Survey Visual Artist’s Fees in the Netherlands, 2014).
  • 18. Business Plan 18 An interview with gallerists shows that especially young starting artists struggle with getting represented and that contemporary art galleries will provide the biggest chance for starting artists. As Jacob Witzenhausen, owner of ‘Witzenhausen Gallery Amsterdam’ states in an interview: “We do take on work of starting artists, but as little as possible” (Hammers, 2012). According to Witzenhausen the costs of promoting new work does not weigh up to the income generated from it (Hammers, 2012). On the other hand Renée Pijpers, of ‘Gallerie Albuslux Roosendaal’, states: “When you are looking for contemporary art, you automatically end up with new starting artists” (Hammers, 2012). According to Pijpers there is a lot of interest in art of new artists at art fairs (Hammers, 2012). Rotterdam Amsterdam Number of graduated artists /year 300 50 Number of contemporary art galleries 35 47 Chart 3. Young artists and galleries in Rotterdam and Amsterdam, number of graduated artists in Willem de Kooning Academie and Gerrit Rietweld Academie. (Sources: www.rietveldacademie.nl; www.adformatie.nl ) Contemporary art galleries with homepages. (Sources: www.fuckinggoodart.nl; www.amsterdamsights.com ) • Spread of visual artists in the Netherlands The CBS has up-to-date data on the population of the Netherlands and the latest update, Q4 of 2014, teaches us that the largest populations and the largest working populations are in Noord-Holland and Zuid-Holland (www.cbs.nl, 2014). Another source tells us that most of the visual artists are located in our targeted Noord- Holland and Zuid-Holland as well (Research voor Beleid, 2011, p. 19). Unfortunately this source is the latest information on the spread of visual artists in the Netherlands and it is from 2011. But since the total and employed working population was still the biggest in Noord- Holland and Zuid-Holland in Q4 of 2014, we can assume that the information on the populations of visual artists is still the biggest in these provinces as well. • Support for entrepreneurs The government officially states that the state offers opportunities and encourages start-ups (The Ministry of Education, 2013, p. 7). The economic situation of the art scene offers new careers for entrepreneurs and the ability to create new collaborations. Therefore, an intermediary entity in the gallery-artist mechanism is extremely useful.
  • 19. Business Plan 19 4.4. Technological Factors Since the technological innovations in the app industry are broadening, it seems that apps are conquering new and new fields. Research and Development activities prove to be highly helpful in this sense, as they produce fresh opportunities, such as new platforms. The new innovations affect the costs of producing apps, as nowadays applications have to be created for multiple platforms (iOS, Android, fixed platforms, etc.). Nevertheless, new platforms also contribute to new opportunities for the company to reach more consumers on different devices. Similarly, it seems that more museums and galleries are open to use digital technologies to reach and guide their own visitors (Barnett, 2013). Galleries and artists are also open to promote and communicate on social networks and web-based platforms. Most official websites of galleries based in Rotterdam and Amsterdam, have the opportunity for artists to apply to get represented by the gallery. Next to that artists are also promoted on the websites of the galleries they are represented by. Also, it can be noticed that art producers are more open to different types of media, as they seem to confer an increasingly constant connection between technology and culture. Nevertheless, reaching to technological tools in branding is neither a rare nor a new example. Apps, websites and blogs can be found in the repertoire of galleries and such digital intermediaries actively contribute to the growth of their business. 4.5. Legal Factors • Laws for professional partnerships („MAATSCHAP”) and start-ups In order to start a business in the Netherlands, the enterprise (or entrepreneur) has to register their business at the Dutch Trade Register and the Chambers of Commerce; in addition, the company has to decide on what type of legal form it wants to pursue. pAiRT chooses as its legal form the “Professional Partnership”, which is determined by the Dutch law as a “form of cooperation established by professionals”. It is important to mention that this legal form is very popular among app-based businesses; the exception is made by companies such as Apple Inc. and Google Inc. because they classify as “Private Partnership”. Nevertheless, each partner of a business is required to contribute with effort, capital and assets; regardless of this aspect, a starting capital is not required. The purpose is to share the income earned, on the one hand, and the expenses incurred, on the other. The partnership contract stipulates various
  • 20. Business Plan 20 arrangements such as the matter of contributions, distribution of profits and allocation of profits (Chambers of Commerce, 2014, pp. 18-19). 4.6. Ethical Factors • Protection of personal data pAiRT has to map the information about the protection of personal data, since the app is going to require the users’ personal data in order to create their personal profiles. All citizens have the right to know why and how an organization uses their personal data. In some cases citizens can block their personal data from organizations, for example when organizations use their data to send advertisements (De Rijksoverheid. Voor Nederland, 2006). • Copyright issues Another ethical issue, which pAiRT has to consider, is the copyright of the artworks and how to protect it during the marketing of the application. The copyright of the application itself also has to be protected. Nonetheless, it is of great relevance to mention that the Dutch law of copyright is not considered to be extremely strict; it does not protects any idea, how original it is maybe. It only protects literary, artistic and scientific works. Additionally, Dutch copyright does not require any formal act of protection as the copyright is obtained by the creation of the work/product; licensing is not required either. Moreover, property right entitles the owner with exclusive rights, which enables the owner to monitor and act against copying, as well as against external adjustments and translations (Blenheim Advocaten, 2014). Ultimately it can be noted that the complexity of local copyright issues and data protection make the ethical factor of the industry slightly mixed.
  • 21. Business Plan 21 5. Market Analysis (Naum) 5.1. The Application Industry: An Overview As the contemporary world has become increasingly based on digital technologies, the mobile industry has capitalized on such changes in the environment. What is more, such business transformations offered possibilities for new market structures to emerge. By converting the typical mobile phone functions into applications, a new market sphere (also known as the app market) has been created. Often considered to be one of the most prospective markets, the app store market provides users with the ability to download different types of applications instantly (Janesen & Bloemendal, 2013). Apple was the first to access this type of market, with their launch of the first iPhone, and, thus, by engaging the audience with a revolutionary software. The small square-sized icons on touch screens were the new access to the basic functions that consumers used to have on their mobile phones – camera, weather report, address book, calculator, or other applications that assist users in accomplishing their everyday-tasks. The Internet and the app market have shown an incredible adoption rate, ever since the market continues to grow and apps become a part of our society. The encounter between Google and Apple has evolved into one of the most heated rivalries in the tech industry and business world, and despite that Google has been providing Internet services from the very beginning and Apple was originally focused on hardware, the two companies have increasingly infringed on each other’s space ever since the introduction of both their smartphones. Apple’s App Store and Google’s Google Play have created a sort of semi-open platform, like a marketplace to purchase apps. However, they are the only ones to administer it, and, as result, Apple and Google are responsible to both app developers and users, not only to advertise and market an app, but to make everything accessible, as well. Both app stores provide the customer with the same core functionality: they display apps listed in order of popularity, sorting the apps according to a specific fixed set of criteria (“trending, most popular, or free”), organizing them in a basic set of categories (The Pfeiffer Report, 2013). In the current technological world, app developers and small ventures highly rely on app stores as Google Play and App Store for their revenues. According to Godfrey and Morgan Reed (2013), nearly three-quarters of the highest grossing apps are developed by small businesses. These small companies are dominant in all previously mentioned categories. Altogether, they contribute to the existence and the relevance of an app market.
  • 22. Business Plan 22 5.2. Data in the Application Market According to the most recent reports issued by Statista, more than 75 billion apps have been downloaded from Apple’s App Store, which offers more than 1.2 million apps to iOS users, as of June, 2014. Additionally, the report shows that Google Play is the largest Android app store with more than 50 billion downloads. Between the two application stores, revenue distribution has always skewed towards Apple’s App Store, but Google Play was able to make strong gains, and reduce the difference starting with 2013. Another interesting aspect that can be noticed from Statista’s report is the data concerning the projections of the app industry. Industry numbers project that the amount of global mobile app downloads is going to reach 268 billion in 2017, as the number of free app downloads will exceed 253 billion by 2017. These app sales are estimated to generate more than 76 billion U.S. dollars in global app revenue, up from 18.56 billion U.S. dollars in 2012. Therefore, it can be stated that the current app market represents a viable and profitable industry where more and more small ventures and start-ups can launch new operations. However, analyzing the market from a singular source is not sufficient in order to adequately understand the entire mechanism behind the app industry. Looking through recent App Market Reports from Priori Data, figures on the Central and Western European AppStore & Google Play activity can be used to gain an overview of the recent app development trends. The percentage of downloads value from Charts 4 and 5 describes how many downloads are generated by top apps in specific categories in proportion to total downloads generated by those apps across all categories. As it can be noticed, the decisions of users are not affected by price issues when it comes to games and entertainment-related apps. Another interesting aspect is that iOS and Android users share the same habits when it comes to price issues in the app industry. Chart 4. Categories with the largest number of top free and paid apps, from iTunes’ AppStore in Europe, October 2014.
  • 23. Business Plan 23 Chart 5. Categories with the largest number of top free and paid apps, from Google Play in Europe, October 2014. Based on research of the Dutch Central Bureau of Statistics (2012), which contains a sample of 20.000 Dutch households, whose log data got collected by an app and got analyzed by TU Delft we can see that networking apps are extremely popular in the Netherlands.. Networking apps end up as second most used apps amongst app users in the Netherlands (CBS, 2012). Both man and women have on average four sessions a day on social media (CBS, 2012). When we look at age and the use of apps, it is clear that the people in the category younger than 35 years old use social networking apps the most (CBS, 2012). They use these apps almost twice as much as people in the category 35-50 years old and three times as much as people in the category of 50 years and older (CBS, 2012). People in the category of 35 years and younger have around 7.5 sessions a day on a networking app, which is almost two times more than the average of total networking app use of the questioned population of this survey of CBS. 5.3. Monetization Types and Prices in the App Market Compared to mobile websites, mobile apps optimize the appearance of displayed data and offer several monetization models for developers. There are four main monetization types in the app market: • Free Apps; • Paid Apps: the pay-before-download model; • Free + In-App Purchase: free app with the option of purchasing virtual goods from within the app (pAiRT intends to use this pricing model); • Paid + In-App Purchase: app monetized by a combination of pay-before-download and the option of purchasing virtual goods from within the app. Figures 1 and 2 reveal the in-app purchase item prices in the USA market, as well as the UK and Europe. Our particular interest is in the European Market, as pAiRT will firstly focus on
  • 24. Business Plan 24 two Dutch cities: Rotterdam and Amsterdam. A relevant fact within this particular area of expertise is that pAiRT will enter the market as a free app. However, by judging the in-app purchase item prices in UK and in Europe, it can noticed that the average price of most sold IAP items is relatively low; under these circumstances (and if the app proves to be successful in its incipient, local stages), the pricing of the app could change in the future. Figure 1. In-app purchase item prices, AppStore, free apps. Source: Statista, 2014 Figure 2. In-app purchase item prices, AppStore, paid apps. Source: Statista, 2014
  • 25. Business Plan 25 6. Competitor Analysis (Naum) Rivalry among firms is essential as it determines the businesses’ competitive positions. However, in order to have a better understanding of the ongoing development of pAiRT in the app industry, it is necessary to conduct analyses of its competitors as well. Such analyses should be operated on the most important competitors that pAiRT is facing; under these conditions, it can be argued that Artsy represents the main competitor for pAiRT, whereas Artnear, artCircles and Artfinder are other applications that follow a slightly similar business model. After briefly assessing pAiRT’s competitors, the app’s competitive position in the industry will be analyzed using Michael Porter’s Five Forces model. Launch Year Description Strengths Weaknesses Artsy 2013 Artsy features the world’s leading galleries, museum collections, foundations, artist estates, art fairs, and benefit auctions, all in one place. - popular; - extended target audience; - continuously growing audience. - no dialog between users; - only curatorial features; - only available on iOS devices. Artnear 2009 Artnear is a global guide to art for the iPhone platform where you can find galleries and museums around the world, by browsing and seeing images of current shows, openings and more. - ability to use GPS; - the Calendar feature is integrated; - useful for people who travel. - only available on iPhone; - no dialog between users; - does not have a user- friendly interface; - no possibility for artists to expose their own art. artCircles 2012 artCircles offers a fascinating way to navigate the world of visual art, while searching through curated collections of art. - users can tag the images as favorites; - users can create their own collection to be shared with friends via social media; - users can purchase pieces of art directly from the app. - only available on iPad; - no dialog between users; - no possibility for artists to expose their own art. Artfinder 2011 Artfinder is global marketplace for authentic art by independent artists and galleries. - search through curated collections of art; - purchase pieces of art directly from the app. - no dialog between users; - only curatorial features; - only available on iOS devices. Chart 6. Competitors. Source: Own elaboration.
  • 26. Business Plan 26 • Artsy Artsy’s mission is to make all the world’s art accessible to anyone with an Internet connection and they consider themselves a resource for art collecting and education. It is interesting to mention that, while Artsy has a more extended spectrum in terms of its target audience (the app features the world’s leading galleries, museum collections, foundations, artist estates, art fairs and benefit auctions), pAiRT would primarily focus on providing a network between artists and galleries starting from Rotterdam and Amsterdam. This can either be considered to be Artsy’s downside (Artsy fails to ensure this dialogue) or an advantage as well: Artsy aims to follow a global based commercial/non-commercial art world. Moreover, Artsy mainly acts as a review/curatorial entity rather than a practical business that could have beneficial outcomes for the wellbeing and lives of artists, and, as a potential facilitator for gallery exhibitions. Ultimately, another detrimental aspect of Artsy is the fact that the app operates exclusively on iOS devices; by contrast, pAiRT wishes to include Android users as well in their client-base. The platforms can be considered to share similarities when it comes to their ability to find new art and artists. • Artnear Artnear’s website states that the application is planning on exhibiting functionality that should allow art lovers to find a museum and/or gallery near their current location. Similarly, the app allows users to find artists with current or upcoming shows in the area, and, by implementing a bookmark tab, users are able to save favorite spots just in case they want to return and revisit specific galleries and/or museums. • artCircles ArtCircles is an application that allows its users to discover their favorite type of art in a brand new way. Users have the possibility to select a color, theme or room type from the spiral selection wheel and let their fingers wander across a palette of curated art, and find their new favorites - from classic masterpieces to contemporary prints. • Artfinder This new application works as a recognition mechanism of paintings. Their website provides users with a digital catalogue of fine art that consists of 500,000 pieces of art. The primary goal of the application is to facilitate the sale process of fine art in partnership with galleries.
  • 27. Business Plan 27 Porter’s Five Forces 6.1.1. POTENTIAL THREAT OF NEW ENTRANTS: MODERATE When discussing the potential threat that is generated by new entrants on the app market, it is important to note that they have the ability to add to the existent capacity of the market, and, thus, reduce the profitability of the already existing players. Under the circumstances that the app market is a continuously growing industry, companies are tempted to become more active on the market. Similarly, the cheap or sometimes even non existent entrance barriers add to this as any firm can display their product or service on the app market. By its nature, the app market democratized the distribution phase in the supply and demand proposition, so access to distribution for firms which want to engage in the app market is not problematic. Another important point which has to be mentioned is that generally no (or, very few) governmental policies actually have the capacity to block firms from entering the market. Conversely, new entrants would find it difficult to challenge the apps promoted and developed by already-established companies. Another aspect in relation to the potential threat developed by new entrants is the fact that, despite an increase of apps that give the creative role to users, there is a consistent lack of interest in the networking and managerial side of the arts application market. pAiRT aims to fill this gap. In these conditions, our application would face a moderate potential threat generated by new entrants on the market. 6.1.2. BARGAINING POWER OF BUYERS: MODERATELY HIGH While the idea of virtual galleries seemed to be more of a conceptual solution to the traditional way of seeing and admiring an exhibition in the past, the emergence of the Internet as part of the normative lifestyle of the 21st century provides a feasible and genuine platform that is capable of becoming the direct replacement of how these two categories interact in the art world. In the case of pAiRT, the bargaining power of buyers represents a much more complex situation. That is because the users of pAiRT are artists, as well as galleries. Another interesting component in the bargaining power of buyers’ proposition is the fact that the app’s functionality would work as a highly beneficial facilitator for both parties: on the one hand, galleries can find new artists to work with, and, on the other, artists can find new galleries where to exhibit their work. Similarly, it is important to note that in the artist-gallery relationship, pAiRT could have a more significant influence in assisting artists to find new
  • 28. Business Plan 28 potentially empty gallery spaces where they could exhibit their art; in other words, pAiRT could potentially become more popular among artists, so they would enjoy a more significant bargaining power. Moreover, in addition to the fact that the app would facilitate a better networking process in the art sector, both parties’ business models (artists and galleries) are prone to change due to constant technological upgrades; in this sense, a virtual networking platform could prove to be indispensable in the future. Essentially, the fact that pAiRT would enter the app market as a free application should, on the one hand, be tempting for users, but on the other, should lower the switching costs for them. Therefore, consumers (or buyers) still have a significant, but not decisive amount of power. 6.1.3. BARGAINING POWER OF SUPPLIERS: MODERATELY LOW The relationship between the app industry and its suppliers is symbiotic; it must work for both sides. In the case of pAiRT, its users are in fact the suppliers of the content; therefore, similarly to the bargaining power of buyers proposition, artists and galleries are supplying the content through the app. Artists become suppliers by contributing to the galleries with their own art, and galleries themselves become suppliers by granting exhibition space (and job spaces) to artists in a process that is offered by pAiRT. Considering the fact that in an industry with many small suppliers (an extended range of independent artists would be more likely to use the app at first) and few large buyers (a few well-established galleries would look to work with artists through our application), the bargaining power of suppliers is diminished. Similarly, the bargaining power of artists is weak as long as there is a limited range of similar applications that are willing to provide a networking service between artists and galleries. As pAiRT would exclusively ensure this conversation between artists and galleries, the bargaining power of suppliers diminishes even more due to the fact that they do not have alternatives to choose from. 6.1.4. THREATS FROM SUBSTITUTE: MODERATELY HIGH When referring to the threats that pAiRT might encounter from different substitutes, it is of great relevance to mention that substitute products are products that perform the same function or satisfy the same need as an existing product (Friend and Zehle, 2009, p.59). Within the app industry, the threat is low due to the fact that there are no applications that ensure the same service. However, artists and galleries can still reach each other through
  • 29. Business Plan 29 traditional methods (direct physical contact at art fairs, submission of recommendations and resumes, etc.), and modern methods (email, personal website, telecommunication opportunities, etc.); all these methods are low-cost (or some even free) so consumers (both artists and galleries) can easily switch from using pAiRT to the previously mentioned substitute products due to low switching costs. Nevertheless, such methods are time- consuming, so pAiRT aims to filter unnecessary information and ensure a better networking service between artists and galleries. The opportunity cost of using pAiRT is lower than using other techniques. Ultimately, it can be argued that the increased digitalization and technological upgrades will persuade both parties to use digitally-supported services (see 4.4. Technological Factors), such as pAiRT does in the app market. Under these conditions, the threat of substitute products faced by pAiRT is moderately high at the moment, but could diminish in the near future. 6.1.5. RIVALRY AMONG FIRMS: LOW In the circumstances that pAiRT ensures a networking service based on an innovative and exclusive business model (at least in the arts sector of the app market), it is obvious that the intensity of the competition is lower. As in this sector of the app market, pAiRT ensures a unique service, our app becomes part of an industry which is generally more stable than fragmented; this is because pAiRT does not faces any competition from similar applications. In other words, the diversity of competitors is relatively low. Current art applications fail to share pAiRT’s main focus: the creation of a dialogue between suppliers (artists) and buyers (galleries and users). Despite a growth of art-orientated apps, most of these applications primarily focus only on the curatorial process of art, or are based on user generated content (UGC) business models; nevertheless, they fail to encompass the business behind it and connect artists with potential new job spaces, and galleries with potential new exhibitions. Therefore, the rivalry between firms on the app market is low at the moment, but could increase in the future, especially if one takes into account the increased appeal towards digitization. 7. Marketing Plan (Maliepaard)
  • 30. Business Plan 30 7.1. SWOT analysis Based upon the environmental and competitor analyses we have made a SWOT with our biggest opportunities and threats. The strengths and weaknesses are based upon our current situation and facilities. Strengths (internal) Weaknesses (internal) - High educated people - People with passion for visual arts - No knowledge on app technology - Developed networking skills - Little financial capital - Experience in the gallery field - No established reputation - High commitment - Small target group - Very user-friendly product - Thoroughly tested product - Only 1 Dutch entrepreneur - Low user barriers - High added value to users - Lowering service costs for galleries - No risks for participating galleries - Unique product Opportunities (external) Threats (external) - Low competition - Moderately high bargaining power consumers - Worldwide growth of in-app advertisement - Low bargaining power for pAiRT. - Growth of smartphone use in Europe - Competition with traditional habits within the arts field - Dutch art policy is pro- entrepreneurship. - Subsidy cuts in cultural sector - Growth in the use of apps in Europe. - lower chance on sponsorship - Little network within gallery field. Chart 7. SWOT Analysis. Source: Own elaboration. pAiRT could become a success, since there is no such product on the market yet, it gives artists the opportunity to be more entrepreneurial as is expected of them and smartphones are
  • 31. Business Plan 31 part of the daily habits of people. Next to that the risk of using the service of pAiRT is quite low and the added value to an artist his career could be big. On the other hand it has a down side of being a completely new player within the field, since pAiRT has not proven itself yet, so why would people download the app? Without users we do not have a product. The target group is very specific, which means less potential consumers, therefore it is important that we can catch a large group of that small potential consumers. For the marketing plan we have used the marketing mix with the four P’s. The P’s of Product, Price, Place and Promotion. The P’s are completely focused on the target group of pAiRT. At first the target group is described, secondly the product pAiRT, thirdly the price rationale, fourthly the place and finally the promotion. This is the marketing plan for the Netherlands only. For Vienna and Berlin a new plan will be created. 7.2. Target group The target group for the app pAiRT is starting independent visual artists, located in the Netherlands. With starting artists, we mean artists that have made the decision to wanting to make a living out of their art, but are not capable of doing so yet. Another important factor of the target group is that they want to be represented by a gallery, but have a hard time doing so, because they do not have established their name yet. Our target group has already made art, has a portfolio and dedicates a big part of their time to creating art works. Between 2010 and 2012 the total population of artists in the Netherlands has grown significantly and 60% of the population worked independently (CBS, 2014, p. 32). As is mentioned in the environmental plan, subsidy cuts force artists to be more entrepreneurial. Since all artists have to be more entrepreneurial, it can be assumed that it is even harder for starting artists to stand out and get represented by galleries. Based on our market analysis, we expect especially for young people between 20 and 35 to be interested in pAiRT. The market analysis describes that especially people younger than 35 years old use social networking apps the most. pAiRT can be seen as a networking app. To sum up the target group for pAiRT is starting independent visual artists between 20 and 35 years old, located in the Netherlands, who want to be represented by a gallery. Next to that we have to promote the app amongst galleries that look for contemporary art, because they are most likely to represent starting artists as is mentioned in our environmental analysis. 7.3. Product
  • 32. Business Plan 32 With pAiRT we aim to be a genuine and worthy addition to the process between galleries and visual artists. We will only allow physical galleries to our database which are genuinely looking for new artists. Digital exposition websites are not allowed on the app. For artists the app functions as a mediator between the artist and an important gatekeeper within the arts world. It can ease up that process for artists of trying to get a gallery to represent them, but will not be a complete replacement of that process. For gallerists pAiRT can lower search costs of looking for new protégés for their gallery, because they are assured that they will only be approached by artists that match their gallery. For gallerists also counts that the app will not replace the entire process of looking for new artists, even though it could replace it, we do not expect this to happen. Because the app is meant to be very professional, it will look stylish. We are dealing with creative people, so the app will have a very creative design. The design should not affect the user friendliness. The app has to “breathe” arts, with bright colors. This design counts for the general pages of the app. Artists and galleries can adjust their own profile to their wishes and desired colors. The profiles have to show as much personality of the gallery or artist as possible; everything can be formed as the users want. After a match is made, we will reach out to the artist and the gallerist to get information on if the app was useful. We will do this via e-mail with a survey. Gallerists and artists can decide for themselves if they respond to our survey of course. With this information we are able to improve our app. 7.4. Place pAiRT is an app which will at first be available for smartphones with the ‘Android’ system of ‘Google’ and the ‘iOS’ system of ‘Apple’. The ‘Android’ system is available for more smartphone brands than all other smartphone systems. ‘Android’ system is available for ‘Samsung’, ‘HTC’, ‘Sony Ericsson’, ‘LG’, ‘Sony’, ‘Google’ and ‘Motorolla’ (www.androidvergelijk.nl, 2014). The chance that visual artists have a phone that runs on the ‘Android’ system is therefore bigger than the chance that they have a phone that runs on another system. To complement this argument, research has shown that most people have a ‘Samsung’ in the Netherlands, which is an ‘Android’ smartphone. After the Samsung follows the ‘iPhone’, which has the ‘iOS’ system (www.telecompaper.com, 2014).
  • 33. Business Plan 33 Chart 8: Market share smartphone manufacturers amongst Dutch consumers. Of course if everything goes well with pAiRT we will come with an app for other smartphone systems as well, but we start with the ‘Android’ phones. The app stores of both ‘Android’ and ‘iOS’ have a large range of apps and orders them by type of app. pAiRT will fall into the following three categories within the app store: Social apps, Lifestyle apps and Business apps. The app will be in the free apps section. The app can be found by the following keywords: art, artists, contemporary and galleries. 7.5. Price Gallerists are expected to have a lot of connections with frequent art buyers and are seen as art experts by their environment. Therefore getting represented by a gallery could be very beneficial for an artist. With the representation the artist will not necessarily benefit financially, but the chance of getting acknowledged by other important parties in the art sector, is of great value to an artist (Teeven & De Jong, 2014, p. 14). pAiRT will make a big effort to find appropriate galleries in Rotterdam and Amsterdam and only wants to deal with serious starting artists. Therefore the app cannot be completely free.
  • 34. Business Plan 34 It is free for artists to download the app and create an account without limitations, because we want to keep a low downloading barrier. We only put galleries in the database after visiting them personally. The gallery has to be open to new artists, otherwise it will not become part of the app its database. When a match has been made, artists have to pay € 20 to see the name and other information of the gallery they have been matched to. We have two reasons for this fee. The first reason is that we only want really serious artists to use our app, since we want to maintain a good relationship with the galleries we have in our database. Secondly we offer quite a lucrative chance to artists once a match is made by the app and it is therefore of high value to artists. “If something costs 20 Euros it will probably be good” is what we believe users will think. 7.6. Promotion We have to actively approach our target group and we expect to find them mostly in the provinces Noord-Holland and Zuid-Holland, as the environmental analysis teaches us. We will use different types of promotional tactics and materials and we have divided them in subcategories. The most important tactic for us is to get into personal contact with our target group as much as possible. The promotional tactics and materials are categorized into: person- to-person selling, advertisement, printed promotion materials, in-app merchandising, tie-in promotions, after-sales and online marketing. 7.6.1. PERSON-TO-PERSON SELLING Networking events Starting artists have to build a network of institutions and persons within the art world and have to be very active in that process of building a network. Therefore an important way to get into contact with our target group is attending networking events and art fairs. During these events, we can actively approach artists and get to know their situation. This personal contact gives us the chance to show that we are not purely commercial, but want to support visual artists in their success. We will have to look for networking events in Noord-Holland and Zuid-Holland constantly. A good way to find out information on networking events is to get into contact with professional collectives of visual artists. In the Netherlands one of the big collectives is ‘Beroepsvereniging voor Beeldende Kunstenaars’. It has a lot of members and its board is build up out of professionals within the art-scene. Networking gives us a chance to build a relationship with our (potential) users. Chances are we will meet quite some artists multiple times at these events. We should not push too hard
  • 35. Business Plan 35 into using pAiRT, but have to win sympathy; when people like your personality, chances are bigger that they will give a look at your product. Approaching art colleges Since pAiRT is mainly for starting artists, we have to go to one of the sources that provides visual artists, which are art colleges. A quarter of the students that graduate at an art college, becomes an artist (CBS, 2014, p. 19). We therefore do not want to decline this group of potential users of pAiRT. There are two main art colleges in Zuid-Holland, which are: Hogeschool der Kunsten Den Haag (School of arts The Hague) and Willem de Kooning Academie in Rotterdam (Willem de Kooning Academy). In Noord-Holland there are two art colleges as well both in Amsterdam, which are: Amsterdamse Hogeschool voor de Kunsten (Amsterdam School of the Arts) and Gerrit Rietveld Academie (Gerrit Rietveld Academy). We have to approach all the colleges and get information on special networking events or types of career days for students. A lot of colleges organize job fairs at their schools to give future graduates the opportunity to network and get a sense of what is important in the art scene. This would be a great opportunity for pAiRT to get notified by its target group. We have to convince the spokesperson of the college that our app can be of true value for starting artists, in order to get a place at an event for their students. If we act too commercial, the potential value of the app will not be understood. Approaching galleries for the database of pAiRT We have to find galleries that are interested in selling arts of starting artists. It is important that we send the right message to the gallerists. It has to be clear that pAiRT could be an extra tool for them to find new artists, without any costs. It has to be clear as well that our goal is to support starting artists and that we only send the artist a notification of a match if the gallery has accepted the match first. The gallery will not be overloaded with disparate visual artists and all the artists in the database will be serious artists. As the environmental analysis showed, Rotterdam has 35 galleries that we have to select from and Amsterdam has 47. In order to get into contact with galleries, we will do some cold acquisition. The cold acquisition contains visiting galleries unannounced and make conversation about our app. We will be selective in this approach, because it takes a lot of time and we want to prevent serious agitation amongst gallerists. This selection will be made through online research. We will approach young start-up galleries, but also galleries that are interested in contemporary art.
  • 36. Business Plan 36 Next to doing cold acquisition, we will visit art fairs in Noord-Holland and Zuid-Holland. Art fairs give us the opportunity to get into a less formal conversation with the presenting galleries. The gallerists or represents of the gallery are already at the fair with the goal to make contact with people and therefore getting into a conversation with them is easy. We do have to make sure not to disturb their business at the art fair. The gallerists need to see our passion for the arts so that we can get their sympathy. Try to get the gallery’s information at the moment of contact with the gallerist. The gallerist has to sign an agreement and we will create the account for him. After that the gallery can personalize and activate it. We stay in touch with the galleries and call them a week after we have created their account to make sure that they activate it. 7.6.2. ADVERTISEMENT Since pAiRT is an app with quite a unique target group, the advertisement should not be too broad. Advertisement is often expensive and it is hard to measure the effectiveness of it. We can advertise in alumni magazines of art colleges and in the magazines of the professional collectives of visual artists. When we advertise we have to make sure that it relates to the content of the magazine. A lot of magazines have certain topics per issue. It only makes sense to advertise for pAiRT when it is about the careers of visual artists, about networking or about the profession visual artist in general. Some magazines we can advertise in: - Rex Alumni Magazine (magazine for alumni of Willem de Kooning Academy); - BK informative (magazine for professionals in the visual arts, published by ‘Beroepsvereniging voor Beeldend Kunstenaars); - Kunstbeeld (Magazine on contemporary art); - kM (Magazine with technical and practical information for professional artists and the latest trends within the professional field). 7.6.3. PRINTED PROMOTIONAL MATERIALS We only need printed promotional materials for the person-to-person selling and external communication. We have to have a very recognizable corporate identity. The lay-out and design of the printed materials should be unique and completely match the design of the app. For the person-to-person selling we need: - Business cards with all our contact information.
  • 37. Business Plan 37 - Flyers to hand out at school job fairs, which contains all the information of pAiRT. - Flyers to give to gallerists we speak with at fairs. - Banners to decorate an information stand at fairs. - Stationery for external communication. - Envelopes in our corporate identity. 7.6.4. MERCHANDISING Merchandising in the case of pAiRT means the process of buying the match by the visual artists. Since we do not have personal contact with app-users in the beginning, we have to make sure that it is clear how the app should be used. The app has to be easy to use and all options should be well described. This means that the guidance texts of all the possible functions have to be clear. We provide a helpdesk that can be reached by telephone, chat and e-mail. The notifications artists get of a match should give them the feeling that they are selected and got a true chance to present themselves to a gallery. This will be a short message and it has to convince artists to buy the match. Below this text should be a button that says: “Buy your match”. 7.6.5. TIE-IN PROMOTIONS When we have more than 100 users, we will approach suppliers of useful materials for artists. Think of suppliers of paints, brushes, exposition materials and so on. We can offer the suppliers the chance to promote their goods in our app and make special discount offers to the users of our app. This should all be suppliers which have an online store and all offers and adverts should lead to a website or an online store. It would not make sense if pAiRT-users need to print a coupon for example, because that takes too many actions for them to use it and the chance of acting on the offer or advertisement will decrease. In exchange for the possibility to advertise in our app, we ask the supplier to promote our app in several ways. The promotion of pAiRT at art suppliers will depend on their possibilities for advertisement of course. Two ways of advertising we could ask in exchange are: - Let suppliers hand out promotion cards of pAiRT with a promotion code that gives a 50% discount on their first match. On this card will also be a description of our app.
  • 38. Business Plan 38 - Advertisement of pAiRT on the supplier’s website. The reason that we already have to have some users of the app is because otherwise we do not have any potential buyers to offer to the art-suppliers. We need suppliers that can decide independently if they will cooperate with us. When a store is part of a large chain it can often not decide for itself if it will cooperate with another entrepreneur. Some well-known independent art-suppliers are: - Akkolades: makes frames for paintings and photographs and is located in The Hague; - Levant Art Supplies: collection of supplies, has brushes, paint and more and is located in Amsterdam; - Harolds: broad collection of art supplies like paint, canvas, frames, brushes and is located in Rotterdam. 7.6.6. AFTER SALES Visual artists that use pAiRT We want to use aftersales to keep developing the user-friendliness of pAiRT and to give users the feeling that their opinion and well-being matters to us. As mentioned earlier we will send a survey to everyone who has bought a match. When someone has not responded to our survey after several weeks, we will send one e-mail to remind them. The reminder e-mail contains the survey as well. When someone has a profile for three months already and has gotten a match before but did not purchase the match, we will send that person an e-mail as well. This e-mail will contain a survey with questions about why they did not buy the match. Galleries that use pAiRT With the galleries we will maintain more personal contact, because we want to make them feel important to us. Once every three months, someone of our organization will visit the galleries and ask about the experiences of the gallerists with pAiRT. The information that we get out of these visits, will be documented and used to improve the app.
  • 39. Business Plan 39 7.6.7. ONLINE MARKETING Our online marketing contains a website, connecting with influentials and app-rating. Website Our website will be designed after our corporate identity. It will not contain too many pages, since our product is an app. One page will contain success stories of visual artists who have found a gallery via pAiRT. This page will be called “Artists experiences with pAiRT”. For this to work, we have to approach users who have bought a match. The idea is to give space for comments in the aftersales survey we send and ask people to check a box with “I agree” when they agree if we post their comment on our website. We will not modify the comments people write. Moreover content will be provided by experts and other players in the arts sector. More details on this subject are in the development plan. On the homepage we will describe the concept of pAiRT and its mission and vision. On the homepage will be a button that says “Download pAiRT in Google-Play Store”; this option will only be of use if someone is visiting our website with his smartphone. Our legal information, like the Chamber of Commerce number and contact information will be in the footer of the homepage. Connecting with Influentials We will reach out to starting visual artists that also blog and have a large amount of followers on social media. We will ask them to download and use the app for free. Once they have experienced the app, we will ask them to write about it online. We have to invite the influencers to an information session (blogger meeting) on the app and give them the feeling that they are a part of something completely new. We will brainstorm with them about their contribution to the success of pAiRT. Afterwards they will get a coupon for their own favorite art supplier. We will link to their blogs on our website at the page with experiences of users. Getting influentials involved will be when our app is new in the app stores App-rating ‘Google-Play Store’ and ‘App Store’ give app-users the possibility to rate and review the apps they use. Now it is even possible in the ‘Play Store’ to filter apps on the rating they got of users (www.android.com, 2014). Apps with a high score are more popular than apps with a low score. Apps can get a score of maximum four stars. Having a high score could affect the amount of downloads an app gets, since nowadays it is possible to filter on high scores. It is
  • 40. Business Plan 40 therefore that we want to point out to our users in the aftersales e-mail, that they can rate pAiRT in both appstores. Social media pAiRT will be active in social media, using Facebook and Twitter. Twitter gives us the opportunity to post and follow news articles on the work and living situation of visual artists. We also want to use Twitter as a channel for our app-users to ask questions or give comments about pAiRT. In this way we can interact with our users quite quick and direct. We do have to be active in our respond to people in order to give them the feeling that they are heard. It can also be a source of information, because if people have genuine complaints, we can use that to improve our app. Facebook will give other parties to advertise with us on our page, but also the connection with our users is an important benefit of Facebook. It will also be possible to download pAiRT through our Facebook page. Launch Event When we are ready for operating and the app can officially go live, we want to organize a network launch event. We invite all the galleries that already have agreed to be in our database and the influentials, who want to be the first official users. We will ask the bloggers to spread the word within their network about this launch event. Furthermore, we want to try to get it on the event calendar of BBK (The professional association for visual artists) and ask Art colleges that have a Facebook page to post it on their page. The invitation has to highlight the networking part and also has to point out that a new unique service to support starting visual artists will be presented. If people subscribe to our app that night, they will get a discount of 50% on their first match. For the launch event we will book the ‘Van Nelle Fabriek’ in Rotterdam. We give a presentation with visuals about the app, but also about why we created the app. It should become very clear during this presentation, that we are passionate about the arts and that we find it important that artists find recognition. We want to make clear that we understand the current situation for artists without government support. After the presentation, the app officially goes live.
  • 41. Business Plan 41 8. Operational Plan (Liebl) The operational plan is crucial for a business and helps pAiRT to effectively plan and allocate its resources. Clearly, resources of a business, either human or physical, are limited, which is especially the case of the small start-up pAiRT (Friend & Zehle, 2009). The operational plan of pAiRT will consist of first, office operations, including office management and physical resources, and second, human resources operations. Further steps, as for example, how these resources need to be allocated and to develop over the years will be discussed in the development plan in more detail. 8.1. Office Operations (Office Management; Physical Resources) • Office management As already stated in the organizational plan, pAiRT has its office in Rotterdam, at Jacob van Campenplein 98, 3067 LC, which is a private apartment of one of our members, who also takes care of the rental contract. The team has one big office room, around 35qm2, which is already furnished. Therefore the team did not have to care about tables, chairs, kitchen equipment, etcetera. Additionally, it has a small kitchen and a bathroom. All members of pAiRT have their own key - this allows the team to have flexible working hours and to be independent of each other. The culture of the start-up is very open-minded, friendly, spontaneous and reliable. However, the team decided to have two weekly meetings, which have to be attended by all internal and the developers of the app – via Skype. Especially during the starting phase this is important in order to be updated and to keep on track of all current operations. These meetings will take place: - Every Monday, 8:30 – 10:30 - Every Friday, 8:30 – 10:30 During these meetings everyone has to report on her/his current and future steps, possible enhancements and improvements. In addition, every evening the members need to send a report via mail, in which they make a summary of the past day and a forecast for the future day. These guidelines are necessary, as not all members of pAiRT work on the project at the same time and as human resources are limited, this saves a lot of time in advance and builds a good base of trust. As a result, during the other days and working hours of the week, the team is
  • 42. Business Plan 42 very flexible – they can freely plan their working hours next to their studies at Erasmus University. • Physical resources Regarding movable physical equipment, the members of pAiRT agreed on using their private laptops and phones in the first stages of the project. They all have updated and fairly new laptops. However, the CEO registered one mobile phone and number for the start-up – this is the official telephone number of pAiRT, which is also indicated on their homepage and which will be used for the customer service and partner management. As the development of the App and the homepage will be outsourced, there are no special physical resources required for this part of the business. 8.2. Human Resources Operations pAiRT is a small team, of which all five are still Master students at Erasmus University in Rotterdam until July 2015. Strictly speaking, for four people of the team this master programme is full-time (the CMO is doing the part-time programme), which means that human resources need to be properly planned and precisely organised. The table below gives an overview of the parts of pAiRT’s human resources, their positions and how many hours per week are planned to be dedicated to the organisation in the first stage. Chart 9. Human Resources. Source: Own Elaboration. As already mentioned above, during the weekly meetings everyone has to be present, however, the remaining working hours can be flexibly organized. Another important part of the start-up is the daily report – although the official organizational chart (Part 1:
  • 43. Business Plan 43 Organizational Plan) indicates a structure, in which the COO, CMO, CCO and CFO primarily report to the CEO, it is clear that these daily reports are addressed to and aimed at all employees of pAiRT. The division and the main tasks of the roles is already mentioned in the Organizational Plan however, the table above gives a good overview of the human resources plan of pAiRT. Although still students, the CEO and COO will work full-time (40 hours) on the project – the main parts of their studies have to be completed during the weekends and in the evenings. The CMO, CCO, and CFO are working part-time (25 hours) for the organization. Nevertheless, they are aware that they probably will have to spend more time on it during the next months. This dedication is only possible due to three reasons: their high engagement to this business idea, their friendly relationships and their flexible time management, which allows them to be spontaneous and to help each other out. This flexibility is also reflected in the case of holidays – if one member of the team plans to go on holiday, it will be discussed and approved during a weekly meeting. During the first year of the project, though, the team decided together, that a member should not miss more than 7 to 10 full working days in a row. Moreover, it is clear that the other members of the team have to take over her/his parts during this period of time. Regarding the communication with the app developers the CCO, Laura, will be in charge. These external employees will work and be paid on an hourly basis – at the beginning this is the most convenient solution. Laura will organize meetings, discuss further steps and will be the main contact person in case of questions or problems. Particularly during the first months, in which the app will be developed this task is of highest relevance. To sum up, the Operational Plan of pAiRT has some strict guidelines, to which everyone has to adhere to. If these rules are approved and accepted, though, the members of the team are fairly free and have a lot of decision power. Furthermore, during the first year all members are aware that they will work a lot without actually making revenues or earning salary. However, they have discussed these points and are confident that it will pay off in the future.
  • 44. Business Plan 44 9. Development Plan (Kühn) In the development plan pAiRT’s further actions are consolidated, according to the two main developments of the business. These are the technological developments (app/homepage), as well as the company developments. The development analysis examines a time period of two years (2015-2016) on a quarterly basis. 9.1. General overview of lifecycle of apps Regarding the mobile lifecycle of apps, there are four important points in time that need to be considered. These are design / development, the testing phase, deployment as well as the prototype phase. To make sure the app runs without any errors, the test phase plays a crucial role in the development process. In this phase different tests as automated unity tests, device tests, beta tests or scalability tests are conducted in order to guarantee the best outcome possible. In the following deployment phase tasks as device management and customer care have to be conducted to build up a solid network before the implementation of the app. After these three cycles, the app is ready to go online and finally the prototype phase starts (Archgate Computer Centre, 2015). 9.2. Technological development (app / homepage) The technological development of pAiRT considers the progress of the app itself as well as the implementation of the homepage. Currently two students from Vienna are working on the project. The main developments of 2015 are shown in the following table. Chart 7. Source: own elaboration The team of pAiRT already had Skype meetings with the students from Vienna discussing the software behind the app as well as the design. As the students have connections to the technical university in Vienna, they made a deal with former IT students concluding that they can use their already advanced technology for the basic software of pAiRT. Therefore, the development costs of the app can be hold down, enabling the team of pAiRT to invest more
  • 45. Business Plan 45 capital into the implementation of the homepage. The team, together with the experts from Vienna, calculated that the initial development costs of the app are €60.000, the costs of the homepage are estimated at €40.000. Moreover, the running costs of the app and the homepage are calculated to be €100.000 per year. However, these figures will be discussed in greater detail in the budget. The App The software behind pAiRT is quite complex, as many variables need to be considered in order to find the perfect match between a gallery and an artist. In the next section an overview of the general functioning of the app will be provided (Chart 8). Table 1. Software Explanation (pAiRT, 2014). In the first step both artists and galleries need to complete the advanced form about their business for free. Then the searching process for the perfect match starts. If the app finds suitable partners, the artist gets a notification that he “got matched” with some background
  • 46. Business Plan 46 information about the gallery (art form, location). In the next step the artist needs to make a decision: if he wants to get into contact with the gallery he has to pay a fee of €20. However, if he is not interested in the gallery at all, the artist simply waits for the next match. In the first case that is described as “scenario payment”, the artist pays the fee and at the same time the gallery gets a notification that the app found a promising match. In the next step the gallery needs to make a decision that is crucial for the further relationship between the two parties. On the one hand the gallery can set up a meeting with the artist, on the other hand the gallery might notice that the relationship will not work out in the future and therefore decides not to meet with the artist. This shows that there is the risk for an artist not to meet with a gallery even though he or she got matched and paid a fee. Nevertheless, since the software behind pAiRT works with meticulous certainty this risk can be reduced. Moreover, as galleries do not have to pay an extra fee to meet with an artist, it can be assumed that most of them will be curious and simply take the opportunity to meet an artist who might be perfect for them. However, if a gallery decides not set up a meeting with an artist more than three times, its contact will be deleted from the system. If the two parties meet and find an agreement, pAiRT helps them to promote further exhibitions and information over its website. In the first quarter of 2015 (Q1/15) the IT students will finish the development of the software and start the first test phase of the app. As the app itself is the main product of pAiRT, it needs to function impeccable and therefore the test phase will be conducted over 5 months. In order to go online pAiRT needs at least 30 galleries that will sign up for the app as well as 40 artists. The marketing department is working on this task, getting into contact with both parties and promoting the app. Further developments of the app are to adapt it currently according to new software updates provided by Smartphone and tablet producers. The Homepage Besides working on the development of the software, the students are also programming the website (www.pAiRT.com). This website is a main part of pAiRT’s business. After a gallery and an artist got matched, the website functions as a tool to promote the artist and give background information about the gallery. Laura Naum, CCO of pAiRT, is responsible for the content of the homepage. Besides the promotion of galleries, other experts and players from the art world will be asked to provide posts on the homepage and some insider information. In return, they get the chance to be the first persons to meet the emerging artists and see their artworks.
  • 47. Business Plan 47 In the second quarter of 2015 (Q2/15) the implementation of the homepage will be finished and the test phase starts. At the same time the software of the app runs through the final test phase. At the end of this quarter the app and the website will be optimized. Then in the third quarter (Q3/15) pAiRT goes online in Rotterdam and Amsterdam. In the last quarter of 2015 (Q4/15) the technological developments will mainly focus on adapting the software and the homepage and fixing potential errors (Chart 7). In 2016 pAiRT plans to expand to new markets. The app will be available in Austria, Vienna and Germany, Berlin. The team decided to focus on these two markets as Iris Kühn (CEO) has contacts to galleries and artists in Vienna and Margareta Liebl (COO) is well connected in Berlin. In the first quarter (Q1/16) the software will be adapted to these new markets and also the test phase takes place in Q1/16. Then in the second quarter of 2016 (Q2/16) the app goes online in Berlin and Vienna. In the last two quarters of 2016 (Q3/16 and Q4/16) the technological team focuses on the adaption of the software and the frictionless service of the homepage. Chart 8. Source: own elaboration 9.3. Company development So far the headquarter of pAiRT is located in Rotterdam and the team exists of 5 people. All of them are still doing a master program at Erasmus University and can therefore only work at pAiRT part time. At the beginning of June the team will complete their studies and start working on the project full time (Q2/15). As already discussed in the technological development plan, the app will be first launched in Rotterdam and Amsterdam in 2015. Laura Naum, CCO of pAiRT, who is concerned with the final development of the app and the content provided on the website will need an intern who supports her in the months before and after the launch. This intern will mainly work on the homepage and its content and makes sure that everything runs smoothly in this matter. Therefore, starting in the first quarter of
  • 48. Business Plan 48 2015 (Q1/15) Margareta Liebl will start recruiting an intern for the creative department (Chart 9). Chart 9. Source: own elaboration Moreover, as the company plans to expand its business to Berlin and Vienna in the second quarter of 2016, pAiRT needs people who know these markets and have connections. Liebl will start with the recruitment of two experts in the second quarter of 2015 and will also look for a small office in Berlin. In the third quarter of 2015 the personnel can move into this office and start their business. They will work on partnerships and build up connections since pAiRT also needs at least 40 galleries and 30 artists who sign up for the app before the new launch (Chart 10). Chart 10. Source: own elaboration With the beginning of 2016 the team starts looking for an assistant in the marketing department who will start his job in the second quarter. The company will expand into two new markets in the second quarter and as pAiRT wants to provide a clear and coherent marketing campaign, an assistant can travel between Rotterdam and Berlin and keep an eye on the business. Furthermore, depending on the number of downloads of the app and the traffic on the homepage the company will recruit some other interns supporting the team in various matters. As the team grows, pAiRT is looking for a new head quarter in Rotterdam that will open its doors in the third quarter of 2016 (Q3/16) (Chart 10).