
Startup Lets You Rent Fine Art, Netflix-Style - binarymax
http://mashable.com/2011/03/01/artsicle/?utm_source=iphoneapp
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bartonfink
Interesting, but I'm curious how big their market actually is. Also, it seems
like their price point is a bit low and nearly unsustainable given the numbers
in the article. If Artsicle buys an original piece for $1500 and rents it out
for $50 a month, that piece needs to be actively circulated for 30 months
before they see a profit on it. An unpopular piece may never become
profitable, meaning Artsicle is stuck with upkeep and storage costs for an
expensive mistake.

Let's contrast this with Netflix. Assume that Netflix pays an average of $15
for each DVD they hold (probably on the high end). Also, assume that each
member pays an average of $12 a month for rental privileges, and that each
member holds a DVD out for an average of 3 days. Each member's "rental" costs
them $1.20 on average. This means that each DVD Netflix buys becomes
profitable after 13 rentals, or just over a month. If a DVD never becomes
popular enough to be profitable, Netflix is just on the hook for $15 plus
negligible storage costs in case someone decides to rent it down the road.

tl; dr - What works for Netflix might not translate away from the DVD world.

