Agencies Or Aggregators

Posted on 1/31/2014 by Jim Pickerell | Printable Version | Comments (1)

More and more stock agencies that license RM and Traditional RF rights are becoming aggregators of images rather than direct sellers of images. This is not a new phenomenon, but as more and more customers tend to go to a few large databases to find the images they need it is having a major impact on the income of many photographers.

Photographers sign contracts with aggregator agencies for a certain royalty percentage. But for a high percentage of the licenses they get a much lower percentage of the gross fee paid by the customer because the actual sale is made by a partner agency rather than the company that signed the agreement with the photographer.

In all the photographer/agency agreements I’ve seen the photographers receives, “X percentage of the fee the agency receives.” When someone other than the agency the photographer signed with makes the sale the portion the photographer actually receives is not a percentage of what the customer actually paid to use the image, but a percentage of what the agency he signed with received from the distributor that licensed the use.



Let me explain. Suppose the photographer puts his images with an agency and signs an agreement to receive 50% of what the agent receives. If the agent makes the sale directly to the customer then the photographers will receive his 50%. But, if the agent supplies the image to another stock photo distributor and that distributor makes the sale the photographer will receive much less than 50% of the fee paid by the customer.

Suppose a customer pays $100 to the distributor for a RM image. The distributor’s deal with the agent may be that he pays the prime agent 50% of what he receives. At that point the prime agent records a $50 sale, because that is what he received.  Sometimes, if the distributor is a strong seller the selling agent’s percentage can be even higher. The exact relationship between the agent and the distributor is almost never disclosed to the photographer. The photographer thinks the sale was for $50. He gets 50% or $25.



With RF it can be even worse. On a $100 sale the distributor keeps 80% and pays $20 to the agent. The agent’s deal with the photographer is often that the agent will keep 80% of whatever it receives. Thus, the photographer get 20% of $20 or only 4% of the $100 the clients paid.

Getty represents 103 RM collections, 94 RF collections and 173 Editorial collections. Some of these are Getty’s house collections, but the vast majority are from smaller agencies that Getty represents. Readers can see a list of these collections here.

Why don’t photographers just sign directly with each distributor?



Often a good distributor that makes a lot of direct sales like Getty Images will not accept every photographer that wants to be represented. The only way for many photographers to get their images represented by someone like Getty is to supply the images to a smaller agency that has a deal with Getty.  

In addition the smaller agencies often have deals with several distributors (some as many as 200) in addition to Getty. In this way they reach customers that either don’t search on Getty, or couldn’t find an image they wanted to use when searching Getty. (Remember, just because your image in on gettyimages.com doesn’t mean it will be seen. Most keyword searches deliver more images than the customer has time to review. If your image happens to be at the bottom of the pack there is very little chance it will be seen.)
 
Photographers that sign with smaller agencies also have the hope that the agency has some regular customers and will make a few sales directly to those customers. In such cases the photographer’s royalty will be based on the fee the customer actually paid.

Another factor to consider is that it takes a lot of time and effort to sign agreements with many agencies and keep supplying all of them with new images. It is interesting to note that this is what photographers represented by microstock agencies do. They put their images with many microstock agencies. There is little or no cross-representation between microstock agencies. While the fees charged and the royalties microstock photographers receive may be low, the photographers know that the royalties they receive are actually the agreed upon percentage of what the customer paid.

There are many cases where the percentage of the total license fee that a Traditional RF supplier receives is much lower than what Microstock photographers receive. In actual dollars the amount each photographer receives can be about the same. But, the amount the customer paid for the microcstock image was much lower than she would have paid for a Traditional RF one because there were more cuts of the Traditional RF fee.  

Are all sales by the big agencies direct?

Even Getty is an aggregator and makes a lot of sales through other distributors. In the story “Choosing A Licensing Model” that I published last week, I provided some statistics gathered from one of Gettys leading photographers whose 2013 sales I was able to analyze.

In this example Getty’s Partner Portals licensed 30% of the uses of the photographer’s images. These licenses generated 13% of the revenue for the photographer. We have no idea what percentage of the fee the Partner Portal took off the top before Getty received what it reported, and the photographer’s royalty was calculated.

However, the photographer received royalties of less than $2.00 for 15% of the licenses and less than $10 for 36% of the licenses. On the other hand if Getty had not been working with these Partner Portals the photographer’s total revenue would have been 13% less than it actually was for the year.

It is easy to understand why it is important for Getty to work with Partner Portals where there is a language difference and the local agency has strong relationships with most of the best customers. It simply would not be cost effective, for Getty to set up an independent office, do its own advertising and go head to head with the local seller. In fact, Getty has tried this in some cases and eventually pulled out. Thus, the only way a photographer can hope to make sales in such markets is to either let Getty handle the sales and take a cut, or through the photographer’s own efforts identify the best agents in each of the foreign markets and place images with each of them directly.

It is harder to understand why Getty needs Partner Portals in the U.S. and Canada where 60% of this photographer’s PP sales were made.

It is also worth noting that Getty represents a number of Corbis collections. It is unclear whether Corbis is one of Getty’s Partner Portals, but Getty does have a lot of PP sales in the state of Washington.

Selling Direct

Some photographers think the answer is to build their own web site and sell direct, but this works for very few people. Some make a small percentage of their sales direct, but are also represented by one or more agencies. The big problem for photographers is making customers aware that their sites exist. If the photographer has a unique niche, an international reputation, and there are very few similar images on any of the major stock websites, then maybe it will work. But I hear of very few cases where photographers have much success trying to sell direct. On the other hand a few big sales where the photographer keeps 100% of the fee paid may generate more total revenue than hundreds of smaller sales.


Copyright © 2014 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

Comments

  • Jaak Nilson Posted Feb 1, 2014
    Jim wrote:
    "With RF it can be even worse. On a $100 sale the distributor keeps 80% and pays $20 to the agent. The agent’s deal with the photographer is often that the agent will keep 80% of whatever it receives. Thus, the photographer get 20% of $20 or only 4% of the $100 the clients paid."

    I think it could be correct to compare...
    On a $100 RF sale the distributor keeps 80% and pays $20 to the agent. The agent’s deal with the photographer is often that the agent will keep 50% of whatever it receives. Thus, the photographer get 50% of $20 or only 10 % of the $100 the clients paid.

    Then a comparison is same like at RM case. An aggregators contracts with photographers are always same an equal for RF and for RM image.
    Big aggregators may have a better deal with final distributors like Getty or Corbis. But like always it is a big secret. Like it used to be in macro market.

    I am not fan of micro, but thus micro is even more fair if macro. No middlemen and aggregators. Why distributors wants images via aggregators. Aggregators doing all work like editing and keywording. Mostly they are an exclusive too. Final distributor can save a money.
    But like always if aggregator does not perform well then a contibutor can not sell same images for other agencies at same time. So very often an exclusivity is very bad for photographer,



    Best
    Jaak Nilson
    http://www.jaaknilson.ee

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