March 2000 Selling Stock

Posted on 3/10/2000 by Jim Pickerell | Printable Version | Comments (0)



Volume 10, Number 4

©2000 Jim Pickerell - SELLING STOCK is written and
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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

    Stone and other major agencies are telling leading landscape and travel shooters that
    their files are already full of this subject matter. They reject everything offered.
    Their suggestion to the photographers -- "Have you considered changing your shooting

    One photographer -- not one of the rejected, but who has great respect for the work of
    some of the rejected -- said, "That's like telling Barbra Streisand, 'Have you considered
    hip hop."'

Story 290


February 29, 2000 - Getty Images, Inc. has agreed to acquire Visual Communications Group
(VCG), its largest competitor, from United News & Media PLC.for $220 million.

The acquisition will be financed through the proceeds of a $200 million convertible subordinated note
offering by Getty Images.

The various companies that make up VCG are: FPG, Telegraph Colour Library, Bavaria
Bildagentur, Pix, Definitive Stock, Giraudon, Planet Earth, Space Frontiers and

VCG's gross sales in 1999 according to Bloomberg were $90 million with $6 million in
operating profits. Based on figures for the first six months of 1998 provided by UN&M in
their June 30, 1999 interim report, 1998 revenue and profits closely matched 1999
indicating no growth since January 1998.

The SEC Getty Images offering memoranda for the $200 million convertible debt offering
indicates that VCG Group B.V. 1999 sales dropped 7% in North America and 23% in the UK
sales base on 1998 levels. Sales in the UK and NA represented 70% of their total sales.
Sales in Europe, the Middle East and Pacific regions were up. The VCG Deutschland GmbH
group reported about $15 million is 1999 sales but 1998 figures were not available.

Getty's gross sales in 1999 were $247.8 million which included 39 days of The Image Bank
income as a result of Getty's purchase of TIB late last year.

Investment bankers on Wall Street are being told to expect VCG's sales to be flat in
2000, and to expect a 12% growth in 2001. Robertson Stephens is predicting that Getty's
revenues for 2000 will be in excess of $440 million. If Getty reaches that figure it
would mean that close to 35% of all the sales in the industry will be made by a Getty

Hart-Scott-Rodino approval (relating to monopoly of an industry) has been received.
Deutsche Banc Alex Brown, Morgan Stanley Dean Witter and Cowen & Company are underwriting
the offering.

Evidently, there were six companies in the bidding and Corbis had the next highest bid at
something in the range of between $170 and $200 million. Following the acquisition,
Getty Images' collection will be in excess of 70 million images and more than 27,000
hours of footage.

Challenges For The Future

One of the challenges for Getty will be the integration of four separate and distinct
competitive brands -- Tony Stone Images (Stone), The Image Bank, FPG and Telegraph Colour
Library -- that have competed head to head for the same clients. When Getty purchased TIB
they said they would maintain that brand identity, but three months later they are
already far along in the process of closing the Dallas headquarters, and have terminated
long time employees in key positions within that organization.

Given the oversupply of images in the industry it would not be surprising to see staff
reductions at FPG and the Telegraph Colour Library in the near future. One thing
photographers with these agencies, and TIB, should track closely is the number of their
images that make it to the gettyone site. Images that are not placed on-line as part of
the consolidation will probably have little chance of sale. File research at these
agencies is likely to diminish.

At a meeting of Stone photographers in New York in January, participants came away with
the understanding that Getty believes there is little potential for additional growth in
"rights protected" sales from traditional stock buyers. To grow Getty's intends to go
after those creatives who hire photographers to do assignments when they need images.
(See Getty To Photographers on page 4.)

In order to do this a "higher level" of imagery will be required and Getty has determined
that TSI will also need to be re-branded in order to appeal to these art directors. Thus
the new brand name of Stone.

It is hard to imagine that the Stone brand will now expand to include TIB, FPG and
Telegraph. More likely, a few photographers will be invited to switch to Stone, much as
Liaison photographers were invited to switch to TSI a couple years ago. The rest of
their images will probably be marketed as a separate middle level of "rights protected"
stock between RF and the "Stone" brand.

Keep in mind that only about 200,000 of the 70 million images are on-line. Getty says
that over 80% of their income comes from these 200,000 images or 1/350th of their total
file. I will be greatly surprised if Getty spends a lot of energy trying to integrate
much of the non-catalog images from these other companies into their system. The costs
are certainly likely to outweigh the benefits.

Another interesting question is the future of new catalogs scheduled to be produced by
TIB, FPG and Telegraph. Are such products needed, or will they simply dilute sales of the
Stone brand. There is definitely a question as to whether the volume of catalogs produced
by these four major suppliers in the past couple of years is necessary or desirable. One
way to cut overhead quickly is to produce fewer catalogs. This will particularly be true
as Stone consolidates their mailing list to make sure they are mailing to all the
customers of the other agencies.

FPG had made a major effort in the past year to gather content for an RF division called
iSwoop. As a result the acquisition iSwoop has been dropped. Images already acquired
for this collection will be integrated into Getty's PhotoDisc and Eyewire collections.
Photographers have been told not to submit any new images for the time being.


Six to nine months after the VCG acquisition is completed, Getty will be faced with a
very interesting problem. In order to keep their investors happy they must keep growing
the business on a quarterly basis. Up to now their growth has been generated principally
through acquisition, and capturing market share from their competitors, rather than a
real growth in sales. This has been particularly true in the past year. Now they own the
competitors and there is little left to acquire of any significance.

Some of the options available might be:

  • Not worry about sales growth as much, but focus on cost cutting as a way of
    increasing profits.

  • Acquire other companies outside the still stock photo industry to continue their

  • Sell to a much larger company that for some reason wants a postion in the stock
    photo industry.

    We live in interesting times.

    Story 283


    February 10, 2000 - Getty has announced their 4th quarter results for the year ending
    December 31, 1999. They had $79.9 million in sales in the 4th quarter up significantly
    from $60.8 million in the 3rd quarter. Their total sales for 1999 were $247.8 million.
    This growth was partially due to the acquisition of The Image Bank in November, but TIB
    sales accounted for only $8.7 million of this growth.

    TIB revenues for the first six months of 1999 were $38.1 million. Thus, if they had zero
    growth in the second half they should have generated approximagely $7,933,150 in sales
    for the 38 days they were owned by Getty. In fact, they generated $8.7 million in sales
    which is $766,850 higher. This would indicate 10% growth for the second half of the year
    if sales levels were consistent throughout this period.

    The Consumer Channel of Getty's business showed significant sales growth. This Channel
    which includes and American Royal Arts (acquired in October 1999) achieved sales
    of $4.3 million in the 4th quarter and $6.1 million for 1999. However, due to continued
    investment in, principally to generate sales, there was a $5.8 million EBITDA
    loss in the Consumer Channel.


    The percent of the business generated from e-commerce continued to be strong in the
    fourth quarter with $24.5 million in sales. This was a little over 30% of total sales.
    Twenty percent of Tony Stone Images sales in the fourth quarter were from e-commerce.
    Over 50% of PhotoDisc sales were e-commerce at the end of 1999. It is worth noting that
    in the third quarter before TIB joined Getty 32% of gross sales were e-commerce, possibly
    indicating some leveling of e-commerce sales as a percentage of the total. Actual sales
    did grow from $19.4 million in the third quarter to $24.5 in the fourth quarter. Total
    e-commerce sales for the year were $67.9 million or 27.4% of gross sales.

    If we exclude TIB's sales from Getty's total then e-commerce represented 34% of total
    fourth quarter sales. Getty argued that TIB's sales figures should be excluded when
    calculating percentage of e-commerce sales because TIB had not been fully integrated into
    the Getty e-commerce system. However, they also pointed out that part of the reason for
    TIB's high fourth quarter participation in their bottom line was the fact that they had
    begun to make sales through

    In October, 1999 we reported that earlier in 1999 Mark Getty had stated that in five
    years all of Getty's image delivery would be digital. Jonathan Klein has also been quoted
    in several places as saying Getty's entire business would be on the web in three years.

    Now Robertson Stevens, a lead investment bankers for Getty, is telling their clients,
    "Getty is targeting eCommerce to contribute 50-60% of total revenues in 3-5 years."


    One interesting thing is the growth in EBITDA (profits). Morgan Stanley, Getty's lead
    investment banker, had estimated that sales for the quarter would be $61 million, and
    that EBITDA would be $9.1 million. In fact, sales were up almost $19 million over Morgan
    Stanley's estimate, but profits were only $300,000 higher than expected, or $9.4 million.

    The fact that there were so little profits from the additional sales could indicate heavy
    promotion expenses. Getty did acknowledge in a conference call to investors that they had
    (1) higher costs in advertising, particularly for, (2) acquisition costs (3)
    continued investments in management, new sales offices, and business systems and (4) the
    completion of the relocation of the corporate offices from London to Seattle.

    Morgan Stanley is estimating that Getty, with its current brands, will have $374 million
    in revenue in 2000 and EBITDA of $62.5 million or $1.31 per share. (This was before the
    VCG acquisition)

    New Lines Of Business

    In line with its strategy to increase the range of products and services Getty supplies
    to customers they purchased, the first complete one-stop source for
    music licensing and purchasing over the Internet, in the 4th quarter.'s
    audio content will be available in the year 2000 on

    Story 279


    Getty is having trouble getting the story they tell investors to match what they tell

    In October when Getty was trying to sell 6 million shares of stock they were telling
    investors that the world wide market for stock photography was between $4 and $5 billion
    annually. (At that time I was saying it was a $1.25 billion annual market. I still stick
    with that number.)

    In order to attract investor interest, Getty must convince them that there is great
    potential for growth in the stock photo business, not that it is a mature market with
    little upside potential.

    Investors would have been unlikely to bid the stock price up so dramatically, if they
    realized that the various Getty brands already controlled almost one-quarter of total
    sales in the market.

    At the Morgan Stanley Dean Witter Internet Conference in early January, MSDW made the
    following statement about Getty's potential. "Commissioned phototgraphy is another new
    area for Getty. The company had not participated in this $3.5 billion market in the past,
    only the $1.5 billion non-commissioned photography market (or stock photography). With, professional photographers can pay a subscription fee to have their images
    posted on the site. Getty's 300--350,000 registered users can access these photos (which
    are posted at no cost to Getty), or commission full professional photo shoots (at Getty's
    expense, but generates high returns). The vertical portal allows Getty to participate in
    a large market where it previously had no presence." (MSDW is Getty's lead investment
    banker. They certainly checked these numbers and these statements with Getty before
    presenting them.)

    Note that the stock photo side of the business has suddenly dropped to $1.5 billion. Now
    they are going to try to grow their business by converting those photo users who have
    traditionally obtained their images by commissioning assignments into stock photo

    $3.5 Billion In Assignments

    We also need to look at the $3.5 billion figure for the assignment market and not let
    that stand unchallenged. This number is much more difficult to pin down than stock sales
    because so much of the work is done by thousands of sole proprietors who are not
    represented in any way by organizations that collect data on their income.

    My guess is that actual figure may be much smaller. One thing is certain. A huge
    percentage of the assignment business is for product related shots and fashion. No stock
    or generated images will ever be satisfactory for the creatives doing this type of work
    because they need the product in the shot. Thus, even if Getty were wildly successful in
    capturing 100% of the market for generated images, it would represent only a small
    fraction of $3.5 billion annually.

    They also have to compete with all those assignment photographers who are very creative
    and have built solid personal relationships with creatives making the assignments.

    In addition Getty should be concerned about their own photographers heading back to the
    assignment market. Rather than shoot on speculation for Getty Art Directors who have no
    money to pay them, it would seem to make more sense for many of Getty's top shooter to
    market directly to those art directors offering assignments. Then they would only do
    work when there is an actual commitment that they will be paid for their efforts.

    One small example that this may be the way the photographers are thinking. Flour
    Corporation, in Orange County, CA just completed the shooting for their latest annual
    report. The art director said he reviewed more portfolios for this project than he has
    seen in years. Most of the photographers said they had been shooting stock, but that
    market is changing and now they are returning to aassignments.

    Story 279


    On Friday, January 21st Tony Stone Images (recently re-named "Stone") had a session in
    New York with 80 to 100 of their top photographers to explain the "evolution of the
    brand," and to deal with other photographer concerns.

    Speaker at the conference pointed out that the existing stock photo market has reached a
    point of saturation. The only way to expand is to find photo users who have, for one
    reason or another, up to now, not been using stock -- i.e. those who commission

    Third Way To Source Photography

    Stone's extensive market research has revealed that the high end buyers who rely on
    assignments to acquire their photography, view stock as "worthless" and a "shopping bag
    full of rejects". According to the findings, creatives feel that all stock has a
    distinctive look and that it is not an option for a high end ad campaign.

    In order to get the attention of these high end creatives, Stone has determined that it
    needs to re-brand itself and create a third way to source photography. They call this
    "generated" photography. It will be distinguished as separate from assignments and stock.

    On the production side "generated" photographs will further raise the creative bar. The
    images will be extensively art directed after careful research into market trends. All
    will be generated in advance of any specific client need and made available for licensing
    later on, just like stock.

    Getty has had a team going through magazines to identify images that were produced on
    assignment, but could have been stock. This information will be provided to Stone
    photographers who agree to work closely with Stone art directors to produce, at the
    photographer's expense, the kinds of images the market research says will be needed.

      Aside: One attendee who attended has done a lot of work for Coca Cola over the
      years, suggested to some of his friends that sometimes very high priced market research
      can be fatally flawed. Remember Classic Coke!

    Marketing Stone

    It was not explained how "Stone" would be marketed except to say that a major marketing
    campaign will be launched in February.

    If the primary promotion vehicle is "Gettyone," as the MSDW statement implies, art
    directors may get the impression that "generated" images are more, rather than less,
    stocky. One complaint about "Gettyone" is that the inclusion of PhotoDisc, EyeWire,
    Hulton Getty, etc. with TSI images has made the total offering look more low end, than
    high end, in terms of visual impact. If the creatives Getty wants to reach consider stock
    a "shopping bag full of rejects," the Gettyone site is not going to change their minds.

    MSDW Analysis

    Stone made it clear to the photographers that they do not intend to represent
    photographers for assignment work -- something that had been speculated by a number of
    photographers after the MSDW announcement.

    Since that is not Getty's intention, much of the MSDW statement makes no sense. Nothing
    was said about "commissioning full professional photo shoots (at Getty's expense)." It
    was indicated that if an art director wanted to commission a particular Stone
    photographer for a specific shoot Stone would probably provide the photographer's phone
    number, but that they do not want to get in the business of marketing for assignment

    In addition nothing was said to the photographers about "professional photographers
    paying subscription fees to have their images posted on" Gettyone. Maybe Getty hasn't
    figured out how, or when they will do this. Or maybe they have totally changed their mind
    in the two weeks since the MSDW Internet Conference. One thing is definitely clear --
    they are telling their photographers one thing and the investors something else.

    Hurdles To Overcome

    The Stone brand has several hurdles to overcome.

    It was left unclear as to what images from the current site will be resident on the Stone
    site. They indicated that approximately 40% of the images on the TSI site are
    "conventional" images, 40% are a step beyond conventional using current techniques and
    trends and 20% are avant garde or cutting edge. When the assignment creatives are looking
    for is the 20% avant garde and some of the best of those that exhibit current techniques
    and trends.

    If they move all images on the current TSI site to the Stone brand they will include
    those conventional images that the creatives perceive as traditional stock. This would
    seem to doom the re-launch to failure.

    In editing the current TSI file they are faced with the question of how to market the
    remaining "traditional stock," which, if the 40% is correct, generates $40 million in
    income per year. They may also be faced with a rebellion from those photographers whose
    images are not selected.

    It is clear that Stone has not been accepting updated conventional "stock looking"
    images for quite some time. They tell photographers to take those images somewhere else.
    One question is how long the 40% sales of conventional imagery can be maintained without

    The biggest intangible is the motivation of the creatives. I believe most of them want to
    create something that is totally their concept, rather than buying the creative ideas of
    someone else. As long as they have the budget, and the time, they will always go for a
    controlled assignment.

    At Stone there is a single view of what is a good image. The view of Andy Saunders. While
    his track record of picking images that will sell is certainly excellent one wonders if
    there aren't a few other editors -- and buyers -- in the world with different points of

    In a creative industry like photography lots of different approaches and points of view
    will sell, if they are made available to the buyers. The Getty approach of narrowing the
    focus of their offering opens up opportunities for their smaller competitors to review
    the rejected imagery, identify those which their experience tells them will sell, and
    make those images available to the buyers.

    Photographer Concerns

    According to John Hallberg, President of Stone, the number of wholly owned images in the
    Stone collection is less than 2%. However, there is some commissioning of work where the
    photographer is paid a day rate, expenses and receives a minimal royalty of 10% or less.
    This category of imagery may make up 8% of the file. It was unclear what percentage of
    sales this category of imagery represents. Individual photographers retain copyright to
    these images.

    Hallberg also said the average license fee in North America in 1999 was $518. He prefaced
    his statement with "I know you won't believe this," and many photographers were shaking
    their heads agreeing that they didn't believe it based on the numbers their sales reports

    One of the major complaints from TSI photographers in the past year, or so, is that when
    they make their best efforts to produce exactly what the TSI art directors say they want,
    the images are still rejected. This happens after the photographers has spent thousands
    of dollars and much time on the production. These complaints come, not from photographers
    who are out doing things on their own, but from those who have been listening to the TSI
    art directors.

    More Positive Attitude

    According to several reports many photographers came away from this meeting feeling more
    positive and energized than they had since the new contract was released more than a year
    ago. "They (TSI) seemed more willing to listen to us and to explain their plans than has
    been the case for some time," one said. However, some of those who have been around for
    many years cautioned, "We've had these kind of pep rallies before when Tony was running
    the show, but things have usually reverted quickly to the way they were before."

    Story 284


    The New York Times has announced plans to issue a tracking stock for their internet
    division, TCD, in an effort to raise $100 million.

    TDC had more than 138 million page views on all web sites in December 1999 and 90.7
    million were for the Times web site alone. For the 9 months ednding September 30, 1999,
    TCD's net revenue was $15.3 million, up 48% from 1998. Net loses were $11.7 million, up
    108% from 1998.

    Story 288


    March 3, 2000 - The stock photo industry needs to totally revise its pricing model for
    uses in educational publishing as it takes into account new methods of distributing
    educational content.

    For more than twenty five years prices for photo usages have been based on the assumption
    that a publisher would gather material for a title and order the material in a certain
    logical format with a fixed number of chapters. This package, or book, was then sent for
    printing. Given the costs of press time, marketing and distribution certain minimum press
    runs were necessary, or the project would never have been started in the first place.

    Once a first edition was nearly sold out, the plates might be put back on press to print
    another edition, or certain revisions might be made to the original text. In some cases
    books would be translated into another language and a separate edition would be printed
    in that language. Again the assumption was that given the basic costs of printing it
    would be uneconomic to print in another languarge unless a certain minimum number of
    copies were produced.

    Today's Reality

    • With print on demand technology it is possible to print one custom book at a time.
      Publishers are now offering students several options for receiving a particular text that
      has been selected by their professor. The student can get it in book form and often it
      will be printed-on-demand. The student can access the full text on-line. Or, they can get
      it e-mailed to them chapter by chapter on a regular basis. In some cases they can get it
      by fax.

    • Professors no longer have to choose between books publishers have designed. Now they can
      design their own book to fit the specific needs of their class. They can take one chapter
      from book A, 4 chapters from book B, 12 from book C, include a report from an
      association, write a couple chapters themselves, and have it all bound, by the publisher,
      in a custom volume which students can purchase.

    • Glencoe has a three book series called Biology: The Dynamics of Life for 6th, 7th and 8th
      grades. They have sold over 100 versions of these books. In most cases they moved
      chapters around to comply with the way the course is being taught in certain school

    • In another situation a publisher expects to sell 265,000 copies of a book currently being
      edited. Of course, this is an estimate, not a guarantee. The publisher is seeking to
      license use of content at the "Under 40,000" rate. Presumably the publisher will pay more
      if they sell over 40,000 copies. In the past year sellers have started receiving more
      frequent requests to bill for print runs over 40,000

      Electronic translators are getting better and better. In the near future it will be less
      expensive to translate an English text into some second language and publish short runs
      of a book in that language.

    • The college division of Houghton Mifflin is developing 50 to 60 new web sites a year to
      support their various products. Traffic on these sites has followed the "hockey stick"
      model over the past 18 months (slow steady growth at the start and then a very rapid rise
      in a relatively short period of time).

    • The internet has provided a variety of sales channels through which publishers may sell
      the information in their books, and the number is likely to expand in the future.


    The internet is providing educational publishers with an opportunity to market directly
    to book buyers and to better understand the motivations of these buyers.

    In the past, book publishers focused most of their marketing toward professors in hopes
    that they would adopt the publishers books for their course. Secondarily, they marketed
    to book stores, but if the professor failed to choose their book the publisher was
    basically out of luck. The student -- the person with the money to actually buy the book
    -- had little understanding of who the publishers were, or the distinctives of any
    particular publisher.

    Now, through the web, publishers can find out who the buyers are and deal with them
    directly. In addition to selling a book, they can determine what other support materials
    the student needs. If the publisher's book isn't chosen by the professor, the publisher
    may still be able to sell a couple chapters to the student.

    Through this interaction publishers are learning that students are more willing to pay
    for tutorial information than additional ancillary information. Users are also willing to
    pay for better functionality and systems that reduce the amount of effort they have to go
    through to get information.

    Publishers have learned, over the years, that once their product is selected by a
    professor there is an average "sell through" of only 60%. That means for some reason 40%
    of the students choose not to buy the book even though it is a class requirement.

    Mark Roller, Associate Director of Technology at Houghton Mifflin's College Division,
    says early on-line sales statistics indicate that if part, or all, of a book is available
    on the web there is a greater sell through of printed copies of the book. To date there
    is not enough data to conclude that there is a direct causal relationship, but it is
    possible that availability of information on a web site could lead to more, rather than
    less, printed books being sold in the future.

    Because their brands are not well known among buyers, publishers are partnering with
    other site operators who for one reason of another have the attention of students/buyers.
    Most of these sites are attractive to students because they offer something for free.

    Many sites make money through advertising and by selling names and information about the
    student rather than by selling content. In most cases, the publisher gets access to
    student information in addition to a fee for making the information available. The
    dilemma for the publisher is in determining how much free material to give away, and what
    to sell at what price points.

    Copyright holders need to think about two separate and distinct compensation models for
    such material. If the copyright holder's material is sold it is easy to see how
    compensation should be based on usage or some type of royalty model. But, it is much
    harder to determine fair compensation for material that is given away, in effect to
    advertise the brand, or other products which will be sold.

    In some cases students subscribe to a group of assets. It is unclear whether the
    copyright holder share of these fees is being divided proportionally among all whose work
    is included in the group, or if actual usage is tracked and payment is given only to
    those whose work is actually used. The model for this type of payment might be Index
    Stock Imagery's relationship with the people who produce "Homework Helper". However, we
    have no guarantee that all book publishers will use the same model.

    While all these options are available, Mark Roller says that, "Currently, over 90% (of
    on-line buyers) still pick a printed text." He says this is probably due to their price
    structures, and they are studying other pricing models that might make web use more
    attractive. He also acknowledged that students like to print the material they get
    on-line and most of them print a lot initially. Once they get into the digital version
    they print less and less.

    Roller also indicates that the web model is turning out to be a profitable line of
    business for the publisher.

    Visual Information On-line

    Looking ahead, I think we need to ask ourselves how important pictures will be, and the
    kind of images that will be needed, if the percentage of students getting information
    on-line, and printing that information out on a desktop B&W printer rises significantly?
    Will they need as many stills? Will they want as many, or more images in the on-line
    environment as they get in the paper books with glossy color printing? Will this change
    the editing strategies for books or, at the very least, for those portions of books that
    are offered on-line?

    In the book environment one of the principle functions of images has been to break up the
    black type and give the product a more user friendly appearance. Often the actual useful
    additional information that the photo provides about the topic is secondary to its role
    of catching the readers interest. Will still photos serve the same functions on the web,
    as they do in print? Will photos be an aid to the person who is getting information off a
    computer screen, or will they be a distraction? Will the kind of visual content that
    helps to draw the student to a particular text be video rather than still images?

    As producers and sellers of still images we can put our heads in the sand and say these
    issues are not our concern -- until suddenly one day we are faced with new realities. It
    might be better to gather information now, try to educate ourselves and our customers,
    and be prepared for the changes.

    New Systems Needed

    There needs to be a dialogue between publishers, leading sellers of content to textbooks,
    and representatives of individual suppliers. The sellers need to get a better
    understanding of how rights to content may be licensed in the future and develop new
    strategies for pricing uses that will insure a continued flow of new material and
    equitable compensation for both content providers and publishers.

    Some of the points that need to be on the agenda are:

  • The development by publishers of systems that can calculate and pay royalties to
    content providers.

  • The development of industry wide standards that would provide content owners with
    accurate, audited information on the number of copies sold above the base number in the
    initial license.

  • A review of the current "revision" strategy to pricing which is probably
    unworkable, given the way books are produced today. It will definitely be unworkable in
    the internet economy.

  • A review of how language translation will necessarily change the strategy for
    pricing uses based on the language in which they are distributed.

  • In the Internet environment certain content is given away to encourage students
    (the buyer) to pay, either by subscription or on a per use basis for "deeper" content. If
    photos are among the content "given away" a system needs to be developed to compensate
    the sellers for that value.

  • Because the costs of producing, distributing and marketing on-line are less than
    supplying books in printed form, I believe that 25% of any fees collected for usage
    should be set aside to proportionally pay the rights holders for the content. If there
    are both text and pictures in the material purchased 50% of the set aside should go to
    the creator of the text and 50% for the photos.

  • The suppliers should be aware of how new digital asset management technologies
    could be used to assist in royalty payments. Many publishers are, at the present time,
    implementing new asset management systems to enable them to use their content in a
    variety of ways across a variety of media. One important aspect of these systems will be
    how they track rights, track uses, and compensate rights holders for the uses. At early
    stages of development of these systems it will be comparatively easy to build in tracking
    of individual units and payment on a royalty basis -- assuming it is recognized that it
    is necessary to pay in this manner. The other option is for publishers to decide that
    they must buy unlimited rights for a one-time fee. If that becomes the default way of
    paying for all still photo usage, photographers will lose value in the long term.

    Now is the time to educate the publishers to our needs.

  • Copyright © 2000 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, 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:  


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