Photographers who are licensing their images based on usage (RM) need to give some careful thought to the lag time between creation and when they are likely to see any money. This is particularly true if they are licensing their images through an agency as the lag time seems to be getting longer and longer.
For starters there is the time between when the image is delivered to the agency and when it is uploaded so a potential customer might be able to see it. More and more traditional agencies are in a situation where they are forced to cut costs. Often that means cutting editing staff and that slows new image upload.
But presuming that the image is where a customer can see and make a decision to purchase it, when is the sale of an RM image recorded or booked? Is it:
- When the image is downloaded
- After the fee is negotiated based on the use
- When the agency invoices for a use.
There can be days or weeks between the time the editor decides he wants to use the image and actually determines – or tells the agency – how he will use it so the actual fee can be established. It is my understanding that in the UK newspaper editors seldom tell image providers how or when they use an image. Instead the seller must thoroughly check every publication, every day, to see if and when any of the images belonging to them have been used.
It is also quite common for textbook publishers to wait for months after a book is published before requesting invoices to use the images in the book. This is a particular problem when the publisher is reusing an image from another title and the image seller has no knowledge that the other title was being created. We are also finding much more evidence of publishers forgetting to ever inform sellers of a reuse, or to request an invoice.
As staffers are given heavier and heavier workloads, and cash flow problems become more serious, delays in reporting uses tend to become longer.
Distributors
Rather than the prime agency where the photographer delivers his images licensing rights to use the image, more and more sales are being made by distributors. This adds an additional level of complication. If the distributor is having trouble paying his bills he may hold onto the money for a while before sending the required share of the fee to the prime agency. If the distributor is in another country it is very difficult to audit books or force the distributor to make payments.
- Does the distributor report each sale to the producing agency the day the sale is made? (This is hardly ever the case.)
- Does the producing agency learn of the sale prior to receiving its share of the fee?
- Does the producing agency only learn of the sale when they receive payment?
It is my understanding that distributors usually report sales when they are ready to pay the producing agent. Even then they don’t give the producing agent much information about who used the image or when the usage actually occurred. The report could come several months after the selling agency’s customer actually used the image.
Most customers are not invoiced the day the sale is made. Instead, to cut down on paperwork, I believe most agencies invoice their larger clients at the end of the month for all the images used during that month. Payment will come in the next month – maybe. A 45 to 60 day delay in payment (the float) is not uncommon. Seldom is an extra fee charged for a delayed payment.
Paying The Image Creator
Most producing agencies pay their image creators after they receive payment from their customer or distributor. Usually they pay monthly, but sometimes quarterly. Quarterly makes sense if the accrued earning are very small, but not if the photographer is owed several hundred dollars. If the payment from the customer comes on the first of the month in the best case the photographer won’t get to use his royalty share until sometime after the first of the following month.
Some large agencies report that they have booked a sale, at the end of the month after they have booked or invoiced the sale. However, they do not pay the photographer until the 4th month after the sale was booked. Their argument is that in some cases it may take them that long to collect the money and they can’t afford to be “fronting” money before they receive payment. Keep in mind that some of this money is coming from distributors and those sales are not booked until the agency has the money.
I guess it is only photographers who pay all their own expenses as they are incurred that can afford to front money for no interest.
I know of one major agency that in some cases has agreed to pay certain volume producers one month after they have booked the sale instead of the normal 4 months. However, they deduct 2% of the total amount owed as their fee for paying early.
Microstock and Subscription Comparisons
Many photographers that license their images based on use hate microstock because the image use fees are so low. (Check out
iStock fees.) Set aside for the moment the possibility that sales volume at these low prices may make up for many fewer sales at higher prices and consider the advantage of getting your money early and knowing which images are selling rather than waiting months and months and months.
Editing and upload is generally much quicker than will be the case with traditional RM or RF distributors. Sometimes image upload in the RM and traditional RF environment can be relatively quick if the imagery has a news element or the supplier is a large production company, but for individuals overall this can be a problem.
In order to be able to download an image from a Microstock or Subscription site the
buyer must have money on account. They must have either purchased a subscription, or credits before they can download. (The same is true for most magazine, newspapers and books publications. You pay before you get the product.)
With microstock payment can be made online with a credit card or PayPal account. With a $249 monthly Shutterstock subscription the customer can download up to 25 images a day for the life of the subscription. When the subscription expires the customer can no longer download images.
With the credit system at iStock the customer can purchase 30 credits for $49.99. At most other microstock sites customers can purchase smaller credit packages for lower prices. Customers slowly use up their credits as they download images. Quantity users can purchase larger credit packages (up to 1,000 for $1,465 at iStock) at a discounted per-credit rate. With special arrangements the customer can purchase even larger packages of credits at greater discounts.
At iStock images are priced based on the size of file needed rather than how the image is actually used. They have also created “brands” priced at different levels and slot images into brands depending on image quality and whether the image is exclusive to them. See
here. Currently they have 5 different price points.
But the important thing is that the seller always has money in his pocket before any image is downloaded.
When an image is downloaded money is immediately credited to the creators account. The creator can go online at any time and see how much he has accrued. The creator can request money at any time but must have at least $50 (in some cases $100) on account before requesting a payout. Money is transferred in a few days. Producers with a high volume of sales could be requesting payments daily. It has been reported that Yuri Arcurs was getting 4,000 downloads a day at Shutterstock before he went exclusive with Getty. Yuri has had over 1.5 million downloads at iStock in the past 8 years.
Some large customers are probably billed monthly and pay after the fact but I think they represent a relatively small part of the business. In any case the agencies cover this out of their share of the sales and credit the photographers immediately at download.
In addition there is seldom if ever a distributor cut. There may be some arrangement with distributors in small markets, but I believe in most cases the distributor simply gets a percentage of the agents share of the sales generated. The photographer’s royalty is based on the full price charged for each download and the total number of career downloads the photographer has had.