Dilemma For Getty Photographers

Posted on 4/6/2001 by Jim Pickerell | Printable Version | Comments (0)

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DILEMMA FOR GETTY PHOTOGRAPHERS


April 6, 2001

The new Getty Images photographer contract has arrived and it seems to me that Getty

and their photographers are operating at cross purposes. The following is my analysis

of the current situation.

What Does The Future Hold For Photographers At Getty?

It is becomming increasingly clear that as far as new images are concerned Getty is

focusing its energies on photographers who are willing to work for a small up front

fee and 10% of sales.

These 10% photographers have no production costs except the costs of their equipment

and get large numbers of images loaded online almost immediately after they are

produced. Freelancers who receive royalties of 30% to 50% of sales get very few new

images accepted into the online database. Even when new images are accepted, it

often takes months, to more than a year, from the time the 50%ers deliver images to

Getty before they are accepted, or rejected.

The 10%ers work under tight direction of Getty art directors. In fact, increasingly

the new creative force at Getty -- those who determine what will be shot, and design

the images -- is the editors and art directors, not the photographers.

Slow Growth

Sales for Getty are not growing substantially. In the last four quarters they were:

Q2 2000, $123.6 million; Q3 2000, $127 million; Q4 2000, $129.4 million; Q1 2001,

????. Analysts estimate $131 million for the quarter just ended, but some also

believe that Getty will fail to reach this very modest increase.

This slow growth is happening despite heavy advertising and promotion campaigns and

Getty's overwhelming dominance in the industry. If sales aren't going to grow

substantially then the only way to increase profits is to cut costs. Their biggest

costs are the royalties they pay photographers which was just under 25% of gross

sales in 2000. They need to wholly own a greater percentage of the content they

license, increase the fees photographers pay by raising catalog charges and lower

royalties whenever possible.

From a business point of view such a strategy will work. Getty's goal is to get

better at predicting customer demand, and produce more images in-house to fulfill

that demand. They need to steadily reduce their dependence on high cost freelancers

and move toward a model of owning, or paying minimal royalties, for images rather

than toward the model of the photographers absorbing all costs and receiving a

significant percentage of sales.

Another way to cut costs is to put fewer new images online, thus reducing their

scanning and keywording costs. Getty has announced that they intend to add no more

than 15,000 new images pre-brand, per-year in the next three years.

They are willing to pay up-front production fees on shoots where it is virtually

assured that the company's share of sales down the road will far exceed costs. When

the subject matter, in their judgment, is in lesser demand they want the

photographer to assume the production risk. In such cases they will reluctantly

concede to pay a somewhat higher royalty.

Low Demand Subject Matter

Getty's goal seems to be to limit their offering to only high demand subjects and

leave specialist material and other low demand subjects to someone else. In

addition, to the degree possible, they would like to remove the low demand options

from the marketplace in hopes that buyers, faced with no other alternative, will be

forced to settle for one of Getty's remaining offerings that may not be quite on

subject, but is the closest the buyer is able to find.

It is clear that they are agressively moving to eliminate file research because they

have determined that these large files of "low demand" images are too costly to

maintain for the return they generate. This will eventually remove millions of

images from the market, and require a huge effort by photographers if they want to

get any of these images back to where they can be seen by customers. It appears that

their active online site will have 1 to 2 million images (3% of the 70 million

images they advertise they control). They will seldom, if ever, search through the

other images to fulfill specific customer needs.

One confusing factor is the way they handle "historical" images. They seem to be

willing to continue searching through analog files owned by Hulton Getty and

Archive, but they are returning huge quantities of unscanned images belonging to

contemporary photographers. In effect, this eliminates their access to much of the

historical record from the 1960's through 2000. It looks like that as long as

historical is defined as the 50's, 40's and before, they'll keep servicing that

file. On the other hand outside researchers report that they are no longer allowed

to search through the Hulton Getty and Archive files as was the case in the past.

Calculated Strategy

Some photographers want to believe that this strategy is a management oversight.

They hope that if the problems and risks are clearly explained to Getty management

they will see the wisdom of returning to the older, more photographer friendly

model.

It seems to me that Getty's strategy is very calculated and accomplishing its

intended goal. Consider what Getty, or any company whose sole, driving force is to

maximize profits should do.

  • It would be in their best interest to pay out the smallest possible

    percentage of gross sales and continually reduce that percentage.

  • As much as possible, they would have 10%ers produce replacement images for

    all high demand subjects and current best sellers. It is not necessary that these be

    exact copies which could be copyright infringements. The images simply need to be

    ones that could substitute for a 50%ers images, if the 50% images were no longer

    available.

  • As replacements become available the 50% images will start disappearing

    from the database.

  • The company would use their sales statistics to determine the images in

    highest demand. This data is only shared with a few photographers, mostly the

    10%ers.

  • Ideally, they would limit their use of freelance material to those

    subjects that are very unique or where the image is particularly costly to produce.

  • It is to their advantage to get rid of specialist material that is

    requested infrequently.

  • As they reduce the size of the general file it should also be noted that to

    a great degree they are eliminating much of the unique and specialist material so in

    any event they really need relatively little freelance material.

  • It is to the agency's advantage to get first look at any images the 50%

    freelancers produce.

  • It is to their advantage to use the "editing process" to hold images they

    have little intention of using off the market for as long as possible. In this way

    the images can not compete with their 10% images. This can be achieved by under

    staffing or various other inefficiencies that are hard for photographers to pin

    point.

  • It is to their advantage to have a rigid definition of "similars" and to

    put certain images into their system to keep "similars" out of the market.

  • It is to their advantage to limit the variety of options available to the

    customers so the customers will be forced to make more use of the images they have

    decided to provide.

  • It is to their advantage, to reduce competition by acquiring competitors

    and closing down much their operations in the name of integration and efficiency.

  • It is to their advantage to reduce the number of photographers they work

    with as that reduces administrative overhead.

  • It is to their advantage, if many photographers decide to stop producing

    stock images as that reduces the supply in all subject areas and the options

    customers have to buy something other than one of the company's wholly owned images.

  • It is to their advantage to allow underpricing to the degree that it causes

    competition to leave the market.

  • It is to their advantage to have a contract so complex that any penalties

    non-performance by the seller are very difficult to enforce.

Industry Precedents

There are at least two good precendents in the industry for the wholly owned

strategy -- Comstock and SuperStock. Photographers need to look at these models as

they assess where Getty is headed.

Both companies have always had a strategy of supporting a small group of

photographers who would produce all the available images in the high demand subject

areas. Comstock has two staff photographers -- Tom Grill and Michael Stuckey.

Together, with Comstock's in-house production team, these two produced approximately

85% of the total file. At one point Comstock was one of the more successful agencies

in the world.

Comstock accepted other photographers, but each one specialized in something other

than the high demand business and lifestyle subject areas. Business and lifestyle

are the two top selling subject areas in the industry. Any image produced by the

freelancers that might compete in any way with one already produced by Grill or

Stuckey, or with something they might want to produce in the future, were not

accepted into the file.

Many photographers joined Comstock because they heard about the high returns the

company was getting from high demand imagery.

Few ended up being satisfied because none of their high demand images were accepted

and the returns from their specialist images were insignificant.

With SuperStock freelance photographers have complained that staff photographers

occasionally copy ideas once they have seen the images freelancers have submitted.

The staff images make the catalog and the freelancer images get returned.

Certainly, from a business point of view this strategy worked for Comstock and

SuperStock, even though many photographers find it unsatisfactory. The main

disadvantage for the company seems to be that the company's file ends up with less

visual variety, no matter how talented the prime photographers are. There is no

getting around the fact that an agency with hundreds of different shooters will

offer a greater variety of approaches to a subject than a small production team is

likely to envision. In general, the basic themes that advertising customers need

change very little, but new approaches to these themes are in constant demand.

Getty may believe that they can overcome the problems Comstock and SuperStock

experienced by working with a larger design team, and a larger number of

photographers. In the end, I believe that limiting the number of shooters they work

with, and drastically limiting the variations in the file, will result in many art

buyers looking elsewhere for imagery. I believe that is what has happened at

Comstock and SuperStock.

What Are The Freelancer's Options?

The key issue for Getty photographers is to find an alternative way to show buyers

the images Getty refuses to make available. It is a lost cause for the 50%

photographers to try to convince Getty to put more of their images online. This does

not fit Getty's business strategy.

Photographers need to diversify and become less dependent on a single source for

their income. They need to enlist the aid of different sellers, and test a variety

of marketing strategies through a variety of outlets. The time has passed when a

photographer could tie his fortunes to a single agent and a single marketing

strategy.

Photographers need to be free to create, and know that everything created will be

made available for purchase in a timely manner and in a way that buyers can easily

find it. Photographers must also have a clear understanding of buyer needs and

recognize that the only images that will earn revenue are those that meet the buyers

requirements for usage.

Photographers must kept clearly in mind that Getty's goal is to maximize profits,

not support photographer's careers. They are now referring to photographers as

"artists" instead of "content providers," but they have no interest in being an

agent, or in trying to maximize sales or income for any given photographer.

Photographers also need to be able to exercise some control over how quickly their

images are reviewed and uploaded once they are delivered to the agency, and how they

are keyworded.

In any relationship photographers need to be very careful about signing long term

inflexible contracts. If the relationship with their representative is not working,

they need to be able to easily terminate it and move their images somewhere else.

Photographers retain agents to handle marketing for them, it is not the agent who

retains the photographer.

Be very careful about any definition of "similars." Locking any single image, or all

of its "similars," up with a single agency or a single marketing strategy puts the

photographer at great risk. The photographer is betting he will "win the lottery"

with a single high dollar sale, and possibly giving up countless low dollar sales in

the meantime.

Photographers need to get images that are no longer being shown to clients out of

the files and put them somewhere else so they can begin working again. Getty seems

to be making some progress in its effort to return images, and is moving at a much

better pace than The Image Bank did prior to its acquisition by Getty. Nevertheless,

the job is huge and it is likely to take many months, if not years, before it will

be complete. From the time Getty removed the images from circulation until the

photographer gets them placed somewhere else, Getty has an advantage because images

are no longer competiting with what Getty is showing.

Various service providers (agents?) may be able to aid photographers in various

steps of this process, but the relationships are likely to change from what they

have been in the past. Photographers need to retain more control.

Photographers needs to recognize that RF has changed the market forever. There will

never be the volume of RP sales in the future that occurred in the past.


Copyright © 2001 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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