It took the global music industry almost 20 years to complete the long journey from compact disks to the first perfect model for distributing and consuming music end to end, like that offered by Spotify. It did not take many years for compact disks and mini-disks to replace tape recordings, which themselves replaced vinyl records. Each medium came with its own special device to play it: record players, tape recorder or Walkman, following by the compact disk player. The invention of the mp3 format, combined with the penetration into our lives of the Internet, made it possible to not only store high-quality music files, but to share them with file-sharing software: from Napster, Kazaa, and iMesh to the Torrents of our day.
Tel Aviv startup Niio, founded in 2014 by CEO Rob Anders and CTO Oren Moshe, wants to do for the world of digital art what Amazon's Kindle did for books, Spotify did for music, and Netflix did for television. Digital art is a name used for a variety of types of artworks produced or displayed using digital technology: digital still pictures, video art, and advanced 3D and virtual/augmented reality technologies.
Niio connects the artists, to whom it offers a platform for displaying and selling their works, and the customers who buy and display the artworks. There are two main groups of customers: art world customers - collectors, galleries, museums, and artistic productions; and the business world - mainly hotels and real estate companies. Hotels have always displayed art in the lobby, corridors, and in the hotel rooms themselves. Artists receive shelf space in the marketplace, and customers receive a virtual shopping mall in which they can buy artworks, and also the tools to display them.
The space looks like this: the artworks are displayed on smart television screens on which Niio 's application is installed. Private customers can control the display - meaning that they can select the artworks and how they are displayed - through a smartphone app. Commercial customers have additional control options enabling them to adapt the displayed art to different tastes in a variety of display areas.
Two digital art festivals are taking place in Israel this month: Print Screen Festival in Holon and Zero.One, which opens this week at the Tower of David museum in Jerusalem. Both festivals are using Niio 's platform in their digital art displays. Zero.One will display audiovisual shows among the stones of the Tower of David archaeological site for two nights. The festival will also host artist Refik Anadol and the Zeitguied modern visual art studio; the displays will utilize Niio's platform.
200 preliminary learning meetings with the industry
The paradox that Niio aims to solve is that despite the fact that, like many types of content, art has become digital, many barriers have prevented it from benefiting from the Internet. The fact that digital media can be copied and distributed has undermined the principle of scarcity on which the art industry is based. The art world saw how piracy was damaging the industry, and may very well have refrained from putting artworks online from the beginning for that very reason. The reasoning is obvious: if exclusive access to an artwork is an important element in the product, then the act of putting it online jeopardizes its existence. Only after the business and technological models and the interfaces for distributing content have begun to prove themselves will the time be right to put the art world online.
The special features of art however, posed a difficult challenge to Anders and Moshe. It is not enough to copy the model for online books or music. The first challenge is to preserve the characteristics of physical art, above all scarcity - the feature that makes possible art trading, and constitutes its economic engine. The art world wants it both ways: to be digital and to enjoy the characteristics of physical art, like oil paintings and sculptures displayed in museums and galleries and sold for millions of dollars.
The second challenge stems from the fact that most of us consume media through a smartphone or laptop screen. This means of consumption undermines the artists' wish to control the way their art is presented. As artists see it, the way an artwork is presented is part of the work itself. If an artwork is intended to be screened for 40 minutes on a wall-sized screen, the artist will not want it displayed for a brief moment to random consumers on a mobile screen. The art realm is one of the last to jump on the Internet bandwagon. In order to induce it to cooperate, Niio must achieve a profound understanding of its special sensitivities, and provide a solution for them.
Anders and Moshe learned these and many other things in what they say were 200 study meetings with people in the industry the first two years after they founded the company. Anders explains that one of the decisions they made was not to develop a product gradually, but to go the players on the art scene only when they had a complete platform ready. They say that they have made no changes in the concept since then. At the end of their investigations, they decided to have a platform that would copy as many elements from the "real" art world as possible to the digital world, and would use technology to remove as many as possible of the barriers that hitherto prevented the display, distribution, and trading of digital art.
For example, in the world of art, collections - a selection of art and a hierarchy of the rigid social and professional circles in this world - are of great importance. The platform was therefore designed to also reflect these hierarchies, and does not allow everyone to join and freely display his or her wares. Artists can offer themselves or be accepted through an invitation from other artists with displays on the platform, but their artwork will be accessible only to those with a direct link to their profile, and will not be among, for example, the featured works on the front page. "On the existing content platforms, they talk about democratization of content. Everyone with Instagram is an artist. We realized that in order to monetize content, you have to begin with premium content. We have to get the best artists and artworks in the world. The rest will come later," Anders says.
Niio is adapting itself to the artists' need to control where and how their art will be displayed. They can limit the type of screens, so that the artwork will be displayed only on screens of a specific size and resolution, in specific places, and at specific times. The artist can determine the monetization model to use - rent or sale - and can also restrict the number of digital copies to be sold, like prints of paintings distributed in a limited number of copies.
Niio also addresses the art world's special needs. For example, some of the artworks are so big that no popular file transfer system was capable of handling them. There is also an option to attach to an artwork the artist's detailed instructions about how it should be displayed. For collectors, it provides documented confirmations of ownership of the asset. Niio itself developed some of these technologies, and has patented them, for example a technology for transfer of digital ownership.
3,500 artists and 11,000 artworks
For the purchasers and displayers, Niio provides and manages all of the means required to store and display the artwork - dispersal on the cloud and security tools to protect it against theft and deleting, and the ability to remotely control the artworks displayed: which works will appear, where, and with what frequency. Another interest that Niio serves is at the simplest level - access to works never before put online, or if they have been online, it was in innumerable places, not on recognized and accessible platforms.
One of Niio's important types of customers is hotel chains, whose walls are already decorated with artworks. Through Niio, a hotel chain can not only replace the paintings and photographs with screens, but can also turn the screens in rooms into windows to art. For example, Anders says, "Niio is working with global hotel chains like Hilton, Marriott, Crowne Plaza, and Mandarin Orient. In Israel, it displays in the Norman and in Fattal hotels, and also works with real estate companies for displaying in their space." Anders says that payment is several hundred dollars per site, and at Marriott, Niio is included on 400 sites. "When they build a hotel, everything stays the same for about seven years. With Niio, you can keep changing things constantly. This is also relevant to shared workspaces, which are looking for all sorts of ways to distinguish themselves to customers," he explains.
Like Spotify, Niio's business model is not expected to rely on sale or renting out to collectors, museums, and galleries. It is also based on the sale of subscriptions to the public at large. Anders points out, however, that for this purpose, "The market must first be educated. No one gets up in the morning and looks for digital art online. So we decided to present Niio everywhere that millions of people can view it: airports, hotels, and office buildings, This a source of revenue in itself, not just a penetration strategy, but the vision is that eventually, we'll rely on monthly subscription fees for a dynamic art display that will provide artists with a regular income."
Following a lengthy development period, the company began growing rapidly. In 2016, 200 artists worked with Niio, and it now has 3,500 artists, galleries, and museums and over 11,000 artworks are digitally displayed. The company has offices in Europe, the US, and Asia, and currently has 24 employees, 17 in Israel and the rest in a development center in Ukraine.
Niio has raised $8 million to date. The first investment came from the pockets of the entrepreneurs, friends, and family members, joined by Elie Wurtman's PICO Venture Partners, Entrée Capital, and investor Ron Zuckerman.
"We now have a winner take all opportunity," declares Anders, who immigrated to Israel from the UK 20 years ago. "The same opportunity exists that presented itself to platforms that began handling other content sectors, became dominant in them, and became multibillion-dollar unicorns. Our revenue is currently over $1 million, but in the next two years, we expect revenue in the tens of millions of dollars."
Niio is currently in the midst of raising $10 million in its first financing round. Just during the meetings we held at the company's offices near Hamasger Street in Tel Aviv, two investors came by to look around. Anders says that the financing round is awaiting the entry of an important fund that will lead it, and of a strategic investor, "probably one of the large South Korean electronics manufacturers." Anders explains the logic behind the selection of screen manufacturers. "I was CEO of a company dealing in screen technology. The problem is that the screen manufacturers are making almost no money from them. Their profit margins are close to zero. They are very frustrated, and CEOs are saying, 'We're making $5 a screen, and Netflix is getting all of the money.' Their conclusion is that they have to make money from services, but they don't have the right kind of head for it.
"Today, you see more screens in the world. They are thinner, with higher resolution, but they're black and unused for much of the time. This is an opportunity to make each of them a canvas for art. This suits us, because if we want to enter end-consumer sales, the right strategy is to sell on a B2B2C model (businesses selling to businesses that sell to consumers, U.B.) in order to take advantage of the distribution channels of major concerns, instead of marketing directly to the consumer - in other words, to close a deal in which someone who buys a television get Niio together with it. Samsung has a screen called 'the Wall' that costs $400, and we're their partners. Today, these companies are trying to define everything as premium. Samsung is trying to talk about a 'third setting' - a gallery setting, in addition to the two usually settings of 'off' and 'on.' LG has an OLED screen in which it has invested billions of dollars, and plans to sell it with the story that OLED is the new canvas. We're talking to them at the marketing level, and we'll have a joint display at an event that will take place shortly in Miami."
Niio is not the only company in the sector. Companies like Framed, Blackdove, Depict, and Electric Objects, sold to Giphy, are also offering means of displaying digital art. Anders is very familiar with these companies, but is not worried. "They're different from us in that some of them are based on offering physical products, i.e. screens. Most of them do not have the art selection that we do, or they usually display only static pictures or gifs, not videos or complicated artworks with virtual or augmented reality. Most important of all, Niio is built to constitute a platform, so that these companies can display their catalogues through us. At the same time, it doesn't work in the other direction - displaying our catalogue through them is impossible."
Anders, 45, is the husband of model and event producer Shiraz Tal. Moshe, 48, is a veteran designer and a lecturer at the Bezalel Academy of Art and Design.
Published by Globes, Israel business news - en.globes.co.il - on December 1, 2019
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