An increasing number of stock photographers are fed up with low prices and low royalty percentages and are looking for a way to get out of the whole agency/distributor rat race. Many are setting up their own sites and are looking for ways deal more directly with their customers. They recognize that they won’t make as many sales, but feel that the higher fees they will receive for each use will generate more total income in the long run. It is not beyond the realm of possibility that by licensing their images directly to end users photographers would receive 10 or more times the revenue for each image licensed compared to what they are receiving from their agencies now.
The economic term for this trend is disintermediation which is the removal of intermediaries in the supply chain or “cutting out the middleman". The biggest problem in the stock photo business today is that there are too many middlemen, many of them providing unnecessary or redundant services based on historical practices and not taking full advantage of new technology. Image creators are receiving a pittance compared to what customers are paying to use their imagery. There comes a point – and for many it is already here – when producers will either stop producing and go into another line of business, or find a way to get rid of some of those middlemen.
However, removing middlemen entirely is probably not the answer. Microstock sellers have pointed the way to some of the things that are needed to reduce the middleman share.
1 – They have removed negotiation from the sales process and priced everything at fixed rates.
2 – They have established a system where customers must pay for the usage BEFORE downloading the file. This eliminates a lot of the complex billing and tracking that the traditional system requires.
3 – For the most part there is only one distributor between customer and producer in the supply chain. This is unlike the traditional system where often there are two or three cuts of the gross fee paid before the contributor’s share is calculated.
4 – They have set up a system where STANDARD discounts are available to VOLUME users.
5 – They offer their more productive contributors higher royalties.
6 - The microstock system of reporting royalties is much more transparent and timely than in the traditional market. Sales data is made available to image producers the moment a sale is made.
7 – . The availability of data makes business planning easier and makes it possible for photographers to learn much more about their competitors and their relative positions within the supply chain
Why Are Distributors Needed?
1 – Customers want to be able to search for images in one place rather than having to seek out many smaller sites.
2 – Customers want choice, but not so much that they become overwhelmed with too much choice.
3 – Customers want an easy and simple purchase process and immediate delivery as soon as payment is supplied.
For the most part customers do not want to go to individual photographer sites. They want help in sorting through the clutter on the Internet. Weak as many distributor sites are in making it easy to find the right image quickly, they are immensely better that a system that dumps everything infront of the customer and says, “sort it for yourself.” Most customers will have no idea which site might offer the best image to satisfy their need on any given day. Most customers do not have time to wade through large numbers of choices.
A system is needed that brings together images from a multitude of different image producers into one place and supplies some degree of editing to eliminate images that are redundant and wholly inappropriate. Given the proliferation of images, keywords alone are not enough. The classic example to illustrate this is Google. When customers search for a specific keyword or phrase Google may tell them there are 180,000 (or many more) images online that fit their criteria. But, Google will only show the customer about 1,000 of those images based on the SEO expertise of the image supplier. The visual quality or appropriateness of the images is ignored. If the image a customer is really looking for is somewhere among the other 179,000 there is absolutely no way to find it using Google. Algorithms alone are not a sufficient way to find images.
What’s Needed
Photographers need a system that offers the following elements.
1 – One that allows photographers to place their images in a central database. (Could be modeled after PhotoShelter.)
2 – A universal system of establishing usage fees for a variety of defined image uses. The number of uses needs to be somewhat more than are typically found in the microstock arena, but far fewer than in the traditional RM systems. It should be possible to list all use types and the number of credits required for each on a single screen along with a preview image.
3 – A payment system based on credits.
4 – A centralized system like PayPal for purchasing credits that any customer, image supplier, editor or distributor can join. Credits may be used to purchase from any registered supplier and proportional shares will automatically be paid into the accounts of the image creator, editor/distributor and possibly the hosting service.
5 – A database of niche image collections within the larger database. It would contain some of the elements that PACASearch and StockIndexOnline offer today.
6 – A system which allows editors to create collection. (Note: Alamy tried a version of this several years ago and it never got off the ground.)
The following explains in more detail how the new system might work.
Photograper
Photographers who want to license their images would place them in a central searchable database like PhotoShelter, License Stream, IPN or Picturemaxx. They would need to prepare their images, do all their own keywording and captioning and supply release data where appropriate. All this would be provided in a standard format.
Photographer would be able to easily monitor which images are available for viewing through any collection and withdraw their image from a collection at any time.
Editing Services
Editors would create collections from the available images in the entire database. The editors would ask photographers for permission to include specific images in the editor’s collection. Photographers could also contact collection editors to request that their images be considered for particular collections. The relationship between a photographer and specific editor would be non-exclusive.
When a photographer and editor “A” agree to work together, the prices for various usages and the percentage shares of any sale will be defined. The editor will probably have a set of standard credit prices for the use of images in his collection and will recommend that to the photographer. When someone purchasesd an image found in a particular editor’s collection the agreed upon share will be credited to the editor’s account and the remainder credited to the photographer’s account.
The photographer may make arrangements with other editors to have some or all of his images included in other collections. The photographer may also make direct sales if the customer chooses to search the master database, or the photographer’s collection. Editors only receive a percentage of sales when the customer finds the image by searching their specific collection.
Collection Database
When a customer enters keywords in a master database he will be given a choice of searching the Whole Database or the Collections List. The Collections List will contain a list of all collections with images on the particular subject. The Editor of each collection will be allowed 200 words to explain why his collection is better than any of the others. Collections will be ranked by the number of images relating to the specific keyword in the collection and the percentage of total images in the collection similar to the system used by PACASearch. Collections should also be ranked based on the total number of images licensed from the collection relative to the size of the collection.
Small collections of a specific nature will be favored over large collections of a very general nature. Editors with a specific knowledge of the subject matter should be able to organized collections that will have a higher ratio of images used relative to the number of images in the collection. Over time these niche collections should rise to the top of the collection list in a particular subject area
There should be lots of subject categories and sub-categories. StockIndexOnline provides an example of categorization, but some editors may want to take the categorization even deeper. For example there may be a specialist in a specific breed of dog who creates a collection. That specialist might have his own large file of images, but he may also find a few great images from a number of other photographers that he wants to include in his collection. He may only take one or two images from certain photographers, but it may turn out that those images sell the best. The photographer with a few images benefits because customers are drawn to the specialist’s site as a result of his expertise in the subject matter. Such customers might never find the photographer’s images if it they were only available in a general collection.
Anyone can be an editor and create a collection. They don’t have to be full-time workers in the stock photo business. They just need a special interest in a particular subject matter, a willingness to take the time to look through lots of photos to find what they consider the best, and ultimately that their idea of “best” agrees with lots of customers with similar interest in the subject.
Credit Pricing
The pricing system should be based on credits. Each image in a collection should be available for certain types of uses and the number of credits required to purchase that type of image use should be listed next to the preview images (similar to what occurs on microstock sites today). Some editors may choose to only offer the image for student use and only that price will be available. In most cases a list of prices for all types of uses will be available. Different images within a collection could be priced a different levels.
It would be possible to build into the system “special exceptions” allowing the customer to contact the editor or the photographer when the rights offered through automatic pricing are insufficient to meet the customer’s needs. However, automatic pricing should be structured to satisfy 99% of customer needs. In the other 1% pricing would be handled through separate negotiations and payment would be separate from the credit system.
Payment
A centralized system for the purchasing of credits and the distribution of revenue to the interested parties would improve efficiency and solve many of the problems and delays in getting paid suppliers face today. Discounts could be provided to volume purchasers who buy large packages of credits. Data on all sales, from a variety of sources, could easily be made available directly to the image creator.
As with PayPal, the photographer would need to sign up with the credit distribution service and probably pay a small monthly fee to be listed. Whenever a customer uses credits to purchase a photographer’s images the photographer’s account is immediately credited. Credits are universal and can be used to purchase images from any seller.
Downloads
Images must be available for immediate download as soon as payment is made. Once the payment process is complete, an email can be sent to the customer with a code that allows the customer to go to the master database and download the appropriate file.