Index Reduces Photographer Percentage

Posted on 6/2/2001 by Jim Pickerell | Printable Version | Comments (0)

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INDEX REDUCES PHOTOGRAPHERS PERCENTAGE



June 2, 2001

Index Stock Imagery has sent a letter to their photographers asking
that they accept a reduced percentage of sales from 50% to 40% of net
revenues collected on Rights Protected sales.


In exchange Index is offering several incentives which are not totally
offsetting, but reduce the effect of the loss of percentage.


  • In the future there will be no catalog fees. Print catalogs only
    represent about 30% of the total company sales, down from almost 80% of
    sales when the current management acquired the company several years
    ago. Online sales are not dominant and over 90% of the images are
    delivered digitally.


    In the past about 5% of the total monies owed photographers have been
    deducted for catalog fees. Thus, on average, this would have made the
    photographer's net about 45% of gross revenue collected.


  • Index will now pay monthly instead of quarterly which should aid
    the photographer's cash flow.


  • Photographers are not the only ones being asked to take a cut. In
    the past few months Index cut their staff by 50% and overall operating
    costs by almost 50%. All staff have taken pay cuts and bonuses have
    been deferred for four months.


  • Index is also trying to re-adjust the percentages with foreign
    agents in those cases where Index is supplying the agent with a digital
    database and there is no need for the agent to store film or to mail
    expensive print catalogs as a means of promotion. Index has one deal
    with an agent who has agreed to take 30% instead of the traditional
    40%. In such instanced, under the new 60% for the home agency policy,
    the photographer would end up getting 28% of the gross sale instead of
    the traditional 30%.


    Unfortunately, many of the agencies attending the recent CEPIC
    international congress seemed to dislike having their percentage cut as
    much as photographers do. But, at least Index is trying to cut costs on
    all fronts.


  • Index is also asking the photographers to let them consider
    putting some of their images into RF. Currently, Index has about 5,000
    images in RF. They have about 600,000 Rights Protected images online,
    but only about 100,000 have ever been licensed. They intend to go
    through their entire database and determine if it would be better to
    license some of these non-selling images as Royalty Free. At that point
    they will contact each photographer and seek approval for specific
    images. No images will be put into RF without the photographer's
    approval.


    The photographers will receive 20% of RF sales which seems to have
    become an industry standard. In this process they will probably remove
    and return some images from the database when they believe the images
    are outdated, or redundant to better images in the file.


  • Through their new brand, Webspice, Index plans to offer a low rez
    photo subscription product similar to Gettyworks.com and Corbis'
    BizPresenter.com that will be aimed at power point users. Initially
    they expect to offer a subscription to about 5,000 images for an annual
    fee of $29.95 for personal use and $199.99 for a Premium Level. Users
    will receive a maximum file size of 200K for this fee. Photographers
    will be paid a proportional share of the total subscription fees based
    on the photographer's share of the total images in the "pool".


    Falling Percentages


    While no one likes to see their income drop, the reality in the current
    market is that costs for everyone are going up and revenue is dropping.
    This is not a case of the agency being greedy, but a financial
    imperative. Almost $30 million in venture capital has been invested in
    Index Stock Imagery and at some point those venture capitalists want to
    see some return on their investment, just like photographers want to
    see a return on the images they have produced.


    Index believes they can make the company profitable by the end of 2001.
    If they can't, and the VC's refuse to put in more money, then Index
    might be forced to close it's doors. This won't be good for anyone,
    including the photographers. 50% of no sales is $0.00.


    Index has said that if photographers can not accept the new terms they
    will be happy to return the photographer's images. Holding out for a
    higher percentage is not likely to force Index to change their
    policies. In the current market environment they simply can not afford
    to pay more. It should also be recognized that Index has many more
    photographers than they need. They can afford to lose a lot of them.


    Probably the best option for the photographers is to accept the new
    terms in order to keep the images already in the file working. When it
    comes to new productions photographers should explore ways of cutting
    their production costs. If that is not possible -- and even if it is --
    the photographer should also look for other ways to earn revenue such
    as assignment photography or something else.


  • 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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