Falling Prices: Issue To Be Discussed At CEPIC

Posted on 3/29/2013 by Alfonso Gutierrez | Printable Version | Comments (1)

The CEPIC Congress in Barcelona June 10 – 14, 2013 attracts stock agents from around the world. Pricing will be one of the key issues discussed – specifically falling prices and the impact they are having on stock agencies and professional photographers.

I posed a series of questions to a few industry leaders that will be in attendance. The following are comments from Alfonso Gutierrez, CEO of age fotostock. There will be responses from others in later stories.

Alfonso Guiterrez

JP - There is a theory that increased volume at the lower prices will make up the difference in revenue. Is that working for you?
AG - I would say that against all odds it has worked so far for age fotostock. The introduction of our brand "easyFotostock" some years ago, a type of Low Budget Royalty Free offer, stopped the sudden degradation in sales that RF suffered in the years 2007, 2008 and 2009 and allowed us to renew relationships with clients that had turned to Microstock. At the same time Rights Managed sales were maintained and still are high for us, showing an almost unaltered behavior as they were/are not so highly dependent on financed productions like RF is.  
However I don´t think the "theory" you mention will work for all of us in the long run because it is easy to reach product saturation in every business and the race to offer cut throat prices will reach an illogical end at some point. For obvious reasons, the model "low price/large volume" has to change.  If we take Yuri Arcurs as a good (or bad) example of what is happening in Microstock, it is symptomatic to read this in his blog;

    "As all active microstock photographers must have noticed, we have seen a constant decrease in sales in terms of our return per image over the last few years. It’s becoming increasingly difficult to shoot great images and profit from it in the same way as it was 5 or 6 years ago."
If you look back for a minute you will notice that the performing cycle for all new licensing models, basically RF and Microstock but even the Internet, follow a clear pattern. They strive for a while, reach a plateau and after a number of years begin to decline. It happened with film delivered in envelopes, with paper catalogs, with Royalty Free and now even with Microstock. While Microstock has received injections of money because the model is attractive and clean for investors, everyone can anticipate that its future is going to be the same that many corporations, and a long list of others, have suffered: transformation, cannibalization and simply being sold to somebody bigger, a large investor possibly, that will gain profit from the next sellout to another investor.
However we have to differentiate between two licensing models, Rights Managed and the Royalty Free/Microstock bunch because the intrinsic nature of both groups makes a difference and suggests the future. Rights Managed has been quite stable against the difficulties because it shows evident advantages in those market segments where image quality, exclusivities and knowledge of the sales history of an image is required, most notable in publishing, editorial, high end advertising, calendars and Greeting Cards and Games and Jigsaw puzzles an few more.  Moreover, RM captions and keywords are much more reliable in large portions of images than in RF/Micro.
Micro has devastated traditional RF by competing with the subject matter (lifestyle productions) of the images however instead of selling at high prices they focused on volume at a very low level of pricing. However, in photography nothing lasts forever as history demonstrates. Microstock will face a steep curve in their business model cannot provide a reliable source guaranteed images. If Microstock wants to be something more than a saturated repository of images that were easy to caption and keyword they will need to become like a traditional stock agency that verifies captions and keywords -- to mention only two details – and that will require time, effort and money. Probably they will have the money but I´m not sure about the time.

JP - Are you licensing more uses now than you were in 2007?
AG - Yes, certainly
JP - Is the average price you’re getting per usage the same, more or less than in 2007?
AG - No, we are selling more images at lower prices-
JP - Is it easier to hold the pricing line on specialized collections like historical, fine art and science than is possible with people, business and lifestyle images or are the declines the same overall?
AG - All lines of the entire business are affected by the same problem. Specialized collections like Historical and Fine Art including Sciences are all affected. As publishers and other users move their products to digital and Internet they require lower prices. These collections also have new concerns that may affect them more than other sectors, such as legislation on orphan works, collective management on plastic artists and restrictions from museums and national libraries. The future is not as clean as it seems.

JP If your revenue is growing is it because you are able to take market share from others or is there another reason?

AG - Growth is hard to define in this industry where everything is largely exaggerated and every defeat, every slice in photographers commissions, is presented as a victory - something that in the end is symptomatic again, but it is always easier to imagine the truth behind the glory rather than be aware of the actual reality. However my own growth is more a result of expanding the business to include new licensing models while protecting my existing ones, acquiring redistribution rights from other stock agencies and adding new distributors and not so much taking market share from others as there is still space for almost everyone.
JP - Even if your agency’s gross revenue is growing, are your individual contributors earning enough to justify continued image production?

AG - It is clear today that contributor earnings from one single source are not enough to justify continued image production without us helping them financially, concentrating on very specific and well tuned in individuals that understand market needs. The reasons are clear: the market is in the hands of the buyer and no longer in those that produce; while at the same time, business models that facilitate volume sales at lower prices have confused photographers. They can no longer cover the costs of new production and expect to earn a short-term profit that would enable them to generate a regular flow in production. And I see their point but there is more still:
While traditional stock agencies are coming up short in technology solutions --badly needed today--, they are guilty of entering into a war of prices by trying to cover with volume what is being lost in prices - a deadly hug, in my opinion.
We stock agencies are not explaining well to our photographers the dangers we are running into, and this is what has provoked the exodus of so much talent who have abandoned the industry and are now dedicating themselves to assignments and other endeavors more or less related to photography.
However, photographers also share the responsibility in all this as well. A large fraction of photographers have facilitated the present situation by acting like a disperse collective of people with a myriad of inconsequential opinions - most of them working against themselves. Photographers in general can hardly be a highly representative collective capable of negotiating framework agreements and stick to them. It is therefore impossible to create behavior standards, system standards and above all behavioral ethics. The same photographer can be publicly abominating extreme low prices while selling his/her own work as Microstock under an alias...

As a result image quality of traditional stock has gone from acceptable to mediocre or even to dreadful, and many good stock shooters are demoralized when they look at the sales reports and see some of the sub-prices we report to them. I can´t blame them, but I´m unable to resolve the situation in the short term because for a company like us a sale is a sale, even if it is a small sale.
Photography, photographs, photographers are going to be needed within, at least, the next 25 years. I don´t believe that motion (video) will ever substitute still photography, my best guess is that the motion market will grow and coexist with photography at 60/40 market split, 60% still images. Therefore if photography is here to stay, the present "status quo" will continue as it is now where low prices will stay, but the obvious requirements for producing better images to fulfill vertical markets that require reliable imagery in all concepts will force prices up for those images that are not only fantastic aesthetically but also fulfill all the requirements needed to offer final clients a product that they can rely on.
Rights Managed images are and will continue offering this reliability for very obvious reasons. The problem we have now is that we have almost destroyed the manufacturers of these great images. Restoring their confidence and creating for them the working field to produce outstanding images again is not going to be an easy task given the present status of both the market and the remaining stock agencies. However, I need to say that I´m killing myself to attend the needs of those that look towards the future and have stopped looking back.
Photographers too have to be educated in many aspects of the business that were not essential in the past, but that today are sharp swords that can conclude a photographers career in no time at all. This trend will continue because more and more refined tools to search in the web will surface emerging problems that may be at one point expensive to resolve.
The biggest problem that photographers present is business disorientation, lack of adaptation to a new business environment, giving more attention to the "toys" they handle than the market value of their images, precipitation in obtaining results very quickly no matter what kind of images are they producing, ignorance to legislations different than the country they live in. They tend to forget that they are selling their images globally and that legislation that protects them in their own country can leave them completely unprotected in another. The worst of all though is the lack of personal shooting style, lack of analysis on how to construct images to make them a desirable product that no client can miss.
We stock agencies are guilty for not offering to our photographers the information they need to find a path to better quality images that can be sold. I´m a great believer of RM licensing as we always have sold more RM than any other license, for better prices. We never have talked to photographers about market segmentation and how it affects the way you shoot.
Of course the general thought among stock agencies is why we have to teach photographers something that may help our competitors because photographers will place images non-exclusive everywhere. While the thought makes sense short term, in the long term it degrades the photography industry to the point that finally nobody knows what a good image looks like.

JPAre there positive solutions to this industry problem?
AG - The Aladdin's lamp does not exist even though we’d like to have one at hand and let the genius inside resolve the problems of stock photography today. However, in the years I have worked in this industry I have learnt a few things that have made age fotostock survive a number of industry crises. Obviously I´m still surviving, but in many other crises a light at the end of the tunnel was visible, something that it is not happening now so we are working by intuition. My approach the present status is based in following 10 commandments.
1. Understand that good photographers are essential for every agency if it wants to be in the market. But not so good photographers can improve if clear guidance and reasons why their images may not be so marketable as they think are given to them.
2. Being patience with photographers is key. They get so much input from so many corners in the business that they lose sight of the essentials. It is not what other colleagues say but how good their images are, without they becoming egomaniacs.
3. Maintaining the commission terms with photographers intact is my second one. We have been 50:50 since 1992 and we will continue being this way until the end that I hope it will be in the distant future. As a still active photographer myself I can understand both sides of the equation. It is appalling to see how companies finance their dreams at the expense of photographer’s income. 
4. Maintain personal private communication with photographers, with all of them, as much as possible and pay attention to what they say and if it makes sense adopt whatever they suggest.  If it is feasible, in short term otherwise include suggestion in the agenda for medium term developments. Private forums or social areas are key. Photographers have to feel that no others than the agency members are the ones that have the access to that private corner. 
5. Rejecting panic, impatience or losing morale in the business. Business is tough today but in so far you have the support of a substantial number of photographers that you can communicate well with, and one can resist their fears, criticism, comparisons, dreams and some inconsequential comments your company will be OK.

Photographers, the blood of the business, need explanations, closeness, market information, they need to see what sells and somebody needs to tell them why, and furthermore they need to understand that the company they are working with has a clear, defined path to somewhere and it is not running in circles.
6. Increase business efficiency by improving technology without becoming more impersonal than the very administrative tasks actually require.
7. Don´t be afraid to conclude volume deals with key market segments that obviously will buy volume but the final price to the photographer will be low, or very low. Be able to justify the reasons for selling volume instead of price to certain clients. Accept the criticism that surely will emerge understanding that some photographers don’t follow the market wave closely. Therefore, they are still anchored in the past evolution of stock photography.
8. Accept that some photographers will leave the company because they are attracted by other offers. There are always more photographers interested to get in than leaving you.
9. Marketing for the company is essential and it has to be done as well as possible. Abandon paper marketing and increase on-line. Dedicate as much money as you can to attract browsers and understand Google.
10. Resilience should be the rule of thumb of any stock agency today, at the expense of restructuring the company if needs be.
Those above reflect my line of thinking to stay in business, while I don´t know if they are positive, they have worked well for age fotostock through the years, but we have been adjusting them to adapt to market needs and evolution as much as the needs of the time.
I´ll see you in Barcelona in June.

Copyright © 2013 Alfonso Gutierrez. 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 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/cv.asp.  


  • Danita Delimont Posted Apr 2, 2013
    Well said Alfonso! As someone who has been in this business since 1980, I too, have seen the ebb and flow of the business, with new trends and players coming and going. Moving forward with positive energy, never forgetting it's the great photographers that make us all successful, is still the key. Bravo to you too for the 50/50 split, which we do too! Danita

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