June 12, 2007
By: Jim Pickerell
Once again the CEPIC conference (that's Coordination of European Picture Agencies Press Stock Heritage In Congress) in Florence, Italy from June 6th through 10th was the place for people in the stock photo industry to be.
In attendance were over 900 delegates from 500 companies and 50 countries around the world. Over 100 companies had exhibits at the trade show. There is no better place to network with others in our industry, discuss the major issues facing us and get a sense of the new directions the industry is taking.
There were seminars and discussion on several topics that I will deal with in separate stories in the next few weeks. They include the increasing need for better metadata and the difficulty in finding a pure technology solution.
Also, there was an interesting seminar about photography in the Majority World (that portion of the world where the majority of the world's population lives - not the U.S. and Europe), and I hope to explore this issue in some detail. In addition there was a very informative seminar, and discussions in small groups around the conference center, on micropayment and where it is headed. Naturally, the subject of micropayment was high on everyone's list of things to talk about.
A major goal for most image producers was to find more organizations to distribute their images. Finding new distributors has always been important at CEPIC, but this year the activity seemed more frenetic. The challenge used to be to get someone to represent an agency's print catalog and that usually involved a fee for buying a certain number of catalogs and dupes. In the digital environment it is much easier to find distributors.
In addition, given the push Getty, Corbis, Jupiter, Alamy and others are making to add more images to their collections, most distributors seem to take the view that the more images they have the better. The only disincentive for most distributors is that their database of images may get so large that buyers will have difficulty wading through all the choices.
One producer claimed to have signed 40 new distributors at the show. Another signed 22. Since the cost of adding new distributors is low it is nearly always better for producers to sign as many as possible, so long as there is a reasonable assurance of being paid when the pictures are used.
Choosing the right distributor used to be much more difficult than it is today because the producer was required to guarantee the distributor exclusive rights in a territory for several years. The distributor needed such rights in order to offset the huge upfront costs of buying print catalogs and dupe sets necessary to market the images. A lot of effort was required by both parties to examine the pros and cons of each relationship.
Now the business has changed. The only images that sell are online. Images can be added or removed from a web site quickly and easily. Customers can buy images from virtually any website, anywhere in the world so granting exclusive rights in a particular territory makes little sense. Now what distinguishes one distributor from another is not being the only one in a particular territory authorized to license rights to certain images, but the customer service the company provides.
Some factors that make a difference to customers are: the editing of the web site, keyword accuracy, the ease of use of the site and being able to talk to someone locally who speaks their own language. In addition, a significant majority of buyers are not worried at all about having exclusive rights to an image.
It used to be accepted that distributors needed exclusive rights to all the images they represented so they could easily guarantee their customers that no competitor would be using a particular image. Now it seems there are fewer and fewer cases where customers care about such a guarantee. More and more, uses tend to cross international borders so it becomes harder to determine who will actually see an image, or who has rights to sell in a particular territory. An Internet use may be seen by anyone. A very high percentage of uses are for RF images where there is no exclusivity. In the RM arena the vast majority of buyers simply want the right image, could care less if someone else uses it, and certainly are not willing to pay any extra for exclusivity. In those rare cases where a customer insists on exclusive rights there is usually time for the distributor to contact the producer and for the producer to make arrangements to withdraw the image from other outlets.
A few major distributors can still command image exclusive rights given their broad international reach to the worldwide customer base. But, in most cases smaller distributors can't offer enough potential sales to make it worthwhile for a producer to withhold the same image from every possible outlets.
Another motivating factor that seemed to be driving producers was to become less dependent on Getty and the other major distributors. This was true for the more than 100 third party suppliers who already have images on the Getty site as well as those who would like to have Getty representing some of their images. A few even believed that the price they would be required to pay in additional image preparation work and lower royalties made Getty representation undesirable.
Nevertheless, most producers would like to have some of their images on Getty. But, we heard more and more complaints from those who are already there about the pressures Getty places on them. This includes cuts in royalties, restrictions on the other distributors they can deal with, more work involved to get images accepted, reduced annual allocations, lower positions in the search return order and declining return-per-image. Several were very concerned about how search on the new web site will affect them, and what additional prep work might be required, once the new site is launched. Many said they are very tired of being expected to do more and more for less and less. One said, "Just when you think you've reached a steady monthly revenue level that you can count on from Getty they do something that causes it to drop."
Most of the people I talked to said that as a percentage of total revenue that portion that they receive from Getty is declining - and most are just fine with that. For many sales through Getty used to represent more than 50% of their gross revenue. Now it is down below 50% and they would like to see it drop even lower. Nobody wants to give up the Getty revenue, but they feel their business is better served when they can draw revenue from as many sources as possible and be less dependent on any one.
Despite all the complaints, one positive thing I heard about Getty is that they tend to be "kinder and gentler" in their dealings with image partners today than was the case a year or so ago.
A disturbing development at CEPIC concerns AGE's Technological Hosting Platform (THP). The THP is an alternative to the major distributors that is open to smaller suppliers and distributors. It enables distributors to have their own custom web site without having to manage any of the IT infrastructures. Image suppliers are able to upload their images to the THP and negotiate arrangements with various distributors to have their images included in the distributor's offering to its customers. Each distributor chooses which suppliers it wants to represent on its site.
Currently, the THP has over 4.7 million images from 239 RM and RF collections on its site. There are 58 distributors. Many of these distributors generate relatively little in monthly royalties for the majority of suppliers they represent. But it is so easy for suppliers to get their images represented in many different parts of the world, at virtually no cost, that the arrangement has been worth the trouble.
In the past, the distributors were charged a monthly fee for this service but suppliers were not charged if AGE chose to represent their work on its site. If AGE chose not to represent a particular supplier's work that supplier could still put images on the THP by paying a small one-time upload fee.
At CEPIC that all changed. AGE has decided to charge all suppliers a monthly fee, as well as distributors. This fee may be prohibitive for many smaller suppliers. It seems likely that a number of suppliers may pull their images.
The prime motivator for this change seems to have been a recent decision by Getty Images to consolidate 10 of its brands into 5. This meant that AGE had to spend weeks making adjustment is its database. Anticipating similar costly adjustments in the future AGE has decided to charge its suppliers monthly fees. The current pricing structure tends to penalize small suppliers more than big ones and make everyone pay for costs that might be incurred by a few. On the other hand, it is still seems possible that the strategy might be modified in a way that would be more equitable to small suppliers.
New Production Companies
One of the things that surprised many participants at CEPIC was the number of new RF production companies showing their wares. There seems to be a race to put more and more images into play despite the current oversupply of RF imagery and the declining return-per-image most existing producers are experiencing. In addition, most of the new companies seemed to be specializing in people and lifestyle imagery, probably the subject area in highest demand, but also the one where there is the greatest oversupply.
All these new production companies are showing very high quality work, but in my opinion the images are not significantly different or better than the best currently available in the market. Most of the new entrants expect to be successful by producing better high quality imagery faster and cheaper than existing companies.
As more and more of these images get pumped onto the market the useful life of any particular image gets shorter and shorter. The position in the search-return-order becomes more critical, but tends to go down because more and more images are being added all the time.
More surprising is that most of the operators of these companies have long experience in the industry and should have a good understanding of what has been happening in the market and where opportunities lie.
At least three of the companies -- juice images, Denkou images and i love images - are ventures financially powered by Anton Dentler who is now partnering with creative and talented people in the industry. Anton is the former owner of the RM agency BAVARIA BILDAGENTUR, the biggest stock agency at that time in Germany, which he sold to Visual Communications Group around 10 years ago. He is now owner of altrendo images, a brand exclusively distributed by Getty, and Creasource which is distributed by Corbis. Both are RM brands. In 2005 he sold his share in the RF production and distribution company image100 to Corbis. Anton has been ahead of the curve many times in the past. Maybe he will be again.
What Will Getty Do With Punchstock
One of the things that kept coming up in discussions concerned what Getty will do with Punchstock. There is a rumor from reliable sources that Getty is seriously considering moving all of its Rights Ready images to Punchstock. That would include almost 100,000 images from the TIB brand. It is not clear whether the RR images would remain on the Gettyimages site as well, or not. There are a number of implications in such a move.
Everyone believes that Getty will use Punchstock to test various marketing and pricing strategies before incorporating them into the Getty model. It may also want to simplify the Getty model rather than having so many variables on gettyimages.com that customers become confused.
Getty may position Punchstock as a simplified pricing option by removing RM from this brand. They could either remove the third party RM brands from this site or offer them the option of staying if they agree to allow the licensing of their images at RR prices. It probably would make no difference if the same images that are on Punchstock are licensed as RM on other sites. In fact, Getty could benefit from this if it drew some customers from other sites to the less expensive Punchstock
Since TIB has already been positioned as the editorial brand, Getty's goal may be to aim the entire Punchstock offering more toward editorial customers.
Such a move might also enable Getty to bring saleable unreleased images onto the Punchstock site, such as travel images, that Getty has been forced to reject on its main site due to the release requirement. This could open the door to a much broader based collection that could better compete with Corbis' 1.1 million editorial images that are often sold for commercial as well as editorial uses. To deal with the release issue Getty could simply make customers aware that certain images on the Punchstock site are not released and that it is the customer's responsibility to obtain any necessary release to use the image in a commercial way. This would allow Getty benefit from licensing non-released images, and still maintain the marketing position that all images on gettyimages.com are released.
Where's Jupiter Headed?
Jupiter's recent purchase of the website www.adsoftheworld.com is significant. While Jupiter is seeing growth in its high priced RF brand Jupiterimagesunlimited.com and in RM imagery expect Alan Meckler to put a lot more focus on the web side of his business that provides information for creative, business and IT professionals.
We believe he is beginning to recognize that the image business overall is not growing and that there is much more opportunity to grow his company by acquiring other web properties rather than more image companies. He is returning to his Jupitermedia roots where he was before he got into the image business.
However, don't expect him to pull away from the image business and start shedding image properties. The advantage to sites like Ads Of The World is that they tend to draw a lot of traffic that can be directed toward the Jupiterimages sites when the users need images. Expect him to execute on his superstore strategy that attempts to offer everything the creative professional needs. He will go after more web properties that have a user base that in one way or another needs images. In this way he not only achieves growth for Jupiterimages by acquiring more market share, but he also has a stronger position in the more rapidly growing technology side of his business.
No Getty Party
Some attendees made the observation that unlike Corbis, Jupiter and Veer, Getty didn't have a party. These parties are a great opportunity for networking and to show appreciation. Obviously Getty doesn't have to do anything to recruit suppliers or to say thank you for what the suppliers have done for Getty. When TIB is moved to RR over 50% of the RM images on gettyimages.com and 42% of the RF images will belong to Image Partners. Even given the unfavorable position these images have in the search return order they must be responsible for a significant portion of Getty's revenue. In addition, over 200 distributors around the world are authorized to license rights to Getty owned images and are generating some of Getty's revenue.
Next June the CEPIC Congress will be in Malta. It's not to early to begin planning to attend.