Are Production Shoots In Your Future?

Posted on 6/30/1998 by Jim Pickerell | Printable Version | Comments (0)

152

ARE PRODUCTION SHOOTS IN YOUR FUTURE?


July 1, 1998

In spite of the oversupply of images in the market, I believe some major agencies

will begin hiring staff photographers, or give contracts that provide a level of

guaranteed return to a few selected freelancers.

The contract deals will probably be for a day rate and expenses on specific

projects or for a fixed number of days per year. They will either be for an

all-rights buyout, or a very minimal percentage of future sales. The shoots will

be highly structured, art directed by agency staffers, and on subjects that agency

sales records show are in greatest demand.

For most photographers this will be a dramatic shift in the way stock images have

been produced and acquired in the past. But, everyone needs to take a deep breath

and consider why this may happen -- and how they, individually, should react to

this new working environment.

One of the things that makes me think the industry will head in this direction is

the success PhotoDisc and Digital Stock have had hiring photographers to do

production shoots. The implications of this success will not be lost on the

traditional stock agencies in the "rights protected" business.

Corbis has also paid for production shoots, but their efforts to date have not

produced the desired return-on-investment. Corbis is currently re-thinking its

strategy for production shoots. Corbis' mistake was in the subjects they chose to

cover. In today's market, no matter how much you spend producing great images on

social, political and anthropological issues there simply aren't enough buyers for

this subject matter to offset the expense of production. (With this in mind, it is

interesting to observe the happenings at Sygma. See Story 147.)

On the other hand, now that Corbis owns WestLight and Digital Stock, they have

Craig Aurness and Rick Becker-Leckrone who understand how to plan productions that

will yield profits. If these two are turned loose, Corbis should earn a much

better return on future production shoots.

Also make note of Comstock. Their staff photographers have been producing a major

part of their collection for years - and very successfully.

Stock Photo Suppliers

There are at least four major groups of stock photo suppliers that will be affected

by such a change in acquisition strategy. They are:

  • Major Stock Agencies (MSA) that have access to capital,

  • Small Stock Agencies (SSA) that are strapped for capital and have no

    alternative but to get their images from shooters who produce on speculation.

  • Major Production Photographers (MP) These photographers make a significant

    portion of their income from stock and are usually represented on an exclusive

    basis by one of the major agencies that distributes print catalogs worldwide.

  • Other Photographers (OP) This group includes all other photographers. Some

    may be earning in excess of $100,000 a year from the combined sales of several

    different agencies. Some may be represented by one of the major agencies, but not

    earning a significant amount of money from that agency, and not in the small, elite

    group of top producers for that agency. Some may do work in an area of narrow

    special interest where the demand for this type of work is not great enough for the

    photographer to support him or herself on stock income alone. Some may have earned

    a significant portion of their income from stock in the past, but now as a result

    of increased competition see that income going down, and are finding it

    increasingly difficult to get images in the agency's print, cd-rom or on-line

    catalogs.

I want to examine how each of these groups is likely to react to increased

production of wholly owned stock. Keep in mind that most photographers are in the

OP category.

Forces Driving Major Agencies Toward Wholly Owned Production

  • The chief interest of the large agencies owned by corporate conglomerates

    is bottom line profits for their stockholders.

  • One way to increase profits is to cut costs.

  • Costs can be cut by limiting the number of images accepted into the system,

    particularly when acceptance means expensive scanning and keywording to make that

    image available for marketing.

  • Royalties are a major cost, and they can be reduced by wholly owning the best

    selling images.

  • The large agencies have detailed statistics on past demand and are convinced

    that their statistics give them a major advantage in selecting, and directing

    production of the kind of images that will be in high demand in the

    future.

How It Will Play Out

MSA - Agencies seem to be having trouble getting the images they want, when

they want them. For maximum profits they constantly need new, updated looks of all

their best selling subjects. They need better control of the flow of this new

work.

Some agencies say submissions from their major photographers have fallen off. Some

believe these photographers are "punishing" them by cutting back on production.

These agents argue that over the years they have made a lot of money for these

major stock producers, and now the photographers have unrealistic expectations.

But, at the same time these top agencies are cutting back on the number of images

they will accept from previous top producers for their new catalogs. They are

raising the quality bar and getting much more picky in their selection. The

agencies are also taking on more photographers and, consequently, accepting fewer

and fewer images from each photographer. They are only promoting and marketing the

creme de la creme in their catalogs.

Yet, according to my calculations in excess of 70% of the gross dollar volume of

stock sales, worldwide, comes from images promoted in stock catalogs. Alfonso

Guiterrez of AGE Fotostock in Spain puts this percentage at between 80% and 85%,

and says that in some countries 97% of the sales come from catalogs.

Agencies will give the most financial support to those photographers who continue

to produce aggressively, regardless of the income the photographer is receiving

from current production.

MP - I hear from major photographers that income from their major

exclusive agency is not increasing in proportion with their production and in some

cases it is falling off rather dramatically.

To express this in numbers a photographer's stock agency income may have risen in

five years from $150,000 to $250,000 per year. That's a lot of money and it is easy to

understand why the agent believes the photographer should be very happy. But, if in

getting to that $250,000, the photographer's income has actually dropped from $300,000

to $250,000 in the past year, and the photographer is getting fewer images in new

catalogs, the photographer has cause for concern.

What the agent often fails to understand is the amount the photographer is spending

on new production. Given the way the stock photo business operates the agent has no

record of such costs. The only way agents get an idea of what these costs might be is

through anecdotal reports from the photographers. The accountants have no way of

verifying the accuracy of such reports.

Photographers have the costs of studio, assistants, computers, computer programers,

models, props, travel, research in order to produce the kind of images the agency

wants, as well as film and processing. The photographer's cost in new production

may be going up at a faster rate than that rising rate of income.

Photographers are frustrated. They spend time researching and coming up with ideas

for images. They work closely with their editor to produce exactly what the editor

requests in the way of execution of the idea. Often the editor will say, "Well,

that's not exactly there yet. Re-do it this way." At greater expense, the

photographer re-does the image. Finally the editor may say, "You've got it. That is

exactly what I had in mind." Then the photographer waits months to see if the

image makes the catalog - and often it doesn't.

Images that sit in the general file, and are only seen when a client requests a

specific type of subject matter often don't sell very well.

Recently, a photographer told me that he had spent two to three weeks of his time,

and about $7,000, shooting specifically for a new catalog. He worked closely with

his editor and produced exactly what the editor said was needed. The editor chose

a number of pictures from the take and said these were what they wanted. When the

catalog came out, none of the pictures made the catalog. Based on my discussions

with top stock shooters with major agencies this is becoming a common occurrence.

In addition, by contract many photographers are not allowed to do

anything else with these images once they have been rejected by their agency. That

$7,000 and three weeks of work could be money down the drain. This expense for

non-productive images must be offset by the profits from the few images that are

promoted. Photographers see this as limiting their income potential. If they are

to continue to produce on speculation,

photographers need a business model that works for them. They need some assurance

that what they produce has a chance of being seen. If they can't get that

assurance they will stop producing. In many cases, what works for their agency is

no longer working for the photographers.

Options

MP - Photographers have several choices:

  • They can cut back on stock production and concentrate on other types of

    photography, or

  • Put new production on the shelf while looking for a new agency, or

  • Actually move to a new agency, or

  • Work out a deal with their agency that guarantees coverage of some production

    costs and/or positions in the catalog, or

  • In some cases go into another line of work altogether.

I know of individual cases where photographers who have earned a major portion of

their income from stock have chosen each of these options in the past couple of

years.

MSA - Faced with their top producers cutting back on production the major

stock agency must do one of the following:

  • try to bring the photographer back into the fold, or

  • find new photographers who are willing to shoot the same kind of things on

    speculation, or

  • consider hiring staff so they have better control over future production, or

  • consider funding the expenses of certain stock productions with an arrangement

    where the photographer receives a reduced percentage of sales.

MSA - If a MSA owns the best selling images, there is the potential that

they will earn

larger profits for their stockholders. I estimate that when PhotoDisc pays high

day rates to photographers, their production expenses are totally paid off from a

20% share of the revenue from those images (the photographer's normal share) within

less than a year. Possibly, in many cases, in a lot less than a year. From that

point on it's all profit for PhotoDisc.

In a seminar in New York in the '80s Henry Scanlon showed images from a production

shoot Comstock had done on a Caribbean island. Total costs for this

shoot were $30,000, a totally unheard of amount of money for most photographers to

spend on a speculative

stock production at that time. But, Henry said that sales from those images

generated more than $30,000 in the first month.

The recent Photo West conference produced some additional interesting information

along these lines. Rick Becker-Leckrone of Digital Stock had just financed a

six-day production that was shot at the American Airlines facilities in Dallas by

Jack Hollingsworth. Becker-Leckrone estimated that the total expenses for this

one shoot was about $90,000. Hollingsworth will receive a lesser percentage of

sales than his normal 20% for the work produced on this project.

Patrick Donehue, of Tony Stone Images pointed out that one of TSI's photographers

did a shoot in the past year that had over $100,000 in expenses, and that TSI

funded "a major portion of the expenses on that shoot." In exchange for TSI's

contribution the photographer agreed to accept a lower percentage of sales

than normal on the images produced on this shoot.

It should be noted that in their May 7, 1998 quarterly report to shareholders

Getty Images (parent of TSI) said, "In line with the company's strategy of

increasing its sales of wholly owned content, the proportion of sales of wholly

owned imagery increased from 5 per cent in the first quarter of 1997 to 12 per cent

in the first quarter of 1998."

It should also be noted that this increase came primarily as a result of owned imagery

at Allsport and PhotoDisc. Patrick Donehue said that TSI has no plans to wholly

own images in the TSI file. TSI will, however, continue to participate with

selected photographers on projects that are very costly to produce and for which

TSI believes there is a high sales potential. The percentages of gross sales

received will be adjusted in such cases.

MP - Some major photographers who might be considered for these funding

participation arrangements say that a shortage of expense funds is not a problem,

and thus they would rather pay all their own expenses and receive a higher

percentage.

But, there are a couple things these photographers need to consider. When the

agency has a lot invested in a project, they have an incentive to give that project

a strong position in the catalog, and to promote it heavily in other ways.

If an agency doesn't want to participate in an expensive project, that may be an

indication of the kind of catalog placement the images will receive once they are

produced.

It may be a good idea for photographers to try to get funding, even if they don't

need it, in order to insure themselves better placement in the catalogs.

Clearly, the photographers who do production shoots for PhotoDisc and Digital Stock

get more of their images into the catalogs than photographers shooting on

speculation for these organizations.

SSA - So what do the small agencies do if the major agencies go in this

direction? There is no way they will have the capital to pay for production

shoots. The pictures they handle must be the results of speculative shooting.

However, they still have some advantages.

  • SSA's may give their photographers a better chance to get more of their

    images seen.

  • SSA's are more likely to hold the line on rates because they don't expect to

    make a high volume of sales and won't be tempted to offer discounts for volume.

  • Photographers seldom win when the agency makes volume discount deals, because no

    individual photographer gets enough volume to make up for the deep discount.

  • SSA's with recognized specialties tend to get called more frequently for that

    subject matter than the larger agencies when clients are looking for that specific

    type of work. Often the specialized agency has a more targeted selection and its

    editors have a better understanding of the client's needs and can provide a more

    personalized service.

  • In the on-line and CD-ROM environment small agencies can promote their work

    through joint sites that give the appearance of being one big database. At the

    same time each agency maintains its own editing and pricing characteristics.

    Two examples of such joint sites are Stock Workbook Online and Picture Network

    International. In effect, the photographer becomes part of a large agency for

    the purpose of letting clients know that the images exist, but gets the personal

    attention of being with a small agency. Rather than having one single editorial

    philosophy as is the case with the large agencies, each small agency on the site

    has its own editing philosophy. This makes for a more eclectic selection of

    imagery and often gives the photo buyer a greater variety of choice. A client

    with highly specialized narrow interests, will often find a larger selection of

    material in their subject area on sites where many agencies participate.

  • Sales through on-line sites are a very small percentage of total sales at the

    present time, but most in the industry agree that the industry is rapidly headed in

    this direction.

  • SSA's may be more flexible in letting photographers market work not selected by

    the agency through other venues around the world. On the other hand, with the use

    of on-line databases, even the smallest specialized agency will be able to reach

    every segment of the world market. Thus, SSA's may find it necessary to insist on

    exclusive worldwide rights to the images they select for their files.

  • SSA's often do a better job of selecting images for the file because the people

    doing the editing are in closer daily touch with the buyers. The same person often

    does the editing, picture research for the buyers, and negotiating sales. Just

    because an agency is big doesn't mean it will always choose pictures that will be

    in greatest demand. There are countless examples of pictures, rejected by one

    agency, being picked up by another agency and marketed very effectively.

  • Many photographers will have no other option. Being with an agency still gives

    them a much better chance of making sales than trying to do everything

    themselves.

Dilemmas For Each Player

MSA Dilemmas

  • As the agency moves toward acquiring more wholly owned work on mainstream,

    high demand subjects, they will try to minimize what they are doing in their

    discussions with the photographers who are expected to continue to produce subjects

    of fringe interest on speculation. As this progresses the high demand subjects

    become off limits to those who are paid standard royalties when an image is used.

    They agency fears that photographers will stop producing if they realize that they

    have very little chance of getting a high demand subject into the catalog marketing

    program.

  • In order to provide a comprehensive file to their clients the agency needs

    to keep the specialist for a limited number of very unique images, but will not

    aggressively market the bulk of the photographer's work.

  • The MSA will not want to produce the specialist images at its own expense

    because the demand is not high enough to offset production costs. The MSA can make

    the greatest profit by wholly owning those images that are in extremely high demand

    and requiring the photographers to cover the production costs of all other images.

  • Will their in-house production team be able to continue to come up with the

    variety of ideas that their freelance contributors are generating today? The MSA

    will still want to have those images that result from unique access, or a unique

    vision or approach to the subject that comes from photographers who have

    concentrated on high demand subjects in the past.

SSA Dilemma

  • Small agencies have a constant struggle in letting a broad enough client base know

    that their imagery exists because they have such limited funds to spend on advertising.

    Will technology enable them to compete, or will they be priced out of the market?

  • By joining other agencies in joint marketing plans like Stock Workbook and

    PNI will they be forced to give up too much control and identity?

  • Will the MSA's license high demand images at lower prices, thus forcing SSA's

    to lower prices in order to compete? MSA's will be able to do this because they

    will share a smaller portion of the fee with the photographer.

MP Dilemma

  • Can photographers earn more through the volume sales of the very few

    mages their major agency chooses to represent, or will they do better with a

    smaller agency that will show a broader cross section of their work?

  • Is there some way for them to get the best of both these worlds? Is it

    possible to give the major agency first look and then turn everything else over to

    the small agency?

  • In the new marketing environment is it possible to earn enough from stock

    to offset their continuing production and marketing expenses?

  • Should they seek guarantees from their agency, either in terms of

    production costs, or guaranteed space? Or should they continue to produce on

    speculation as they have in the past and go for the highest possible percentage of

    sales?

OP Dilemma

  • Photographers, represented by a major agency, who produce high demand

    subject matter that competes with the wholly owned images of the major agency will

    find that they have trouble getting this material seen in the catalogs of the major

    agency. The major agency will want to concentrate on showing their wholly owned

    material so they can recover their production costs and make a greater profit on

    each sale.

  • Which is better for the specialists? The big agency that wants to keep them,

    but does little to promote their work, or the small agency which will show more of

    their work, but to a smaller cross section of buyers? The answer will change as

    on-line becomes a more dominant catalog system.

  • The photographer who in the past has earned significant income from a few

    images in high demand subject areas has a particular dilemma. The SSA may not

    market those few images as effectively as the MSA might, but if a photographer can't

    get his or her MSA to continue putting the same volume of images in their catalogs, then

    the SSA's may be the better choice.

  • As percentages drop and the photographer gets fewer and fewer images in the

    major agency catalog, will he or she do better by marketing the work direct to

    clients or by going with an SSA?

  • Many photographers will have no other option. Being with a small agency still

    gives them a much better chance to make sales than trying to do it on their own.

There are so many intangibles that when a major agency offers up front payment it

will be an offer that is hard to turn down.


Copyright © 1998 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 301-251-0720, 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.  

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