January 2002 Selling Stock

Posted on 1/3/2002 by Jim Pickerell | Printable Version | Comments (0)



Volume 12, Number 3

©2002 Jim Pickerell - SELLING STOCK is written and
published by Jim
Pickerell six times a year. The annual subscription rate is $120.00 to have the printed
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are reserved and no information contained herein may be reporduced in any
manner whatsoever without written permission of the editor. Jim Pickerell is also
co-owner of Stock Connection, a stock agency. In addition, he is co-author
with Cheryl Pickerell of Negotiating Stock Photo Prices, a guide to pricing
stock photo usages.

Thought For The Month

In 2001 Getty Images returned to their photographers almost 10 million of the 70 million images their
various brands had previously filed. Most were returned to Stone, Image Bank and VCG photographers. Massive
editing and return of images will continue in 2002. Corbis has also returned huge quantities of images, but
the exact numbers are not available.


January 3, 2002 (Story 450) - Now is a good time to start your planning for 2002. The following are a
few resolutions for photographers and stock agents to consider.

Before itemizing the resolutions there are a few quick facts to keep in mind.

    -- More and more customers, particularly in the U.S., are finding the images they need by using digital
    search techniques.

    -- A huge number of images that customers want to buy have been returned to photographers. Getty says they
    returned almost 10 million images in 2001. Corbis isn't giving numbers, but they have returned a huge amount
    of imagery as well. Much more will be returned in 2002 and beyond.

    -- Many photographer will be looking for ways to put the best of these returned images where buyers can
    find them once again.

    -- In these bad economic times advertisers are becoming more conservative. They are moving back to basics
    and using more classic imagery that expresses concepts like joy, serenity and domestic bliss. It is this
    imagery that the agencies have been dumping and returning to photographers. The edgy, gritty urban scenes
    (that have populated so many of the new catalogs) may be on the way out according to a Dec. 20 article in
    the Wall Street Journal.

    -- Photographers want more control of their work.

Resolutions For Photographers

  • Edit the images that are being returned and get the best of what you have already shot online where
    buyers can see them.

  • If necessary, cut back on new shooting in order to concentrate on getting existing work where it can
    be seen.

  • Make sure the work that goes online is keyworded effectively. (See Keywording story,
    445 ).

  • Put the same images on multiple sites to spread your risk and test new marketing strategies.

  • Maximize the variety of images you offer for customer consideration. Consider uploading relatively
    small files for client selection and preview purposes and generating hi-res scans on demand.

  • Post single images of lots of different subjects rather than multiple slight variations of a few

  • Make direct relationships with agents in various countrieswho will handle the negotiation of rights
    and the collection of fees on your behalf. (Initially, you may have trouble finding agents who will agree to
    represent images you have posted on one of the Technology Service Provider sites, but expect the number of
    agents who are willing to operate in this manner to dramatically increase in the near future.)

  • Look for ways to retain more control of your work.

    Resolutions For Stock Agents

  • Get as many images as you can online, and on multiple sites.

  • In order to maximize the number of images available for viewing, consider making low res files
    available for customer selection. Generate high-resolution scans on-demand and clean then up only when
    customers actually chose to use specific images. Using this strategy it will become unnecessary to spend the
    time making high resolution scans and cleaning up the tens of thousands of images that are made available
    online for buyer consideration, but which are never selected for actual use.

  • Make sure every image that is placed online is keyworded well. (See Keywording story,
    445 ).

  • Take advantage of the opportunity offered by Alamy to create image "Collections" that would be of
    interest to your customers. You earn a percentage of sales of these images simply by creating the
    collection. By promoting these collections to your customers, you can increase your revenues. Other sites
    are expected to offer similar services soon.

  • Consider new business models as an alternative, or an add-on line-of-business, to the traditional
    agency model. (See Modify Your Business, next story.)


    A New Business Model For Stock Agents

    January 3, 2002 (Story 451) - It's time for stock agencies to consider a new business model as an
    alternative, or add-on line-of-business to the traditional agency model.

    To explain this model it is important to dissect the stock agency business and examine eleven different
    activities in which a stock agent normally engages. They are:

      1 -- Recruiting photographers and image suppliers

      2 -- Initial editing of the collection

      3 -- Storing images

      4 -- Editing and Research for customers

      5 -- Marketing

      6 -- Produce catalogs and dupes for distribution

      7 -- Negotiating

      8 -- Delivering

      9 -- Refiling

      10 -- Collecting

      11 -- Paying Photographers

    In the new business model the costs of items 2, 3, 6, 9 are totally eliminated and taken over by the
    Photographer and the Technology Service Provider (TSP). The costs of item 1 and 8 are drastically reduced.

    The costs of item 5 are likely to be drastically reduced as some of these costs are borne by the TSP and the
    Photographer. However, it is not clear what the final balance of shared costs will be once this new model is
    fully functional.

    The main work of the Agency in this new model is then focused on doing Editing and Research for the
    customers, Negotiating, Collecting and Paying the photographer (Items 4, 7, 10 and 11).

    Photographers Seeking New Models

    Many photographers are seeing dramatic drops in their stock income. The old agency model is failing them.
    They are looking for new solutions that allow them to exercise more control over how their work is marketed
    and sold. They want to insure that their work is where it can be found by customers. They want to be able to
    better track image availability, and when sales are licensed. And, they are becoming much more conscious of
    the percentages various segments of the supply chain extract before the royalty is paid to the photographer.
    At the same time TSP's are emerging to assist photographers with some of these tasks.

    Photographers are willing to accept responsibility for putting images into an online database, making sure
    the image is properly keyworded, and paying all the fees for maintaining the image in the database. A
    certain level of promotion of the database is usually a part of the relationship with the TSP.

    However, TSP's tend to be weak in providing Editing and Research for the customers, Negotiating, and
    Collecting. Traditional agencies have a tremendous wealth of knowledge and experience in these areas. They
    have relationships with the customers and understand the customers needs. By shedding some of the more
    costly aspects of the old agency model and streamlining their operations many agencies should be able to
    operate more profitably on a smaller percentage of the gross sale.

    Photographers are looking for agents who are willing to handle negotiations and collections for the usage
    rights to images they have posted online. In most cases, for providing this service the agent may retain 20%
    of the fee collected before paying the TSP their rightful share and submitting the balance to the
    photographer. (In some agreements the total would be paid to the TSP and the TSP would pay the

    If the Selling Agent only receives 20%, the photographer must have available online, for immediate download,
    a file large enough to satisfy the needs of the customer. If it is necessary for the agent to go back to the
    photographer to obtain a larger file, or to deliver film, the Selling Agent is entitled to keep an
    additional 15% of the fee collected.

    When a customer finds a photographer's image he or she inputs their location and the contact information of
    the Selling Agent authorized to "negotiate" the sale in that territory is provided. The TSP does much of the
    marketing that brings the customers to the negotiator.

    The arrangements between photographer and agent would be non-exclusive. Since the agent has no costs of
    maintaining files the photographer would be allowed to terminate the arrangement for cause at any time.
    Termination would take place when the photographer notifies the agent and changes the information that
    appears on the web site. The agent would remain responsible to pay royalties for any transactions in process
    at the time of termination.

    As part of the agreement the agent would report information relative to each specific license as soon as the
    license is negotiated. The form of this information will be specified by the Technology Service Provider.
    The agent is also required to provide information as to when the fee is actually collected and when payment
    has been made to the photographer. The agent will not be required to pay any portion of the royalty until
    the fee has been collected.

    Promotion of such a database, would be a separate issue. If the Selling Agent promotes the database then the
    agent might receive an additional percentage of the fees from the licensing of the images. This would be a
    matter of negotiation between the Photographer, TSP and the Selling Agent.

    Getting Started

    Selling Stock is developing a list of companies interested to working with photographers and representing
    them on a basis similiar to that described above. U.S. photographers, in particular, need to find companies
    outside the U.S. that would be willing to represent them. All companies interested in receiving more
    information about this business model are invited to contact Jim Pickerell at Selling Stock by sending an
    e-mail to jim@chd.com.

    Small companies, as well as large, can serve in this role. The principle requirements are that someone with
    the company have experience in negotiating stock photo usages, that there is someone available to assist
    customers and negotiate during normal business hours, and that the company have a reputation for honesty.

    The major need is for people who have a good working relationship with the customers in their territory.

    Specialists agencies that have relationships with customers in a niche markets of the photo industry, and
    knowledge of the needs of that group of customers can particularly benefit from this type of relationship.
    The TSP's give them access to a broader collection of work at no additional cost. This should help them
    better satisfy the needs of their customers.


    December 14, 2001 (Story 446) - In the last few months Getty Images has been struggling with the
    integration of the many and varied accounting systems that they acquired when they purchased Visual
    Communications Group (VCG) in March 2000. These problems began to come to light in the summer of 2001 when
    they started the migration of data from the old accounting systems to their new Oracle based Alliant
    accounting system.

    This resulted in multiple sales and payment reports to photographers raising the level of photographer
    concern about the accuracy of Getty's reporting. It is important to note that payments to Stone, TIB and
    other non-VCG photographers were not affected by these problems.

    In late November and early December Getty took the unusual step of arranging conference calls with VCG
    photographers. CFO Liz Huebner and two VP's of Finance were available to answer questions. They emphasized
    that, "We want our photographers to know that getting them paid, and putting in place new systems to prevent
    such problems from recurring, is a top priority for Getty Images."

    Huebner acknowledged that, "we underestimated the difficulty of the first part of this transition. We didn't
    allocate enough people at first, but we learned from our mistake. We are moving through the second part of
    the transition with many more people and resources in place to be sure every transaction migrates properly
    to the new system. We have now made this a company-wide effort, and have dedicated our entire internal audit
    team to royalties. Although we can expect some typical problems that occur whenever a new system is put in
    place, we're confident that we won't incur problems on this scale again."

    For over a year Getty has been cutting staff throughout the company and particularly at VCG. They refused to
    tell Selling Stock the number of staff in accounting at the time of the acquisition and or how many were
    remained at the time these problems began to manifest themselves. However, it appears they may have cut way
    too fast and the remaining staff were simply overwhelmed by the work load. Nevertheless, now they seem to be
    bringing the necessary people resources to bear to deal with the problem.

    Roger Ressmeyer, VP of Strategy & Corporate Development, has said that the current problems will be
    corrected by the time the December statements are mailed. He continued, "We are well into the transition
    process, which should be largely completed by the middle of 2002. We have an extensive team of employees,
    consultants and experts working on the project to assure that nothing is "lost" in the process. Continuous
    audits will assure that any problems in transition are detected, reported and corrected. If photographers
    find something on their reports that we haven't yet caught, that information can help as well, especially if
    it is submitted to us right away."

    Some photographers will receive two sales reports a month until the transition is complete. Some of the old
    data will not be imported into the Alliant database and the old systems will be used until photographers
    have been correctly paid for all sales made through the old systems.

    One thing that has added to the confusion is that under the old systems photographers were issued a sales
    report in the month after the sale was booked, but paid after the fee was finally collected from the
    customer. This often made it difficult to compare a reported sale with a payment.

    Under the new photographer contracts a new payment policy has been put into effect. A sales report and
    royalty statements will now be issued in the month after the sale is made. Checks will be mailed 90 days
    after the reports regardless of when the customer pays Getty, and will match the sales statement. This
    should make it much easier for photographers to track when sales have been paid.

    During the conference call CFO Liz Huebner said, "our new systems are integrated, so the company can't
    recognize revenue until the sale is recorded and flows through to royalty payments. Among other reasons, we
    are highly motivated to pay every photographer properly so we can recognize the revenue. This is just one
    more way that our interests are aligned with those of our contributing artists."


    When Getty acquired VCG each brand had its own accounting system with data formatted in many different ways.
    There were a myriad of unique conditions and special contracts. Sales were reported in the local currency of
    the country where the image was licensed and often the currency used was not clearly indicated.

    In the process of migrating this data some agent sales were inadvertently entered at the gross sale figure,
    rather than after the agent's split, overstating the amounts received from sub-agencies. Once this was
    recognized it was necessary to cancel transactions within the system and input revised transactions. This
    unusually large number of cancellations created concern among the photographers. Getty says, "We are
    auditing all cancellations to make sure they are entered at the same royalty rate as the original

    Roger Ressmeyer says, "In the short term, while new systems are being phased in, there are more
    cancellations and more confusion than usual. This will unfortunately continue until the transition is
    complete. If a photographer finds something on a report that seems incorrect, we would like to hear about it
    immediately. This can be accomplished by e-mailing anthony.harris@gettyimages.com. We greatly appreciate
    this kind of assistance."

    Other Problems

    Among the other problems that have concerned photographers are:

    Response Time - Getty has been slow to respond to some photographer complaints. However, we have
    received a few reports from photographers that indicate Getty may now be responding in a more timely manner
    recently. Based on this evidence, I advise photographers who might have given up in frustration to try once

    Ressmeyer assures Selling Stock, "We are keenly aware that we need to improve our service response times
    with photographers. While we currently respond to many photographer inquiries within 24 hours, and many more
    within a week, we need to do better. Any photographer with a longer standing issue should contact Anthony
    Harris (anthony.harris@gettyimages.com) so he can make sure the inquiry is elevated to the Artist Relations
    priority list."

    No Longer Representing Certain Images - Some customers are being told that Getty no longer represents
    certain images that are in some of the VCG catalogs.

    Ressmeyer said, "Periodically our collections are reviewed to ensure that client searches produce relevant,
    saleable and, where applicable, contemporary results. This process requires us to remove some of the older,
    poorer selling images. For this purpose, two large reviews of the TIB and VCG collections were undertaken in
    recent months, as our contractual relationships allow. Images in older VCG catalogs have either been removed
    from the collection as part of our review process, or are now in our production department being prepared
    for upload to the web. This process of scanning, retouching, and keywording older catalog material will be
    completed over the next few weeks."

    In the past year Getty has returned almost 10 million of the 70 million images they claim to represent,
    mostly to Stone, Image Bank and VCG photographers. Ressmeyer says returning images will continue to be a
    major effort in 2002. Because the images are filed by subject and must be resorted by photographer, the work
    is tedious and painstaking, but it is ongoing.

    Ressmeyer emphasized that photographers with image-exclusive contracts are free to market the returned
    images elsewhere, as long as the image is not a similar to any that remains in the collection. "If a
    customer contacts Getty to license an image that has been removed from a catalog, we do our very best to put
    the photographer in touch with the customer so the artist can complete the transaction," he continued.

    Falloff in Sales - Many VCG photographers have seen a substantial falloff in sales compared to what
    they were earning a year or two ago. Part of the answer to this seems to be that until recently many of
    these images were not available on the Getty Images site.

    Ressmeyer says, "Since core VCG images are now web-enabled on the new, international Getty Images site, we
    are confident that VCG sales will follow the same healthy pattern that Stone and TIB have enjoyed. Some
    photographers' sales have diminished and others' have increased in all our brands, as has always happened in
    the industry. Royalties for specific images and styles have always fluctuated, driven by changing customer
    tastes and needs, by the overall economy, and by the submission and acceptance rates of individual artists.
    Photographers who are working to meet customers' needs, as articulated by our art directors and editors, are
    seeing the most revenue growth."

    Bavaria - In October 2000 the creative department of the Bavaria brand was closed and future editing
    moved to Getty Images in London. Since that time many photographers and stock agents who had images in
    Bavaria catalogs have had trouble getting paid for uses, and in finding out when their images would be
    returned. The telephone number 89-98339-146 was provided, but answers were not forth coming when this number
    was called.

    The old systems for VCG's European brands didn't produce sales advises in the months when there weren't any
    sales. The new Alliant system will issue a report every month for every photographer, even if there has been
    no sales activity for their images. Getty's records for every month of the past year show payments to all
    Bavaria photographers who had sales. If any Bavaria photographer feels he or she is missing a sales report
    or payment, they should contact Maylene Lowe in the Royalties team (maylene.lowe@gettyimages.com) or Goranka
    Ferger in Artist Relations (goranka.ferger@gettyimages.com).

    The images of the Bavaria artists whose work is not being marketed are being prepared for return under the
    terms of photographer contracts.

    Planet Earth Pictures - Some (PEP) photographers had not received sales statements for one or two
    quarters. These payments have been delayed because the old accounting systems that dealt with them were
    increasingly unstable. Getty's transition audits detected these problem, corrected them, and at this point
    in time Getty has caught up on the delayed reports and payments. Additional audits are in process to make
    sure no other transactions go unreported or unpaid for any of Getty's brands.

    Getty Images has been open, honest and direct with photographers about these transitional problems and what
    they are doing to fix them. While this period has been very frustrating for many photographers, it appears
    that Getty is getting very close to a final solution in this area and that the new Oracle database system
    will be a major improvement over the accounting and payment systems of the past.


    November 9, 2001 (Story 441) - At PhotoPlus and the PACA International Conference meetings in New
    York the companies producing and marketing RF images were much more visible than ever before. At PhotoPlus
    there was a private meeting of RF producers with almost forty people in attendance. During the PACA meeting
    there was a panel of nine producers who discussed the state of the industry as they see it. However some of
    the most interesting information resulted from one-on-one meetings in the corridors.

    Prior to attending these events, I had estimated that total worldwide revenue from RF sales in 2000 was
    between $230 and $270 million, or between 18% and 21% of total stock revenue. (I believe total revenue for
    2000 was approximately $1.278 billion. See Story 410 ,
    July 2001 issue, for details.)

    Based on discussions in New York, my earlier RF estimates may be too high. Many RF providers believe I
    credited the leading companies with more revenue than they are generating. These RF producers are in a much
    better position than I to know what their competitors are doing. Totalling the numbers they provided I get
    approximate gross sales of $200 million, or 16% of gross industry sales.

    In his recent quarterly conference call Jonathan Klein told investment analysts that RF represented about
    1/3rd of Getty's "stock photography" sales. I originally interpreted that to mean 1/3 of "total" sales, but
    Klein's definition of "stock photography" doesn't includes all the Getty Images brands. The stock
    photography brands are: PhotoDisc, EyeWire, Artville, Stone, TIB, FPG, most of the other VCG brands, and the
    third party brands. The brands not included are: TIB Footage and Energy, as well as the editorial brands
    Allsport, Liaison, Newsmakers, OnlineUSA and the archival brand Hulton/Archive.

    This means that about 75% of Getty's total 2000 sales are covered under the term "stock photography". This
    puts total RF revenue for Getty Images in a range between $100 and $120 million. Thus, I now put my estimate
    of worldwide RF sales at somewhere between $200 and $270 million with the likelihood that the actual number
    is much closer to the bottom than the top.

    Where Was PhotoDisc?

    One of the most interesting things about the New York meetings was the conspicuous absence of PhotoDisc.
    While a PhotoDisc editor attended one meeting, no one with access to PhotoDisc sales data was present. All
    the other brands had key executives in attendance.

    Other recent moves at PhotoDisc are also worth considering. We reported in August (Story
    422 ) that Getty's
    U.S. scanning operation (primarily PhotoDisc) was closed. New scanning is expected to be done in London, but
    there is no evidence that London is ramping up for any additional work load.

    Just before the New York meetings Sally Von Bargen, originally President of PhotoDisc, announced her
    retirement. Mark Ippolito, originally VP of sales at PhotoDisc resigned. Clint Kendrick (originally
    PhotoDisc) and now director of customer service and sales in Seattle, and Gretchen Hundermark customer
    service manager at PhotoDisc were laid off effective the end of 2001.

    Competitors report dramatically reduced marketing by PhotoDisc. The company seems to have the attitude that
    they have such a dominate position and commanding lead in RF sales that they don't need to market and
    promote. They seem to expect that once buyers have bookmarked the PhotoDisc site they will never go anywhere
    else to look for images. They give the impression that they don't need to produce much in the way of new
    work because the buyers will be happy to use whatever PhotoDisc has to offer. These impressions, may not be
    an accurate reflection of real attitudes within Getty, but this is how most of the other RF producers are
    reading PhotoDisc's recent actions.

    This is a very attractive strategy in a down economy -- if it works. The company is able to cut costs
    dramatically, while sales continue at about the same level. The thing to watch is whether aggressive
    competitors, offering new content and aggressive marketing, will take market share from the industry leader
    or just each other.

    Market Penetration

    One of the hopes of RF producers is to take increased market share from the Rights Protected side of the
    business. They conclude that their must be a lot of room for RF growth if RF only represents 15%, to at best
    20%, of total stock revenue currently.

    What they often fail to consider is that there is a big segment of the market -- editorial -- that is not
    addressed by the imagery RF producers offer. The producers acknowledge that given the wide variety of
    imagery needed by the editorial market, it will never be economic for them to try to produce discs or single
    images that would have much penetration into the editorial market space. Thus to determine RF's market
    potential we need to focus our analysis on the advertising and corporate segments of the market where RF's
    strength lies.

    Based on statistics from PACA and CEPIC (see story
    410 again) I believe the advertising segment of the
    market represents about $400 million in sales in the U.S. and $180 million in Europe. If we assume RF sales
    are about $230 million worldwide, and close to 80% of those sales are made in the U.S., RF represents about
    45% of the dollars being spent in the U.S. market and 28% in Europe. It is important to note that these are
    dollar figures, not percentage of uses. RF's percentage of uses is much higher given the relative difference
    between the average price per use for RF and that of RP. If the RF sales figures are higher in total dollars
    then their market share and percentage of use is even greater.

    I believe RF use, as a proportion of total use, is beginning to plateau in the U.S. market. According to
    Trend Watch 80% of the creative pros in the U.S. download individual RF images from the Internet. Trend
    Watch also reports that 85% use RF CD's. There are very few new buyers to convert.

    If total uses are not growing, then it is unlikely that RF's share of the total market will increase. There
    is still room for RF to take an increasing share of uses from RP in Europe, but because the total market for
    the RF type of imagery is smaller in Europe, the growth potential may be less than many RF producers would
    like to believe.

    No matter how high the quality of the RF offering -- and it is certainly on an equal par with Rights
    Protected imagery -- there will always be customers who need images that are not available as RF. RF has
    focused on high demand subject matter and provides very little depth in some of the lesser demand subject
    areas. It is this depth and variety that many customers are seeking.

    In a high percentage of cases the additional cost to use an image is not a factor. That is why over 80% of
    industry revenue still comes from RP images. The image is more important than price, as long as the price is
    reasonable. Most customers recognize that the prices charged for Rights Protected images are reasonable --
    based on intended usage -- even though they are much higher than RF prices.

    Issue Of Concern For RF Suppliers

    As they look ahead there are a number of issues that appear to concern the RF producers. They include:

    Oversupply: They are concerned about an oversupply of RF. Every new entrant produces new discs that
    compete with all the existing discs that are already out there. They all recognize that sales made by new
    entrants are now taking more market share from the existing RF suppliers, than from the Rights Protected
    segment of the market as was once the case.

    Most RF sellers believe they can capture an even greater share of the total market for stock photography by
    further improving quality of their offering. They hope this will enable them to take an increasing share of
    the market from the Rights Protected sellers. I believe that from the buyers point of view, the quality
    level is perfectly satisfactory in both the RF and RP segments of the market. What it boils down to is does
    the specific image meet the requirements of the specific project. Customers will buy whichever image does
    the job the best.

    There is no single arbitrator as to what is "high quality" for ALL buyers. Every buyer has a different
    definition based on their particular need at the moment. RF tries to focus on those subjects that will be of
    interest to a majority of buyers, but at any particular moment there will be lots of needs their offerings
    will not fulfill.

    Broader Distribution: Most RF sellers are looking for more companies to handle the images they have
    to offer. In a typical retail model the more stores you have showing your wares the more product you are
    likely to move. Look for more Rights Protected agencies to start offering RF images on their web sites as an
    additional service to their customers, since they know their customers are going to make some use of RF
    anyway. If the RP sellers can get a percentage of those RF sales it will help them stay in business and
    support their Rights Protected business. In most cases the Rights Protected sellers will not develop their
    own RF brand, but will make deals with various existing RF brands to represent the images they have to

    Many photographers who offer Rights Protected images to their agencies will be unhappy with this move, but
    it probably is best for everyone.

      -- The RP agency gets a share of RF revenue without having any major cost of producing, scanning or

      -- The number of new RF images available, and the number of new RF suppliers, is limited. That is good for
      everyone if we agree that there is an over supply of RF content right now.

      -- The RF company has a chance of making additional sales from every additional outlet they add to their

      -- The RP company may be able to "sell up" RF customers to RP images when the customer can't find what they
      want in RF.

      -- The company that makes most of their money from RP sales may find it easier to justify doing some
      research for RF customers because they are not totally dependent on RF fees and they have a chance to
      possibly sell some RP images as well.

    Sales of Discs: When both RP and RF images are searched and delivered online much of the original
    convenience factor discs offered is lost. Some within the industry point out that one of the easiest ways
    for the RF sellers to raise prices is to stop selling discs and only offer single images. Eventually buyer
    would find it necessary to come back each time they needed a new image, rather than having a library of
    images available on their desktop. However, most RF sellers seem reluctant to do this because, right now,
    they need the additional revenue from the disc sales.

    There is a real possibility that as the recession worsens customers will make more use of the images on the
    discs they purchased years ago, rather than buying new images. No one doubts this possibility, but they are
    not prepared to deal with its likelihood. The greater a company's sales in the past the more likely they
    will be hurt if buyer psychology turns in this direction.

    Customers are tired of discs that have 100 images, but only 10 to 15 basic subjects and the rest of the disc
    filled with slight variations on the main subject. Customers say that if they are going to pay for 100
    images they want 100 really different images. To go in this direction would cost the RF producers more and
    make more images available for future use at no additional fee. It seems unlikely that RF producers will
    move in this direction.

    Given the changes in technology, it may be time for the RF industry to acknowledge that one aspect of the
    business model that worked well in the early 90's when online delivery was not practical may no longer be
    viable or beneficial. They need to recognize that disc sales could lead to the industry's downfall. There is
    little evidence that RF producers are willing to accept this thesis.

    Research: Research is becoming an issue. As more and more RF images of similar subject matter are
    available on the any given site, art directors must spend more time searching through the options to find
    what they need. Many want the seller to help them, and provide research. The problem for the RF seller is
    that their margins are so narrow that they can't afford to spend time doing research given the revenue they
    will get from the sale. No one seems to have an answer for this problem. They just hope it will go away.

    Production Costs: Production costs for RF are increasing as producers try to improve the quality of
    their content. In most cases it is taking longer to pay off this up front investment than was the case in
    the past. Many producers are finding they need to constantly feed new work into the system, just to keep
    their sales level. The growth curves that RF experienced in the early days -- and even one or two years ago
    -- are no longer there. Increased cost of production is eating into their bottom line. This may explain why
    PhotoDisc appears to be cutting back on production.

    Prices: All RF producers acknowledge that they are leaving money on the table. They know buyers would
    be willing to pay more for many of the uses they make of RF images. However, most feel there is no way to
    modify their existing pricing model. When sales volumes were steadily growing this was not a big issue. Now
    that they are leveling out, raising prices is a much more important issue.

    Most companies would like to raise prices, but few feel they can not do so until PhotoDisc raises their's.
    PhotoDisc is expected to raise prices somewhat in a couple of months. As soon as they raise prices everyone
    else will likely follow suit.


    December 12, 2001 (Story 444) - I'm getting more frequent call from very experienced stock
    photographers who can't get enough of their imagery where it can be seen by customers. They are trying to
    figure out what to do.

    When they send new submissions to their agencies almost nothing is accepted. Several photographers have told
    me that a few years ago when they would make a tightly edited submission of 400 images they might get 30% to
    90% of the images accepted. Now, out of a 400 image submissions of similar quality they might get 3 to 5
    images accepted.

    In addition, huge quantities of previously selected and filed images are now being returned to these
    photographers. A significant number of the returned images had been good sellers in the past. Now the number
    of each photographer's images available for licensing is drastically reduced. It has long been a "rule" in
    the stock industry that the more images a photographer has available for customer review, the greater that
    photographer's income is likely to be.

    Stock incomes for these photographers have dropped significantly. Some of the leading shooters with major
    agencies tell me their incomes are down 30% to 40% from what they were three to four years ago. Other
    photographers tells us that their current incomes from their major agencies are only 10% to 20% of what they
    were at their peaks in the mid-90's.

    Does this mean customers no longer want the kind of imagery these photographers produced so successfully in
    the past? NO! Does this mean that today's customers will only use RF imagery? NO! It simply means that
    editing strategies of some agencies have undergone fundamental changes in the past few years, and much of
    the imagery customers want to buy is no longer being shown.

    First, let me debunk the standard argument that this fall-off in sales is because everyone is using RF.
    Currently the total RF revenue worldwide is about 15% to 20% of all stock photo revenue. That means that 80%
    to 85% of the dollars generated from the sale of stock photos is for Rights Protected images. And, the
    overall worldwide stock revenue is only down very slightly from what it was a few years ago. There is still
    a huge demand for Rights Protected imagery.

    Personal Experience

    To deal with the issue of whether older classic images will still sell, let me outline a personal

    My imagery is mostly concentrated in the business and lifestyle areas, and much of it might be thought to be
    easily replaceable by Royalty Free. My stock income in 2001 is down 7% from what it was in 2000. Overall, my
    stock sales in 2001 are about 1/3rd of what they were in 1996. But, it is important to note that I have not
    produced a new stock image in over four years. All the images in my files are at least four years old, or
    older. These older images are still selling. Not as well as they did in 1996, but selling.

    More significant is what has happened to various segments of my stock photo marketing. (I have always
    pursued a diversified strategy and put my images with many agencies.)

    In 1996 my income from FPG, Stone and WestLight (now Corbis) were my 1st, 2nd and 4th best selling agencies.
    Combined they represented 39% of my total stock income. In 2001 the income from these three agencies was 10%
    of what it was in 1996. Certainly there are many factors that affected this. I'd stopped producing new work,
    never had many images in the catalogs, and RF was certainly having some impact on my sales volume.

    However, it is worth noting what has happened at my other agencies, all of which are smaller than the big
    internationally known companies. On average, sales for the five year period are only off 60%, not 90% as is
    the case with the big guys. Also, sales from some smaller agencies are better than others. Sales through
    Stock Connection (which has been heavily focused on digital marketing throughout the period) are only down
    30% for the five year period.

    My conclusion is that while sales are down from what they were in 1996, and are unlikely to return to those
    levels no matter how much I would ramp up production, there is still significant demand for the images I
    have produced in the past. The key is to get those images where they can be seen by potential customers.
    That means working with a variety of editors and companies that use different marketing strategies.

    Why Have So Many Editors Changed Their Strategy?

    The primary reason for the change is that the major companies have decided to make most, if not all, of the
    images they intend to license, available online. There are huge up front costs in doing this -- scanning to
    a certain extent, but mostly keywording. Given the cost involved, this strategy has necessitated limiting
    the number of images these companies are willing to offer to only those subjects that the companies believe
    will be in "high demand."

    What Should Photographers Do?

    Recognize that there probably no longer remains a single agency that is prepared to effectively market
    EVERYTHING you produce. In that past, that was the theory behind the big multi-national agencies. And, it
    worked for a many photographers for a long time.

    Now, those big agencies have decided that they only want to represent a very select few of the images any
    photographer produces. No one is out there saying, "We will effectively represent everything you produce,

    Find Other Outlets - Given the above, in order for any photographer to be successful, he or she must
    adopt a NEW strategy for marketing. If a given agency will only take some of the images then the
    photographer must find some other way to market the rest of the work.

    Stop beating your head against a wall. Give up trying to convince the big guys to return to their old
    marketing strategies. It's not going to happen. Accept these big agencies for what they are.

    Diversify - Get the images the big guys won't accept, or have discarded, into other venues where
    customers can find them. Concentrate on venues that offer online search. There is dramatic growth in the use
    by picture buyers of online search engines to find images.

    Keywording - Pay attention to keywording. Effective keywording is critical if images are to be found
    online. Keywording is time consuming, and thus costly. No one has found an effective shortcut. Those with
    shortcuts are usually doing poor keywording and their images are found less frequently by buyers. (See
    page 12 for more on keywording.)

    Keywording is a learned skill. Someone who has an aptitude for keywording and who does it on a regular basis
    can usually do a better job than someone who only does it occasionally. If someone else does the keywording
    for you, review the images when they are online. Provide suggestions for other words that are important.
    Work with people who will accept your input.

    Existing File - Focus on marketing your existing file. In the short term, focus your time, energy and
    dollars, not on shooting new work, but in getting the work you have already produced where it can be seen.
    The images you already have will generate income if buyers can find them.

    Trust Your Instincts - If you have been selling stock images for a while, and know that certain types
    of imagery have sold in the past, don't let some novice tell you those images won't sell in the future.
    Trust your instincts. Continue to produce and update the kinds of things that have sold well in the past.

    Don't assume that just because there are RF images of the same subject type, that higher cost Rights
    Protected images that fulfill the same requirements will no long sell. This is not the case in today's
    market. Rights Protected images may not sell as frequently as they did in the past, but when they do sell it
    may be for a lot more money.

    Editors - Every editor has a different sense as to what will sell. Editors have different life
    experiences and different cultural biases. Most editors have a customer base for whom they are editing that
    buys the kind of imagery the editor chooses. The more editors making selections from your body of work the

    More Control - In the new online environment photographers will be able to exercise more control over
    which images are made available. While they may still want to work through various agents who have special
    relationships with small groups of customers and provide custom services to those image buyers, the
    photographer will have a lot more say about the images that are initially made available for viewing. It
    will be easier for the photographer to track when sales have been made. If an agent does not pay promptly it
    will be easy for the photographer to restrict that agent's right to make future sales of the photographer's
    images and to easily transfer those rights to someone else.

    In many cases the photographer will be able to have more input on the pricing of the use.

    Site Marketing - Be concerned about how any site will be marketed. It is not enough simply to create
    a searchable database. There must be strategy for letting potential buyers know that the site exists. Buyers
    must be reminded frequently of a site's existence, and of new offerings.

    Trends - If you must continue to shoot, shoot what you know from experience will sell. Don't chase
    trends. The classic subjects, updated to a certain degree are still in demand, and will sell.

    Customer Service - Customer service is not just 24/7 availability and full automation. It also
    includes easy access to helpful humans when automation is not an adequate solution. It is not a phone system
    that takes 15 minutes of clicking through menus before you get to a human who knows something. It includes
    easy access to someone who has knowledge about the subject. It is helping the customer find what they need,
    even if it is not online. It is solving the customers problems in a friendly and timely manner.

    Often smaller agencies are much more effective at providing this personal service than the big call centers.
    This is where specialists, dealing with a small specialized group of customers, excell. Photographers need
    to have a lot of specialists showing, their work. This will be much easier than it has been in the past. It
    no longer requires having dupes everywhere. All that is needed is a centralized digital database and lots of
    specialists with access to it.

  • Copyright © 2002 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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