Agency Closures: What Went Wrong?

Posted on 2/23/2009 by Jim Pickerell | Printable Version | Comments (1)

Recently, several stock agencies have found it necessary to discontinue operations. When that happens, photographer royalties often go unpaid. A reader asks: “What do you think went wrong in the industry for these firms and their photographers?”

Several factors are involved. These include the growth of mega-agencies via consolidation, the ability to research and deliver images using the Internet and the cost of developing effective platforms for this purpose, oversupply and the decline in demand for traditional imagery, partly due to the availability of microstock.

Large agency growth

The image choice and marketing muscle offered by the mega-agencies have made it increasingly difficult for smaller players to get their product seen and thus compete. Some have been able to work out deals to have some of their images represented on the major portal platforms. Others have sold their businesses to larger competitors. Many of the agencies that are unable to pursue one of these two options have seen a steady decline in revenue.


In order to license rights to an image, it has become absolutely necessary that the image be available online for both research and final delivery as a high-resolution digital file. This has severely affected photographers with film-image libraries, because it is not cost-effective to digitize most of those images. Agencies dependent on film files have seen a rapid decline in revenues.

Even the early adopters of image scanning and Web-site development have often found it difficult to compete due to the costs involved in building such sites and the difficulty in attracting traffic. The broad offering and heavy marketing of the major sites made it almost impossible for small sites to draw buyers. Small sites often made large investments to complete and grow revenue, but instead saw a continued decline in revenue and a proportionate decline in the monies allocated to paying off debt.


There is a huge oversupply of images. With digital capture, photographers are creating a lot more images, faster. However, for several years there has been no increase in the number of traditional buyers or the number of images they need—in fact, there has been a decline in the number of still images needed.

As such, the industry is facing the classic supply-and-demand problem. Customers have more choices, so an increasingly smaller percentage of all available images sell. Thus, there is no growth in overall image sales—and what sales there are go to the biggest and strongest suppliers. This leaves the little guy in an impossible situation.

Decline in traditional demand

In 2008, Getty Images made about 500,000 rights-managed image sales and 1,000,000 royalty-free sales at traditional prices. iStockphoto made about 25 million sales of images in their collection at an average price of about $6.50 per image. There is no question that microstock has opened up a great new market and found a lot of new customers who simply could not afford to pay anything approaching traditional prices for the images they wanted to use.

However, microstock companies are also selling images to commercial customers for the same low prices they charge everyone else. Commercial customers used to pay an average of $250 for a royalty-free image and $500 for a rights-managed image. Now, the same customers can often get the images they need for an average price of $6.50. As a consequence, traditional sales are disappearing at a fairly rapid pace.

• • •

These four factors have put extreme pressure on many small agencies. Those that have not sold their assets to one of the industry leaders have tried to hang on as long as possible, hoping for a turn-around that would allow growth—or at least stabilization—of revenue.

Continued operations require staff and other overhead costs. If revenue continues to decline, there comes a point where monthly operating costs are greater than a given agency’s percentage of gross image sales. When that happens, there is great temptation to use some of the photographers’ share of revenue to cover basic expenses, in the hope that the company is only a couple months away from a revenue turnaround that would allow paying photographer royalties. But when things eventually get so bad that the agency must close its doors, there is nothing left to pay the photographers.

In some cases, the troubled company takes out loans from banks or other investors instead of using its photographers’ share of sales. Still, when the company finally gets to the point of bankruptcy, these investors become priority creditors, and any money left from the sale of assets goes to these priority creditors, not the photographers.

For the 45 years I have been in this business, poorly capitalized firms have been going out of business, and photographers have ended up the losers. The current economic conditions are bound to make this situation worse. The only way photographers can avoid this problem is not to attempt to sell their images through stock agencies and portals.

Copyright © 2009 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, 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:  


  • Leslie Hughes Posted Feb 23, 2009
    Jim - It is great that you are putting this out there and I agree with what you outline. It is necessary, however, to add that it is not really large agency growth, e-Commerce of even over supply that truly causes an agency to go out of business. It is the inability to supply a product to a customer who wants it.

    You are right that it is harder to compete with the mega-agencies. But frankly they don't always do a good job either. Whether agency or photographer, differentiating what one does is key to convince a customer to buy and most don't. remember when Photodisc can in and offered their new pricing package called Royalty Free? That was differentiation. It was really nothing more than a new way to package and market commercial content. Remember when Tony Stone dropped research fees? Getty has deep file and nearly everything one could want - hard to not have them on the list. Most agencies can't say why a customer should come to buy from them as opposed to another. Better content doesn't cut it as everyone must have good content these days.

    As for e-Commerce - it is tough for those still with analog collections. I have done evaluations for many and it holds pretty firm that a fraction of the analog usually is worth digitizing though so there is a balance that can be struck between the past and go forward. the issue should be going forward for agencies who want to remain competitive unless of course they are a historical agency. And oversupply - well you are right - which usually means a couple of things, there will be a shake out in supply in the future and creators need to focus their work and specialize. If we are truly talking about the agencies - then the issue is not oversupply, It is the skill in editing, selecting the partners to represent, and managing what is offered. It is really the ability to compete in an abundant market.

    Bottom line is that there are only three ways to compete in any business - on price, on quality or on service. Today, all agencies must have quality to be sustainable. You better be in microstock if you are going to compete on price, and service and specialty differentiation points are key otherwise. This is a highly competitive market as you have pointed out and photographers and agencies both have a tough road ahead to distinguish themselves. But it does not have to be doom and gloom for those that plan appropriately.

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