603 INCREASED IMAGE USE?????
January 2, 2004
Economists expect the U.S. economy to be better in 2004 than 2003 and 2003 wasn't all
that bad. Does that mean that sales of stock images will increase? Jonathan Klein
expects Getty's growth in 2004 to be between 8% and 12%. Some of this will be due to
price increases, but he also says Getty will sell more images despite the declining
trend the company has experienced in the past five quarters. (See statistics in Story
Lots of people are very bullish on 2004, but as an industry skeptic I'd like to offer
some things to consider before you run out and pile up debt betting on future growth.
I've been wrong before, and I hope I'm wrong this time, but I don't see the rosy
picture ahead of us that many do. Unfortunately, in most cases there is no solid
indisputable answer to some of the most critical questions, but that doesn't mean we
shouldn't consider the questions.
I've always taken the position that it is better to PLAN for the worst and be
pleasantly surprised when it doesn't materialize than to HOPE for the best and face
disaster. With that said, here are a few things to think about.
Things To Consider
One of the trends we see at Getty is a decline in the number of images being licensed
over the last year or more. (The trend is worse for RM than RF, but it is down for
both.) For part of this period the overall market was flat, but recently we've seen an
upward trend in sales for many industries but, as far as I can tell, not an upward
trend in the use of professional imagery. Getty's experience may not be representative
of the stock photo industry as a whole. My guess is that most other companies have been
seeing a bigger decline in usage than has been the case at Getty.
It is comforting that Getty has been able to offset declining volume with price
increases, but there is probably some limit as to how much prices can eventually be
increased. The long term health of the industry depends on finding some way to increase
When it comes to price increases in the RF sector a case might be made that companies
may be close to the maximum they can raise prices without losing ground to the
"Subscription Model" RF offerings. So far it is very difficult to get any handle on how
many images Subscription buyers are actually using, or if these buyers would have
purchased regular RF if it were still at its old, lower price points.
But the key questions are: Will there be a turn-around, and growth, in the number of
images used? Or, are their reasons why we may not see the same type of growth in image
use that we have experienced in past economic recoveries?
Technology has been a boom to the stock photo industry in many ways, but it may also
have brough with it some unwanted side effects that may partially explain declining
There are signs of some fundamental shifts in user demand that could mean the recovery
in the stock photo industry will not track with the recovery in advertising, or the
economy, as has been the case after previous downturns.
Image User Demand
According to Dr. Joe Webb, formerly of TrendWatch and now with
www.WhatTheyThink.com, despite the improvement in the economy in general the printing
industry in the U.S. is not seeing similar improvement. In October 2003 unadjusted
shipments of printed materials were $700 million less than October 2002. Shipments for
the year are down 2.7% compared with the previous year. There has been a steady trend
downward since late 2000.
Still photographers should keep in mind that their revenue is very tied to print uses.
Anything that causes overall printing to decline will eventually affect the average
still photographer's bottom line.
Dr. Webb says surveys show that there is now a clear disconnect between the growth in
Gross Domestic Product (GDP) and growth in the printing industry. Previously it was
assumed that printing was tied to GDP and as GDP demand grew demand for printing would
Why the disconnect? It used to be that there were two basic ways for consumers to get
information about products and services -- printed materials and television. When there
were only a few TV network outlet the cost of an advertising buy used to make it almost
impossible for anything but big national brands to use TV for promotion.
Now with the explosion of cable, and more special interest programming, more and more
advertisers are finding it cost effective to spend a larger portion of their ad budgets
on TV. That leaves less for them to spend on print.
There are other indicators that the use of printed materials may be on the decline.
The Pew Internet & American Life Project discovered that Americans seem to look
less to Magazines and Newspapers for information than to all other sources. (See Story
600 , page 15.)
The other information sources are not big users of still imagery, and
when they do use still photos the payments for usage tends to be less than in the
Dr. Joe Webb also points out that in the Internet age consumers get lots of
product and pricing information on line, without printed materials. He says that while
the economy is growing, print advertising is not and suggests that, "Perhaps they
(print advertising uses) have been permanently discounted? In the past when economies
had an upturn, we could always count on advertising going up shortly thereafter. We
may not be able to this time."
More companies are finding more efficient ways to advertise on the Internet.
Total online advertising in 2003 exceeded $6 billion. Online advertising at leading
media sites jumped almost 40%.
The big spenders in online advertising are no longer fly-by-night Internet companies,
but hotels, airlines, car companies, insurance companies, retailers and companies in
all the largest sectors of the economy. Consider any of the products that are sold
through Amazon.com, and the explosion of EBay not just for consumer to sell items they
no longer need or want, but as a retail outlet for many small businesses. More and more
companies are finding ways to promote their products that don't involved print. They no
longer need print as much as they used to.
A recently released Patrick Marketing Group report finds that 48% of marketers plan to
spend more on electronic advertising next year and 40% will spend more on online
marketing. If they are spending more on electronic, and their budgets don't rise
dramatically, there will be
Less Spending On Print.
When advertisers use photos on the Internet to promote their products or services
there are four reasons why they tend not to pay as much for such usages as they might
have paid for comparable print usages.
1 - If the photo is being delivered on the Internet the file size necessary is often
much smaller than that needed online. This means the buyer can often get by with the
cheapest RF resolution rather than paying more for a larger file size.
2 - Many uses have print and Internet components. The tendency is to price the total
usage based on the print component and do a small add-on for the Internet usage.
However, as print components become smaller and Internet components become more
dominant this will tend to reduce the overall amount that is being paid for
3 - There is a tendency among sellers to think that all Internet uses of images are
the same. Sellers are struggling to find a way to determine the likely buyer impact
that any particular Internet use might have and to develop a circulation based system
of pricing similar to what the industry has had in the print environment.
RF marketers would argue that circulation based systems of pricing are not important
and that the price should be fixed regardless of the circulation. But, there is no
denying that a huge percentage of the industry's revenue comes from prices based on
usage (I estimate it at about 75%). If we eliminate usage pricing and price everything
at the current fixed RF rates the Stock Photo Industry's annual revenue would drop to
about half of its current level.
There may be no good way to ever price Internet uses based on estimated eyeballs as is
the case with circulation pricing. This may mean that the overall revenue from stock
photography is destined to go down, down, down.
4 - The hotel use example we discussed in "Hidden Internet Uses" (Story
600 , Page 15)
clearly illustrates the problem. Through linking a single promotion or advertisement
can get much more extensive exposure than is likely from any printed piece, and the
degree of that future linking is impossible to determine at the time the image is
In one example an exterior view of a hotel was placed on the hotel's web site. It was
later discovered that this images was on 155 separate Internet portals in the U.S.,
Canada and the UK that were marketing rooms for this hotel. In the print environment
multiple insertion fees would be established for such uses, but this kind of pricing is
certainly not common when discussing Internet uses.
It is also likely that when the commitment was made to use the image the buyer
probably had no idea as to the number of portals where it would eventually appear. The
buyer is not buying space on these portals, but giving up a percentage of revenue on
any sales made by the portals. The image seller is caught in an impossible bind, if he
wants to price based on eyeballs.
As this type of advertising becomes more widespread, and effective, it is likely to
mean less revenue for the stock photo industry.
How Usages Are Changing
Even when we look at print advertising usages, there may be changes in the industry
that will cause a reduction in the number of images licensed.
Some sellers have noticed that there may be a greater tendency to use high paid
celebrities in advertising. Thus, while total advertising revenue may not be falling,
on the creative side the fees for these personalities may be eating up a bigger share
of the creative budget leaving less to spend on still images.
There may be more of a tendency to develop large campaigns using a variety of
media targeted to reach certain segments of the population than was the case in the
past. This could mean selecting fewer images and making more use of each one. That's
not bad if there are additional fees for each use. But, there may also be a tendency
to offer volume discounts when the same image is used in many different ways. This
could mean lower revenue overall. If the buyers choose RF images for such campaigns
then the discounting is built in.
In the process of getting information to consumers, marketers are finding that
it is more effective to make more of the Internet and put less information in
brochures, or printed pieces that are mailed to consumers. This may lead to a decline
in the use of brochures for marketing.
Rising postage costs also tend to make print a less viable advertising medium.
How Do Customers Get Their Images?
Customers, almost exclusively, want to receive their images digitally. In many cases
the only thing they are willing to look at is digital images. This is partly because
they need a fast way to determine what is available. Digital gives then this option. In
addition suppliers are finding that because they receive so few requests it is no
longer cost effective to maintain and search analog files. This limits the choices for
Isn't that good news? Maybe. But in the last few years a huge percentage of the images
that were formerly available to customers have been removed from the marketplace.
Consider that Getty and Corbis alone acquired over 140 million images. Only a small
fraction of these are now available through the web. The rest have either been returned
to photographers or for various reasons are inaccessible.
When it came to choosing the images to scan and put on the web these companies tried
to pick the ones they believed would be in greatest demand. But, many images that were
rejected are ones that some customers would like to buy, and these images are not now,
nor are they likely to ever be, available on the major portals.
One of the issues is will customers be satisfied with an available second choice
rather than trying to find the image they really wanted? And what options are available
to them if they are not satisfied with second choice?
The fact that some art directors are "googling" to find images (See story
598 , page
10) is an indication that they are not accepting what is offered on the major portals.
What they tend to find by googling is not images from stock agents or professionals in
the business of selling stock images. The images that tend to come up in a google
search are ones that have been posted for other purposes by people who are not
necessarily focused on making money by licensing rights to their images.
The Internet offers a way of finding resources for very specific subject matter that
simply was not available a few years ago. As a resource it is also likely to get better
and better. It will be very hard for archives that focus on offering general interest
images that would be useful to a larger segment of the buying public to ever compete
effectively with the specific knowledge and resources of the people with imagery in
The main question will be whether this loss of customers will be significant, or not.
The number of professional buyers who actually find something they can use in this way
may be very small. And there will undoubtedly be a lot more hassle for the customer in
obtaining imagery from these unsophisticated sellers. However, on the plus side for
buyers is the fact that they will be dealing with people who really know their subject
matter. If the buyer needs detailed caption information she is more likely to get what
she needs from a google source than from a general interest stock archive. In addition
the buyer will often be able to get the images for a lower fee from the
non-professional sellers by saying, "Our standard honorarium is ___."
I think this resource is likely to be of particular interest and use to book
publishers and low budget special interest magazines. Only time will tell how much
impact it will have, but professional image sellers should be careful not to discount
this as unimportant.
Another thing that may happen is that more and more photo user may start
creating images themselves rather than buying from a professional source. Digital
cameras make it easier and easier for amateurs to produce professional quality images.
Canon sold about 1 million SLR's with interchangeable lens in 2003 and estimates sales
of 5 million in 2006.
If image users are having trouble finding an image that works then it may be simpler
to shoot the image themselves and let their graphic designer manipulate it in
Photoshop. Many graphic designers may find that often it makes more sense for them to
create the images they need themselves, rather than getting a professional photographer
Anyone considering any type of print use today needs a digital file. They are
not going to be anxious to work with someone who is supplying them with film, given the
hassle they must go through to turn that film into a useful digital file.
So lets sum up. The threats to increased still image use are:
Demand for printed products is down and no longer tied to trends in the economy.
Consumers get more of the information they need from non-print products.
Consumers get more product and pricing information from the Internet.
Still photo demand is very dependent on the use on print products.
Expansion of cable encourages more TV advertising and less print.
Internet use is likely to increase.
The pay for use of still photos on the Internet is less than in printed products.
There is no good way to increase the fee-per-use for images on the Internet.
The growth in image use on the Internet is likely to be for video, not stills.
Print users are spending a greater share of their budgets on celebrities.
As print campaigns get more complex the actual price-per-use is likely to be
discounted compared to single use pricing.
Many of the images some buyers want to use are no longer easily available.
Consequently, buyers are looking for other ways to find the images they need.
By "googling" print users are finding images outside of the normal sales
Rising postage costs encourages more use of the Internet for distributing
information and less print.
This isn't bad news for everyone. Some individuals and companies will prosper as they
capture market share from the less efficient. But the total market for still images may
get smaller. The number of photographers who can develop, and maintain, successful
stock photo businesses is likely to decline.
It seems clear that the long term the trend is toward greater Internet use for
communication and less use of print. Young people should also keep in mind that as the
Internet matures it is likely to make more use of video and less use of still images.
How long it will take for such trends to develop is anyone's guess, but it seems clear
that's where everything is headed.
In 1926, George Eastman told his employees, "The world is moving, and a company that
contents itself with present accomplishments soon falls behind." If Eastman thought the
world was changing rapidly in 1926, consider the speed of those changes today.
Individuals and companies in the photographic industry should heed his words.
Have a Happy New Year!