Getty's Challenge

Posted on 1/14/2001 by Jim Pickerell | Printable Version | Comments (0)

366

GETTY'S CHALLENGE


January 4, 2001

There are widespread expectations among Getty photographers that early in

2001 Getty will offer a new contract to TIB photographers. It is also believed that the

terms in this contact are likely to be extended to all Getty brands. Thus the FPG, VCG and

Stone photographers are equally interested in this hoped for new contract.

Photographers want a single standard contract, with a single royalty rate, across all

brands. Getty recognizes what photographers want, and for months has been trying to find a

way to write such a single contract that would satisfy the majority of their photographers.

I'm not convinced they will be able to accomplish this task because they are faced with a

set of conflicting problems.

I believe the number one issue for Getty is that the total percentage of gross revenue paid

to photographers must not go up, and hopefully it can be reduced. In order to make their

business profitable at a level that will satisfy investors, Getty needs to cut costs. Their

biggest single cost of operation is the amount of gross revenue they pay suppliers.

This basic principle is in direct conflict with the image creators desire for a larger share

of the total revenue collected from the sale.

TIB photographers look at Stone photographers and say, "Why should they get 40% of gross

sales and I only get 30%?" They look at FPG photographers in the U.S. and say, "They get

50%, why can't I get 50% also." Getty now wants Stone photographers to allow them to market

some of their work under the TIB brand and pay them only 30%. Stone photographers say, "Yes,

I want more of my images marketed, but I am not willing to give up that much of a percentage

of sales to make it happen."

It appears that any royalty percentage that would appeal to a large number of suppliers

would dramatically raise Getty's cost of content. This is something they probably will not

accept.

Getty appears to have other problems.

  • They need new images, but a large percentage of their suppliers are sitting back and

    waiting to submit until they get a satisfactory new contract. If photographers are unhappy

    with the new contract terms some may allow the images they already have on file with TIB to

    remain in the files, but they are unlikely to submit new work.

    The question is how long Getty can operate without a steady flow of fresh images.

  • The lack of new agreements is making it difficult for Getty to publish some of their

    planned marketing materials. Getty has a strategy of putting out a series of subject

    oriented catalogs that they were calling "Special Collections" and were to be marketed

    through the TIB brand. Some of the subjects under consideration are: nature, wildlife,

    scenics, travel and sports. Some of the images they want for this series have been produced

    by Stone or VCG photographers, but Getty wants them to accept the lower TIB royalty

    percentage on these images. A number of photographers seem to be resisting which is playing

    havoc with the editing for these catalogs. Of course, long range this could affect the flow

    of Getty's marketing.

    Word on the street is that the "Special Collections" terminology is no longer being used

    internally as they look for new ways to get the photographers involved.

  • One alternative to getting contract photographers to work for a lower percentage is

    for Getty to produce the work in house. Getty has tried hiring young people right out of

    photo school to shoot new work under the careful supervision of experienced art directors.

    In such cases the photographer is paid a day rate, plus expenses and a minimal royalty. In

    at least one case they paid $800 a day plus a 10% royalty for 10 years.

    The main reason for paying a minimal royalty is so they can tell their other contract

    photographers that they don't "wholly own" much of the work in their files. Indications are

    that this strategy hasn't produced the desired results. Work produced in this manner

    evidently isn't selling well enough to offset the up front costs Getty is paying, when

    compared with getting the freelance photographers to absorb all production costs. Sources

    indicate that Getty has come to the conclusion that in house production is not a realistic

    solution, and that they need to do more to encourage the experienced freelance photographers

    who work for royalties to continue to produce and supply new images.

  • Getty is trying to give their separate brands unique visual identities from the point

    of view of the buyer. They have defined Stone as having modern, innovative, cutting edge

    imagery and TIB as having more conservative, classical imagery.

    Photographers are having a difficult time figuring out what the third distinctive for the

    VCG/FPG brand might be -- (a brand that also includes Bavaria, Telegraph Colour Library).

    So far Getty Images has not identified a third "brand" distinctive. There does not seem to

    be a clear third brand definition. Will they roll VCG into TIB and basically have only two

    brands? Will they retain the FPG brand, which has a strong user following, and basically

    brand it in the same way as they brand TIB without a major distinction between the two?

    One problem with this strategy is that Stone, TIB and the various VCG brands have all been

    in head-to-head competition for years. All are currently perceived by the buyers as

    offering a full range of quality imagery from innovative cutting edge to conservative

    classical. Moreover, individual photographers associated with each of these brands, from

    time to time produce images that would fall into the category of one or the other "new"

    brands.

    Now, Getty has to change the way they accept images for these brands, as well as the way

    they market the brands to the buyers. In the past, each of these brands showed the full

    range of work of their photographers. Under the new branding it will be necessary for

    photographers to cross from brand to brand in order to market everything they produce.

    Adding to the complexity for the photographers, each brand has different contracts and

    different royalty percentages.

    Getty needs to work out a simple system that will enable all their photographers to offer

    work to whichever brand is most appropriate to the images that have been produced. This

    argues for a single unified contract, and possibly unified editing, as well as one royalty

    rate.

  • One argument Getty may be able to use with Stone photographers is that fees per usage

    are going up. Therefore, they will make money at existing percentage rates. However, TIB

    photographers report there doesn't seem to be any rise in their average fee per usage. If

    anything, the fees per use, as well as the gross royalties received, seem to be dropping.

    Therefore, the above argument would be unlikely to hold much water with TIB shooters.

  • Can Getty offer a higher percentage, but take the money back in fees for various

    services provided? I think this is unlikely to work, particularly in the near future.

    Photographers are very sensitized to the amount they are losing as a result of fees being

    charged. While the total impact of such fees are often difficult to calculate until after

    the fact, photographers, especially those with previous experience with TIB, will be wary.

    Getty's recent effort to play catch up with Stone catalog fees has angered many

    photographers. Stone allowed catalog fees owed by photographers to accumulate for almost

    two years without taking deducting any portion of the amount owed, or even telling

    photographers how much they owed. The photographers could have accepted small deductions

    each month, but in the last four months of 2000 Stone deducted fees from the photographer's

    royalty checks in an effort to totally catch up on the debt. This left many photographers

    with small checks at the end of a difficult year, and a clear recognition that they must be

    concerned about fees as well as royalty percentages.

    In theory, catalog fees would be the perfect way for Getty to get more money out of the

    photographers. They can set the per-image cost at almost anything they want because there

    is no transparency to the numbers. On the other hand, lately they have pushed this

    per-image fee so high that it is hard to imagine that photographers would not rebel at even

    higher fees.

    Predictions

    I believe Getty will repackage their contracts in an attempt to find a way to make them more

    palatable, but I believe they will face a lot of resistance from many of the most productive

    photographers until they offer a single royalty percentage across all brands. To gain much

    acceptance that percentage would have to be at least 40% -- and even that may not be enough.

    But, as I have pointed out, I believe it will be very difficult for Getty to offer an across

    the board 40%. Consequently, I expect them to go through several variations trying to find

    something that a significant number of photographers will agree to without having to raise

    the percentage.


  • Copyright © 2001 Jim Pickerell. 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 301-251-0720, 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/Curriculum-Vitae.aspx.  

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