Death of Educational Market for Images

Posted on 4/13/2011 by Jim Pickerell | Printable Version | Comments (0)

Anyone who earns significant revenue from producing or licensing stock images for educational purposes should be looking, as soon as possible, for another line of business.

Why? It is rapidly becoming impossible to earn enough from licensing images for educational use to cover the costs of producing them. For decades photographers have been willing to license rights for limited usage of their images with the understanding that if a greater use is made the photographer will receive additional compensation. This system was originally developed to help publishers limit their risk in the event that some of the book they produced did not sell well or generate as much revenue as hoped.

Stock photographers create images before a specific need is defined. They have been willing to take the risk that there will never be any demand for a significant number of the images they produce as long as the revenue generated by the licensed images is sufficient to cover their costs and provide a reasonable profit. At less than 1% or the 23 million images available on are licensed in any given year. Similar ratios exist for most other image licensing organizations. Thus, the revenue that a single license is not just enough to cover the cost of creating that single image, but the 100 or more from a variety of different situations often produced at totally different times.

What Publisher Want

Publishers want total flexibility to make their products available, not just in printed books, but in a variety of different formats electronically delivered through multiple new devices. They want to pay a one-time fixed fee for the right to use images in any way they choose, anytime, forever.

Publishers want to keep the fees they pay to a minimum in order to keep their break even points low and insure a profit even if only a few copies of a book are sold. If the book eventually becomes popular and sells above the minimum expected break even point, they want to retain 100% of all additional revenue as profit.

Publishers also want to keep their administrative costs to a minimum. Any system for re-licensing rights to use photos and other information would increase their administrative costs. They are opposed to making information about usage available to content providers.

Basic Licensing Strategies

There are three basic licensing strategies used buy the photographic community.
    1 – In the past most of the images used by educational publishers were licensed using a rights-managed (RM) licensing strategy. RM prices are based on narrowly defined uses with clear limits. Increasingly, publishers tend to define uses much more broadly than in the past, particularly when it comes to uses of an electronic nature.

    2 – Another common license model is royalty-free. RF images may be used forever with no additional charge. The principle behind this licensing model is that certain images will be used by many different customers and thus small fees paid by many customers will provide the same level of compensation as a higher fee paid by one or a few customers. However, experience has shown that there will never be great demand for many of the images publishers require. If these images are licensed for unlimited use at low fees, the creator loses money.

    3 – The third model is a version of RF known as Microstock. Images purchased from these distributors may be used forever so long as the total distribution of printed copies does not exceed 500,000. If a publisher wants to include the image in more than 500,000 copies of a printed product then he must purchase a much more expensive “Extended License.” Since today most publishers want the right to print at least one million copies of a book they find it necessary to purchase an Extended Licenses. There is no restriction on the number of impressions if the image is delivered electronically.
When the RF licensing model was invented it was believed that electronic uses would be constantly updated with new imagery and therefore there was no need to put limits on those uses. In the educational field that is not the case. Some images may be used for very long periods of time. Unlimited use provides the publisher with a huge value unless a very high fee is charged initially for such uses. Publishers are unwilling to pay fees that would actually cover the cost of production.

Given publishers’ needs as the industry moves more toward electronic delivery of educational information, most would prefer to license the images they need from royalty-free or Microstock distributors. Unfortunately, many of the images they want are only available as rights-managed. Nevertheless, we understand that currently up to 30% of the images used in some new products are licensed from microstock distributors.

Many image creators believe that a system of licensing based to some degree on use is absolutely critical to the sustained production of all the images needed by the educational publishing market. While the system of RM licensing worked for a number of years, it is no longer working in the educational products arena and is on a track to become totally uneconomic for image creators.

Factors That Will Destroy Image Supply

There are a number of factors that are on track to force photographers to stop producing the stock images needed by educational publishers.  
    1 - The amounts being paid to use images are not keeping pace with the volume of use being made when compared to a decade or two ago. Publishers are paying a smaller and smaller share of total revenue generated by their products for the images they use. This has resulted in increased profits for their investors, but it has not built a stable supply chain.

    2 - Over the last decade publishers have demonstrated that they cannot be trusted to honor their license agreements. They have systematically used the imagery they licensed far beyond what the agreements allowed.

    3 – When creators learn of unauthorized uses publishers make it extremely difficult to collect any compensation for such uses.

    4 – Licensees have no reasonable way to determine if written agreements are being honored.

    5 – The supply of imagery relative to demand has increased dramatically in the last decade and demand has remained relatively flat. When supply is greater than demand prices should drop, which they have. But, when the percentage of images licensed drops compared to total images created, photographer expenses per-image-licensed increase. Meanwhile the revenue per image used has been flat or declining. At some point, photographers who are dependent for their livelihood on the revenue they receive from their images must stop producing new imagery for the educational market and look to other ways to make a living. There is no indication this trend will reverse itself.

    6 – In the not too distant future there will be a serious decline in the use of books for educational instruction. Most information and images will be delivered to students electronically.

    7 – While many will access educational information through sites that are password protected, it is not clear how secure the password protection will be. Given the unauthorized uses that already take place it seems likely that in the future many of those who access images and other educational information will find ways to avoid paying anything for the information they consume. Thus, it seems likely that much of the information distributed by the publishing companies will end up being freely available to many without passwords.

    8 – Electronic delivery will occur on a variety of devices many of them still to be developed. Thus, it is impossible to predict what the term “electronic delivery” will really mean ten years from now. Yet the right to use images electronically in this manner is already being licensed for long periods of time into the future. Most current licenses allow unlimited electronic rights for a period of years. The number of years used to be 5 and is now most commonly 10, with occasional requests for 20 year rights. There are indications that in some cases 50 year rights are being granted. If these grants of rights were edition specific or program specific their might be some limitation on future use, but in most cases there are no such limitations.
Are Distributors Protecting The Creators?

Those who are licensing rights on behalf of the creators are not, or cannot, represent the long term best interests of creators. And yet the creators are left with little alternative. They find it very difficult to deal directly with publishers because it is in the publisher’s best interests to deal with a few large sources of imagery rather than multiple suppliers.

The distributors with large collections tend to be interested in maximizing short term revenue and profits for their investors. In some cases their goal is to build a company and sell it for a profit, not operate for the long term. Such companies need huge positive cash flows, and consistent quarterly growth. They are not in the photography business for the long term. They are focused on sales volume, and will do almost anything to appease a volume user. They will cut prices to hang onto their volume users. (Volume users tend to be less important to individual photographers because most photographers don’t have the variety of content necessary to sell much volume to these customers.) Since there are several of these larger distributors competing against one other, the publishers have been able to very effectively play them off against each other and continue to ask for more and more rights for less and less money.

When one distributor gives on a price the publisher goes to all the others and says, “so-and-so is giving us this usage for this price. If you want to stay competitive then you need to match it. Otherwise we won’t be able to use you very often.” In the vast majority of cases all the distributors have similar images that will be satisfactory for most of the publisher’s needs. In some cases the best image may be with a distributor, or an individual, who wants to charge more. But there will be a “good enough” image with one of the discount distributors that fulfills the same purpose and publishers will usually go with the discount.

Another factor to be considered is that there is no cost to the distributors for the content. Their only costs are administrative and marketing. In most cases the distributor is already keeping 60% to 80% of the gross revenue collected. Thus, if a significant number of sales are lost that represents a significant revenue decline. Giving a discount to maintain, or hopefully increase, sales volume becomes critical. Distributors benefit from the increased volume, but image creators seldom do. Discounting works for distributors, but it doesn’t work for the image creator whose costs stay the same, or go up.

Then there are the distributors with smaller specialized collections. They are generally interested in keeping their company going for a generation and looking for a steady level of income over a long period of time. They are not looking for a quick sale of their business. They want to grow their businesses by finding new customers and trying to do the best for their photographers.

But, once the big guys cut their prices the publishers go to the little guys and say “so-and-so is giving this usage for this price. If you want us to continue to search for images on your site then you need to match the price. Otherwise we’ll only search your site when we can’t find images that will work anywhere else.” Those who try to hold to their prices tend to discover that they license very few images to the publishers, particularly if they compare their record to other small agencies that have been willing to match prices.

More and more photographers are taking the position that, “My images are worth more and I’m not going to let distributors license them for low prices.” Even if the photographer gets the same price as the distributor he gets to keep 100% of the fee instead of the 20% to 40% royalty he will receive when it is licensed through the distributor. More and more photographers are pulling their images from the distributors and trying to license direct. This can work for those with very unique collections and where there are no competitive images available elsewhere. But those photographers have to spend a lot of time and effort marketing and promoting their sites. For the vast majority it doesn’t work for several reasons.
    1 – Their images are hard to find because the researcher has to remember a lot of different web addresses for different subject matter, rather than just going to one site that has everything.
    2 – There is usually a lot of competitive imagery that will satisfy the customer’s need.  
    3 -  If the researcher finds an image on a photographer’s site she has to go to the photographer (often not immediately available) and negotiate rights. This takes time, which she doesn’t have. (If she finds an image on a “preferred provider” site the fee has been previously agreed to, regardless of the subject matter of the image, and the researcher can download the full size image and move on to the next task.)
    4 – Finally, the photographer may want more money than the distributor is charging. The publisher’s accountants are constantly pressuring researchers to not agree to fees that are higher than the “preferred providers” are charging. The researchers don’t need the hassle.
    5 – And then there is microstock.
Distributors will always have larger, more diverse collections and offer better prices than individuals. Researchers will always go to the distributors first because if they can find what they want there it is easier.

In theory, if all photographers would pull their images from distributors and make their images available through independent, large, searchable collections that leaves the actual licensing to the individual, publishers would have no alternative except to deal with individual creators. However, bad as the publisher agreements are, in most cases the photographers are also making some sales for uses other than book publishing through their distributor. They don’t want to give up that revenue and they can’t tell a distributor “don’t license my work to educational publishers, but license it to everyone else.”

The choice photographers are left with is to accept that revenue for educational uses will decline. Stop producing new images aimed specifically for educational uses and find some other source of revenue to replace what they have been earning from the education market.

Is There Any Hope?

I’m very pessimistic about finding a viable alternative for reversing the established industry trends for licensing electronic use. Sellers have been willing to accept one flat upfront fee for unlimited use for an extended period of time.

I do not see any reasonable way to charge different fees for different types of electronic use. Thus, establishing a time limit for electronic use licenses, and pricing based on the size and type or organization, seems to be the only way measure how much a given image is worth to the customer. I would like to see the time limit for electronic use licenses dramatically shortened to one or two years. The publisher would be required to renew the license and pay an additional fee if he wants to continue to use the image beyond the license period. Publishers will argue that to re-license images every two years is an administrative burden they cannot afford.

Bur, when most educational information is delivered from one central database with a variety of ways of accessing it, I believe the data, including photographs, will be changed and updated on a regular basis. Some of the information will have a short useful life and other information like a photo of a Michelangelo sculpture may be used for decades. The longer the image is being shown the greater the compensation should be.

In the digital environment it should be fairly easy for publishers to code their image databases to warn them when the license on each image is due to expire. The re-license price (a percentage of the original price) could be part of the original license agreement so the publisher would not have to come back to the licensor and negotiate a new agreement. All the publisher would have to do to continue legally using the image is mail a check. The license agreement could also make it the licensor’s responsibility to inform the publishers of any address changes. In the original agreement the licensor would agree that if he/she fails to inform the publishers of an address change and a check is “returned to sender” the publisher is relieved of all liability for continuing to use the “orphaned work.”

When notified that it is time to re-license an image the publisher would have the option of reviewing the use if it was determined that the company wanted to continue using it. If the company decides to replace it, or to discontinue using it, there would be no re-licensing charge. The database should also be able to tell the publisher how frequently the image has been accessed during the license period. If no one is looking at a particular image, that would be a good reason for removing it from the database.

While this would seem a simple solution, I don’t think there is much chance of getting the major agencies to fight for it, or in getting the publishers to agree. If the big distributors continue to grant long licenses without objection no individual or small distributor will be able to get publishers to agree to a 2 year renewable license. Even if a photographer puts two years on his invoice, based on what publishers have been doing with regard to print runs over the past decade, I think we can assume that once they have the image in their system they will ignore the terms of the license and continue to use the image without paying anything for additional usage rights.

The big distributors will continue to get what little they can for the images in their collection and eventually transition to some other line of business.

Solution For Photographers

Photographers should recognize that the future is bleak for those producing images for educational use. Photographers probably need to look for other clients and other types of work. They should determine the portion of their gross revenue that currently comes from educational publishing and find other ways to replace it. Photographers should probably concentrate more on trying to get assignments rather than shooting stock on speculation. In this way they will know exactly how much they will be paid for the effort and expense they incur.

Photographers should price shoots based on the minimum annul revenue they need divided by the average number of jobs they can reasonably expect to shoot per year. Limit speculative shoots to those times when they are trying to build a new client relationship and don’t do such shoots more than once with any particular client. If they must shoot stock assume they will earn nothing for their efforts and try to work only on project that will help them learn a skill they can use on a future assignment.

Copyright © 2011 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:  


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