288 CHANGING EDUCATIONAL USES
March 3, 2000
The stock photo industry needs to totally revise its pricing model for uses in
educational publishing as it takes into account new methods of distributing
For more than twenty five years prices for photo usages have been based on the
assumption that a publisher would gather material for a title and order the
material in a certain logical format with a fixed number of chapters. This
package, or book, was then sent for printing. Given the costs of press time,
marketing and distribution certain minimum press runs were necessary, or the
project would never have been started in the first place.
Once a first edition was nearly sold out, the plates might be put back on press
to print another edition, or certain revisions might be made to the original
text. In some cases books would be translated into another language and a
separate edition would be printed in that language. Again the assumption was
that given the basic costs of printing it would be uneconomic to print in
another languarge unless a certain minimum number of copies were produced.
- With print on demand technology it is possible to print one custom
book at a time. Publishers are now offering students several options for
receiving a particular text that has been selected by their professor. The
student can get it in book form and often it will be printed-on-demand. The
student can access the full text on-line. Or, they can get it e-mailed to them
chapter by chapter on a regular basis. In some cases they can get it by fax.
- Professors no longer have to choose between books publishers have
designed. Now they can design their own book to fit the specific needs of
their class. They can take one chapter from book A, 4 chapters from book B, 12
from book C, include a report from an association, write a couple chapters
themselves, and have it all bound, by the publisher, in a custom volume which
students can purchase.
- Glencoe has a three book series called Biology: The Dynamics of Life for
6th, 7th and 8th grades. To date they have sold over 100 versions of these
books. In most cases this occurred because they moved chapters around to
comply with the way the course is being taught in certain school systems.
- In another situation a publisher expects to sell 265,000 copies of a book
currently being edited. Of course, this is an estimate, not a guarantee. The
publisher is seeking to license use of content at the "Under 40,000" rate.
Presumably the publisher will pay more if they sell over 40,000 copies. In the
past year sellers have started receiving more frequent requests to bill for
print runs over 40,000
- Electronic translators are getting better and better. In the near future
it will be less expensive to translate an English text into some second
language and publish short runs of a book in that language.
- The college division of Houghton Mifflin is developing 50 to 60 new web
sites a year to support their various products. Traffic on these sites has
followed the "hockey stick" model over the past 18 months (slow steady growth
at the start and then a very rapid rise in a relatively short period of time).
- The internet has provided a variety of sales channels through which
publishers may sell the information in their books. The number of channels is
likely to be expanded in the future.
For educational publishers, the internet is dramatically altering their
approaches to marketing their products. It provides an opportunity for them
deal directly with the buyer. It also helps them understand the motivations of
In the past, book publishers focused most of their marketing toward professors
in hopes that they would adopt the publishers books for their course.
Secondarily, they marketed to book stores, but if the professor failed to
choose their book the publisher was basically out of luck. The student -- the
person with the money to actually buy the book -- had little understanding of
who the publishers were, or the distinctives of any particular publisher.
Now, through the web, publishers can find out who the buyers are and deal with
them directly. In addition to selling a book, they can determine what other
support materials the student needs.
If the publisher's book isn't chosen by the professor, the publisher may still
be able to sell a couple chapters to the student.
Through this interaction publishers are learning that students are more willing
to pay for tutorial information than additional ancillary information. Users
are also willing to pay for better functionality and systems that reduce the
amount of effort they have to go through to get information.
Publishers have learned, over the years, that once their product is selected by
a professor there is an average "sell through" of only 60%. That means for
some reason 40% of the students choose not to buy the book even though it is a
Mark Roller, Associate Director of Technology at Houghton Mifflin's College
Division says that early on-line sales statistics indicate that if part, or
all, of a book is available on the web there is a greater sell through of
printed copies of the book. To date there is not enough data to conclude that
there is a direct causal relationship, but it is possible that availability of
information on a web site could lead to more, rather than less, printed books
being sold in the future.
Because their brands are not well known among buyers, publishers are partnering
with other site operators who for one reason of another have the attention of
students/buyers. Most of these sites are attractive to students because they
offer something for free.
Many sites make money through advertising and by selling names and information
about the student rather than by selling content. In most cases, the publisher
gets access to student information in addition to a fee for making the
information available. The dilemma for the publisher is in determining how
much free material to give away, and what to sell at what price points.
Copyright holders need to think about two separate and distinct compensation
models for such material. If the copyright holder's material is sold it is
easy to see how compensation should be based on usage or some type of royalty
model. But, it is much harder to determine fair compensation for material that
is given away, in effect to advertise the brand, or other products which will
In some cases students pay a subscription fee for access to a group of assets.
It is unclear whether the copyright holder share of these fees is being divided
proportionally among all whose work is included in the group, or if actual
usage is tracked and payment is given only to those whose work is actually
used. The model for this type of payment might be Index Stock Imagery's
relationship with the people who produce "Homework Helper". However, we have
no guarantee that all book publishers will use the same model.
While all these options are available, Mark Roller says that, "Currently, over
90% (of on-line buyers) still pick a printed text." He says this is probably
due to their price structures, and they are studying other pricing models that
might make web use more attractive. He also acknowledged that students like to
print the material they get on-line and most of them print a lot initially.
Once they get into the digital version they print less and less.
Roller also indicates that the web model is turning out to be lucrative and a
profitable line of business for the publisher.
Visual Information On-line
Looking ahead, I think we need to ask ourselves how important the pictures will
be, and the kind of pictures that will be needed, if
the percentage of students getting information on-line, and printing it out on
a desktop B&W printer rises significantly? Will they need as many still
pictures? Will they want as many still pictures in the on-line environment as
they get in the paper books with glossy color printing? Will this change the
editing strategies for books or, at the very least, for those portions of books
that are offered on-line?
In the book environment one of the principle functions of images has been to
break up the black type and give the product a more user friendly appearance.
Often the actual useful additional information that the photo provides about
the topic is secondary to its role of catching the readers interest. Will
still photos serve the same functions on the web, as they do in print? Will
photos be an aid to the person who is getting information off a computer
screen, or will they be a distraction? Will the kind of visual content that
helps to draw the student to a particular text be video rather than still
As producers and sellers of still images we can put our heads in the sand and
say these issues are not our concern -- until suddenly one day we are faced
with new realities. It might be better to gather information now, try to
educate ourselves and our customers, and be prepared for the changes.
New Systems Needed
There needs to be a dialogue between publishers, leading sellers of content to
textbooks, and representatives of individual suppliers. The sellers need to
get a better understanding of how rights to content may be licensed in the
future and develop new strategies for pricing uses that will insure a
continuing flow of new material and equitable compensation for both content
providers and publishers.
Some of the points that need to be on the agenda are:
The development by publishers of systems that can calculate and pay
royalties to content providers.
The development of industry wide standards that would provide content
owners with accurate, audited information on the number of copies sold above
the base number in the initial license.
A review of the current "revision" strategy to pricing which is probably
unworkable, given the way books are produced today. It will definitely be
unworkable in the internet economy.
A review of how language translation will necessarily change the strategy
for pricing uses based on the language in which they are distributed.
In the Internet environment certain content is given away to encourage
students (the buyer) to pay, either by subscription or on a per use basis for
"deeper" content. If photos are among the content "given away" a system needs
to be developed to compensate the sellers for that value.
Because the costs of producing, distributing and marketing on-line are
less than supplying books in printed form, I believe that 25% of any fees
collected for usage should be set aside to proportionally pay the rights
holders for the content. If there are both text and pictures in the material
purchased 50% of the set aside should go to the creator of the text and 50% for
The suppliers should be aware of how new digital asset management
technologies could be used to assist in royalty payments. Many publishers are,
at the present time, implementing new asset management systems to enable them
to use their content in a variety of ways across a variety of media. One
important aspect of these systems will be how they track rights, track uses,
and compensate rights holders for the uses. At early stages of development of
these systems it will be comparatively easy to build in tracking of individual
units and payment on a royalty basis -- assuming it is recognized that it is
necessary to pay in this manner. The other option is for publishers to decide
that they must buy unlimited rights for a one-time fee. If that becomes the
default way of paying for all still photo usage, photographers will lose value
in the long term.
Now is the time to educate the publishers to our needs.