Exclusive World Rights to Catalog Similars

238

July 28, 1999

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.

Photographer Dilemma

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.

Usage Control

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

made.

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

survival.