Holding The Pricing Line

Posted on 4/16/2013 by Jim Pickerell | Printable Version | Comments (0)

In recent discussions with agents operating in Europe it seems that it has become impossible to hold the line on pricing. They say there is always a competitor willing to undercut any rate.

At one point agents had exclusive rights to the images they represented. Then they could refuse to license if the customer was unwilling to meet their price. But increasingly sub-distributors representing works supplied by many different agents are the ones doing most of the licensing. The negotiators at these large distributors have been instructed to, “Never lose a sale.” For the most part, direct contact by the seller with image creators, and an understanding of the creator’s dilemma, no longer exists.

There has been a race among agents to get broader distribution around the world of the works they represent. The theory is that some clients prefer to deal with one distributor and other clients with a different distributor. Thus, to make a given image available to all potential customers the image needs to be in the collections of multiple distributors, often several in the same country.

In addition, as revenues have declined, in an effort to increase sales photographers are putting their images with multiple agents in the same territory.

Clients have also become more comfortable with the idea of licensing an alternative image – even ones that are not of as good a quality – or even rewriting the text of their products in order to use a cheaper alternative image. A few agents have had some success holding the line when certain contributors stipulate that their images cannot be licensed below a minimum price. However, most agents refuse to represent images if this is a condition. Clients complain about these higher fees but will ultimately pay if the contributor’s image is unique and not available anywhere else. Unfortunately, very few images meet both of these criteria.

Germany used to be one of the last bastions for holding the line on pricing. The BVPA (German Association of Picture Agencies) conducts an annual pricing conference where guidelines are discussed and published. However, my sources indicate that more and more those attending these conferences claim to get higher prices than is actually the case, and then everyone undercuts the BVPA listed prices.

Most companies seem to be licensing more images than was the case a few years ago, but average prices are so much lower that gross revenue is declining. And more work is required by the agents to make the sales. Clients have cut staff and now expect agents to do more of their research. In addition, deadlines are incredibly tight, even for long, complex lists. Clients also demand rescans of images at larger sizes. All of this costs the picture agency more, while overall income declines.

There was a gradual reduction in the average price until about 2010. At that point, in the education market particularly, instead of trying to push prices even lower, clients held the price but increased the rights they wanted. While this steadied the drop in average picture prices, agents will lose out in the long run on re-uses and re-licensing for subsequent editions.

While the gradual eating away of prices is an important issue, European agents see the big game changer as the push to pay one fee and then have free rein to do whatever the publication wants with the image for as long as it wants. This started with US educational publishers but has now spread quickly across the entire publishing market.

Some have argued that it is easier to hold the pricing line on specialized collections, but the people I talk to say this is seldom the case. They claim that even high-profile clients known for the quality of their products are pushing on prices and rights. The other consideration with specialized and vintage imagery is that the subjects are not usually in high demand. Nevertheless, agents are still forced to invest a lot of money in storing, researching and archiving vintage imagery. Often after careful editing the agent will digitize and preserve hundreds of images from a particular collection and be lucky to license 10% of the images. The work involved relative to the number of potential sales is also true of other specialized subject matter that has limited interest to certain niche markets.

Another problems for the vintage image provider is the many museums have made their high resolution images available for Google search and use as part of Wikipedia entries. Clients have started using these sources without a second thought.

One agent pointed out that many of their photographers spend significant amounts of their own money and, in some cases, risk their own lives to travel to little-known and barely accessible parts of the world to photograph with the best equipment they can afford. Their costs have gone up just like the costs of the agents.

But since it is so easy today to take a photo on a phone, clients assume professional photographers put a similar amount of effort into the pictures they take. As a result clients are not willing to pay a fair price for the images they need. “Most of our contributors have to look to other, non-photography-related, avenues to supplement their income. I can foresee a number of them giving up photography altogether as the amounts of money they make decline,” the agency concluded.

Be sure to attend the CEPIC Congress in Barcelona on June 11-14, 2013 where there will be more discussion of this important issue.

Copyright © 2013 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 301-461-7627, 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/Curriculum-Vitae.aspx.  


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