238 EXCLUSIVE WORLD RIGHTS TO CATALOG SIMILARS
July 28, 1999
Catalogs - Image Exclusive vs. Exclusive Plus Similars
Many agencies have decided that the key to their survival, as they compete with
RF, is to concentrate on high-end restricted rights sales. While they are not
ready to totally write off low end sales for small brochure and other minimal uses,
they seem to expect RF to totally capture that market.
In an effort to focus on the high end they are demanding from their
photographers world wide exclusive rights to every image - and all its similars -
that they promote in their catalogs. This includes
print, CD-ROM and on-line. "Similars" are often defined very broadly.
For the photographers this means:
- They must send all new production to a single agency and often wait
for a year to 18 months to see if an image is actually selected before they
can submit non-selected subjects to other outlets.
- If the photographer offers similars to other agencies prior to catalog
selection, he or she must be prepared to pull those similars from the other
agencies once the image has been selected for the catalog. In almost all cases
this is a practical impossibility.
- If an image is selected for the catalog the photographer is no longer allowed to
license rights him or herself to "similars" of that image.
In order to generate enough income to keep producing, many photographers find
it necessary to use several agencies to market their images. To limit sales
to one agency could seriously reduce their overall income.
For example, one very productive nature photographer markets through 10
agencies, most of which have some type of catalog. His best producing agency
generates 15-20% of his gross income. All the others represent a much smaller
share of gross income. About 50% of his income comes from direct sales he
makes to clients. Many of these relationships are long-term ones that have
been developed over many years. He has established his position by giving
each agency exclusive rights to the specific image they place in their
catalog, but other frames of the same animal, in a slightly different
position, are often placed with one or more of his other agencies.
If he were to adopt a strategy of only submitting to my best producing agency,
and not sending similars of accepted images to any other agency, he would have
to learn to survive on about 65% of his 1998 income.
Actually even the money he makes from direct sales might go down because he
would not be able to sell similars of any accepted images to his own clients.
Thus, 65% is a BEST CASE scenario. It could be worse. If the photographer
were to give his top agency all his work, their gross sales might increase
enough to make up some of the difference, but experience has shown him that's
usually not what happens. Sales increase somewhat, but not enough to make up
that 30% to 35% he would be losing from the other agencies.
The reason the photographer has work with ten agencies is that his top
producing agency won't accept a large percentage of the work he produces.
Even in those times when they keep a larger portion of similars his overall
sales do not seem to grow dramatically.
The only way he can get display for the other work, so clients know it
exists, is to offer it to other agencies.
In this photographer's case it is not his "best" agency that is
demanding the high degree of exclusivity relative to similars, but other agencies
that represent a much smaller share of his total income.
If the photographer has to live with reduced income one thing seems sure. He
will be spending much less to produce new product.
Many of the agencies that expect photographers to limit their income in order
to provide the agency with more flexibility, do not have systems in place that
would allow them to license world wide exclusive rights with any assurance
that they can honor such rights.
If they are dealing through a series of sub-agencies they can not tell what
rights have been sold by many of their agencies until the monthly, or
quarterly sales reports arrive. This leaves a big gap where conflicting sales
can develop. Even then, most foreign sub-agencies do not report sales with
sufficient details to
enable the U.S. parent to understand the dimensions of restricted uses.
If their German sub-agency licenses rights to an image for three
years in the German banking industry, and guarantees that no other banking
client will use that same image in Germany, the U.S. agency can not sell world
rights to that image, or a similar, to a U.S. banking client. Such
reporting must be timely in order to prevent a competitive sale from being
In almost no cases is there a requirement to check with the parent agency
before completing a restricted rights license in an agency's own country, even
though such licenses may inhibit future larger sales at much higher fees.
When Can Photographers Afford To Offer Worldwide Exclusives On Every Image?
By using the following procedure it is easy for a stock agency to figure out
which of their photographers will need to supply images to more than one outlet.
- The agency should look at what they pay each photographer on an
annual basis. Take 57% of that number to allow for the average 43% of total
income that photographers spend for production and operating costs. If that
number (57% of total income) is
sufficient for an individual to support him or herself, maybe the photographer
can live on the income they are receiving from the single agency.
- If not, then the photographer must be earning additional income from one
or more other sources. These other sources may be other stock agencies, other
sources of photographic income, or non-photographic income.
- The agency should also determine if the annual income being paid the photographer is going
up or down. If the photographer's annual income is level, or going down, then
he or she is probably looking for other ways to earn income. No matter how
high the income may be, the photographer's personal expenses are likely based on income
levels achieved during the best producing years. (When incomes are up that's
when you commit to those more expensive mortgages, more elaborate studios and
costly education for your children.)
By using the above three steps to analyze photographer income figures,
agencies can quickly tell exactly how many photographers they have who are
likely to be fully committed and dependent on their agency. Many agencies
will find they have none.
Even in those cases where the agency has several photographers who can justify
supplying worldwide exclusives, it is important for the agency to consider whether
they can function effectively with those photographers alone. If not, then a
different acquisition and marketing strategy may be necessary for long term