March 2003 Selling Stock

Posted on 3/1/2003 by Jim Pickerell | Printable Version | Comments (0)

540

MARCH 2003 SELLING STOCK




Volume 13, Number 4



©2003 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
version mailed to you. The on-line version is $100.00 per year. Subscriptions may be
obtained by writing Jim Pickerell, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, fax 301-309-0941, e-mail: jim@chd.com. All rights
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

"Become a possibilitarian. No matter how dark things seem to be or actually are, raise
your sights and see possibilities -- always see them for they are always there."


Norman Vincent Peale



SURVEY RESULTS



2003 Stock Photographer Income Survey

February 14, 2003 (Story 539) - The results of the survey we posted in mid-December are in and 172 photographers
supplied data. Nearly all the respondents have been selling stock for three years
or more. The combined gross 2002 income of these photographers was $24,244,557
and 67% of this income came from stock photography. If most of
the stock sales were made by agencies and, on average, the photographers receive
40% of each license, then this data represents in excess of $40 million in sales
to customers. Given the size of our industry this is a significant sample.


In many ways the results were not what we expected. We sub-titled the survey "Stock
Industry In Crisis", but based on results there may not be nearly as much
"crisis" as we had anticipated. At Selling Stock we have daily discussions with
photographers throughout the U.S. and the world. Often we hear anecdotes
indicating hard times. Surveys like this one provide a more balanced perspective
on some of that information.


Regularly photographers tell us that their income has dropped significantly in
the last two or three years. Some photographers with very high incomes who
responded to this survey reported that their incomes had dropped 50% and more since
2000. But at the same time there were many photographers who reported a rise in
income over the three-year period. Thus, while there was a drop in average income
year-to-year, it was not as significant as we had expected. On average
there was a drop in total income of 4% in 2001 when compared with what the
photographers earned in 2000, and a total drop of 14% for the two year period
from the end of 2002 when compared with 2000. Of the photographers who earned
more than $70,000 in each year 49% saw a rise in their income in 2001 as
compared with 2000 and 38% saw a rise in 2002 when compared with 2001.


























     

Total Income   

Percent Decline   

RM Stock   

RF Stock   

Total Stock Income   

2000   

$28,149,000   

     

$17,923,596   

$1,052,849   

$18,976,445   

2001   

$27,155,121   

4% from 2000   

$17,759,614   

$980,870   

$18,740,484   

2002   

$24,244,557   

14% from 2000   

$15,121,066   

$1,160,641   

$16,281,707   





















     

Total Income   

Average Photographer Income   

Percent Income From Stock   

2000   

$28,149,000   

$163,657   

67%   

2001   

$27,155,121   

$157,878   

69%   

2002   

$24,244,557   

$140,956   

67%   






It is interesting that for all three years the photographer's stock income was
about 2/3rds of total income. In a 2001 survey of year 2000 income 61% of photographer's
total income came from stock (the response rate was smaller for this survey), and for a 1999
income survey stock represented
62% of their total income. Thus, it seems the average photographer is not finding
other sources of income to make up for loses in stock income as we thought might be
the case. We know of some cases where this is happening, but evidently not
enough to affect the averages. In fact the percentage of total income photographers
are earning from stock (and thus their dependence on stock) is slightly higher
than it was in previous years.


Character of Respondents


Many more respondents reported high incomes on this survey than on
previous surveys (I'll provide a breakdown under "Comparison With Recent Surveys"
below). This probably is due in no
small part to the founding since the last survey of the StockArtistsAlliance,
and the participation of SAA photographers in this survey. Ninety-five of the
respondents were SAA members and this is close to one-quarter of their membership.
These photographers are among the most successful stock photographers in the
world and their numbers clearly pushed the averages higher. ( Editors note: Any
photographer seriously interested in the stock segment of this business ought to
consider joining the SAA. You can get more information at
www.stockartistsalliance.com ),


The first chart below shows a breakdown of the Total Income and Stock Income from
the 95 SAA respondents. The second chart shows the comparison incomes from the 77
other respondents who are not members of the SAA.



























     

Total Income   

  

RM Stock

RF Stock

Total Stock Income

2000

$15,948,434

  

$11,152,562

$22,499

$11,175,061

2001

$16,030,876

  

$11,456,386

$54,370

$11,510,756

2002

$14,369,565

  

$10,344,119

$86,041

$10,430,160




























  

Total Income

  

RM Stock

RF Stock

Total Stock Income

2000

$12,200,566

  

$6,771,349

$1,030,350

$7,801,699

2001

$11,124,245

  

$6,303,228

$926,500

$7,229,728

2002

$9,875,032

  

$4,776,947

$1,074,600

$5,851,547





The average income for the SAA members is quite a bit higher than for
non-members. The chart below provides a breakdown of the average income of SAA
photographers compared with those who are not members of the SAA. (In the
Averages chart further down in this report we will provide averages for
the SAA members operating in the U.S. compared with those from other countries.


























  

Income of SAA Members

Average

  

Income of Non-SAA

Average

2000

$15,948,434

$167,878

  

$12,200,566

$158,449

2001

$16,030,876

$168,746

  

$11,124,245

$144,471

2002

$14,369,565

$151,259

  

$9,875,032

$128,247



Royalty Free Income

Another interesting factor is the percentage of income from Royalty Free
sales. The SAA is very opposed to Royalty Free and in all years its members
had less than 1% of their sales from RF images. While the amount of RF sales
did rise year-to-year in all cases it was less than 1%. The non-SAA members,
on the other hand, showed a small but significant amount of income from RF
sales. The income remained about the same year to year, but due to declining
Total Stock Income RF represented a significant rise to 18% of total income in
2002.

A total of 18 of the respondents had some RF income. Seven of them showed a
rising trend and 11 showed a flat or declining trend over the three years. Three
earned all their stock income from selling RF. Two had RF incomes in excess of
$100,000 a year and for one the income was significantly in excess of this
number. However, the one with the greatest income showed a decline in income
year-to-year.


























  

SAA Stock Income

Percent RF

  

Non-SAA Stock Income

Percent RF

2000

$11,175,061

0.2%

  

$7,801,699

13%

2001

$11,510,756

0.5%

  

$7,229,728

13%

2002

$10,430,160

0.8%

  

$5,851,547

18%




Income from photographers based outside the U.S.

We received responses from 40 photographers living and working outside the
U.S and they represented 23% of total respondents to the survey. 35% of these
foreign respondents were based in the United Kingdom. This was the first time
since we began surveying that we have received a significant response from
non-U.S. photographers.

While the average incomes for this group were much lower than for U.S.
photographers, the foreign photographers do not seem to be experiencing the same
drop in incomes that U.S. photographers have been experiencing. In fact, they
had an average rise of 5% in income for 2002 over what they were earning in 2000.

I have a couple theories about this anomaly. First, because the number of
respondents is still relatively low this may not be truly representative of all
photographers living outside the U.S. On the other hand there has definitely
been a push in the industry in the last couple of years to produce and market
more European looking content. This may be paying off in increased sales
for photographers working in that part of the world.


























  

Total Income

  

RM Stock

RF Stock

Total Stock Income

2000

$3,387,606

  

$1,813,027

$19,000

$1,832,027

2001

$3,747,153

  

$2,163,498

$46,000

$2,209,498

2002

$3,559,125

  

$2,308,065

$39,615

$2,347,680



Average Income for Photographers

The following are the average incomes for all respondents to the survey and
for various groups within the survey. The first chart is focused on the
U.S. and SAA respondents. The second chart deals with the responses from
those who live and work outside the U.S.



























  

All Responses

All U.S.

US SAA

US non-SAA

Respondents

172

132

72

60

2000

$163,657

$187,586

$192,295

$181,936

2001

$157,878

$177,333

$187,745

$164,837

2002

$140,956

$156,710

$166,505

$146,188























  

All Foreign

Foreign SAA

Non-SAA Foreign

Respondents

40

23

17

2000

$84,690

$91,443

$75,553

2001

$93,678

$109,268

$72,586

2002

$88,978

$106,756

$64,924



Comparisons With Recent Surveys

This chart lists the number of respondents for certain levels of Gross Income.
It includes the total number of respondents to each survey and the number that
had gross revenue above $70,000. The bottom row indicates the percentage of
total participants that earned over $70,000 during the year.

There are two different columns for the year 2000. 2000A was for a survey done
in early 2001 and it measured income for the year 2000 (There was a low response
to this survey). The numbers for 2000B were generated from the survey just completed.


































































































  Year

1997

1998

1999

2000A

2000B

2001

2002

  Total Respondents to Survey

206

185

138

97

172

172

172

  Gross Income

  

  

  

  

  

  

  

  Over $400,000

6

6

4

5

12

11

9

  $250,000 to $400,000

13

12

11

5

10

10

9

  $150,000 to $250,000

14

18

7

7

13

16

15

  $100,000 to $150,000

24

11

17

9

16

18

10

  $70,000 to $100,000

13

18

23

16

22

10

20

  

  

  

  

  

  

  

  

  Total In High Income Categories (HIC)

70

65

62

42

73

65

63

  

  

  

  

  

  

  

  

  Percent of Total HIC Responding to Survey

34%

35%

45%

43%

42%

37%

36%




Click here to review the results for previous Selling Stock surveys for the years: 1997
(Story 125) , 1998
(Story 213) , 1999
(Story 297) and 2000
(Story 399) .


VEER ADDS RIGHTS MANAGED


January 22, 2003 (Story 533) - Veer has expanded its offering with the Rights
Managed collections from SolusImages and Pete McArthur. SolusImages is highlighted in
an insert in the Veer monthly catalog announcing the relationship and the addition of
high quality Rights Managed Photography to their growing collections.

According to Arie Kopelman of Solus, "The Veer group rose to fame when they created
Eyewire a few years ago. Their extraordinary success caught Getty's eye and Eyewire was
subsequently purchased. The Eyewire team worked in the Getty environment for a few
years and was released in 2002. Immediately, this intrepid group conceived their next
brainchild, Veer. This is a digital marketing company created to 'veer' off the beaten
stock path with exceptional creative vision - and the knowledge that it takes
extraordinary monetary resources for continuous direct marketing to get attention in
this market. SolusImages caught their eye and the rest is history. Everyone seems to
agree Veer is a world class competitor and we are highly enthusiastic about this
relationship."

Veer is the exclusive re-seller of SolusImages in the U.S. market, but Solus
will also be marketing the collection on its site as well. To see the Solus collection
on Veer go to www.veer.com/products/photography/sip/.


GETTY REPORTS 2002 PROFIT


Profit For Year Is $21.5 Million

February 6, 2003 (Story 535) - Getty Images, Inc. reported 4th quarter 2002 revenue of
$117.7 million, down just slightly from the $118.2 million in the 3rd quarter, and a
15.5 percent increase over revenue of $101.8 million in the 4th quarter of 2001.

Getty has definitely turned the corner on the profit picture. After many years of
investing in the growth of the company it moved from a loss to earnings per share of
$0.39. The company had net income of $7.5 million, or $0.13 per diluted share, for the
4th quarter, compared to a net loss of $38.8 million, or a loss of $0.75 per diluted
share, for the same period in 2001. For all of 2002, net income was $21.5 million, or
$0.39 per diluted share, compared to a net loss of $95.3 million, or loss of $1.84 per
diluted share, in 2001.

The company which will be eight years old next month had total revenue for 2002 of
$463.0 million, up 2.7 percent compared to $451.0 million in 2001, but still 4 percent
below the 2000 revenue of $484.8 million. Nevertheless, CEO Jonathan Klein pointed out,
"the fact that they were able to grow revenue on a like-for-like basis by of more than
4% in the worst market in decades for our customers is a demonstration of the quality of
our imagery, our strong, but still expanding leadership position in the market, the
strength of our platform, and our pricing power."

In the past eight years Getty has moved the business from an analog, expensive to
operate and labor intestive business model to an all digital, e-commerce operation.

Milestones For 2002

In his conference call to investment analysts Klein emphasized that the 2002 financial
growth was achieved while still growing the company. He outlined some of the 2002 growth
and development milestones. They have:

  • Completed the final steps in the digital migration they began five years ago and
    now have a unified and integrated platform from web site to supporting back office
    systems.

  • Successfully re-invigorated both TIB and Taxi (VCG) and got them growing. The
    turnaround in both these companies has exceeded expectations.

  • Completed the digital transformation of the news and sports business which is now
    wholly digital from the point of capture to the point of distribution.

  • Implemented their brand unification strategy by making Gettyimages.com the clear and
    primary source for visual content. Every day the Gettyimages name and brand is promoted
    worldwide in numerous newspapers and magazines.

  • Agressively rolled out their third party distribution strategy which has also
    exceeded expectations. Getty intends to expand its relationships with 3rd party
    suppliers as a way of leveraging its dominant distribution platform and model. This is
    beneficial to the company because there are virtually no incremental operating costs
    despite the somewhat higher percentage of gross sales paid to the supplier.

Klein also mentioned that an important factor contributing to their current success has
been getting staffing to the right size for an all digital business. In March 2000,
Getty Images had 3,200 employees. They ended 2002 with just under 1,700 people and
believe they will not need to add people, at all, to grow their revenue. "Quite simply
we can now add significant incremental revenue against a largely fixed cost base and
declining capital expenditure," Klein explained. They have also reduced their offices
around the world from 88 to 44 according to a London Sunday Times interview with Mark
Getty.

Business Outlook

For the first quarter of 2003, the company expects to report revenue in the range of
$120 to $124 million and diluted earnings per share of $0.15 to $0.19.

The company has established "agressive, yet achieveable goals" for 2003 according to Klein
and expects to report revenue in the range of $485 million to $515 million. This
would be between a 5% and an 11% growth for the year. It is worth noting that at the
beginning of 2002 Getty Images estimated that their revenue for the year would be
between $430 and $460 million and their actual revenue at the end of the year exceeded
the top end estimate by $3 million. They expect diluted earnings per share for 2003 to
be between $0.70 to $0.90.

Gross Margins

Gross Margins essentially consist of Getty's share of revenue after they pay royalties
to photographers and 3rd party vendors, plus the costs associated with the sale of
CD-ROM discs. Getty's share was 70.6% of total revenue collected in Q4 2002 and this was
down from 71.7% in Q3 2002. The decline is primarily attributed to increased sales of
material from 3rd party vendors. Some of the 3rd party vendors receive 50% of sales, but
due to contractual changes most will be getting no more than 40% in 2003 and beyond.
This should cause Getty's margins to rise despite expected increases in 3rd party sales.
Getty's goal is to reach 75% gross margin for the company in 2004.

Percent Of Revenue

In the 4th quarter stock photography (a combination of RM and RF image licensing) was
84% of total sales, the same as Q3 2002.
However, the RF proportion rose to 30%, up from 28% in Q3, and RM revenue was
down to 54% from 56% in Q3. The majority of the rise in RF sales was from 3rd party
content (read Digital Vision). The trend for the entire year is as follows.






















  

Q1 2002

Q2 2002

Q3 2002

Q4 2002

Rights Managed

56%

57%

56%

54%

Royalty Free

26%

26%

28%

30%

News & Sports

9%

9%

8%

7%

Archival & Footage

9%

8%

8%

9%



It should be noted that there has been a steady rise in the RF share and a steady decline
in the RM share for the year. This difference may be accentuated in 2003 given the
added marketing push and the price restructuring Getty intends to give to RF in 2003.
Another factor that makes RF sales attractive for Getty is that according to Klein
"85% of all RF sales occur on the web, at list price, unassisted by a human being."

The above percentages translate into the following dollar figures for the 2nd, 3rd and
4th quarters.

















  

Q2 2002

Q3 2002

Q4 2002

Rights Managed

$64.58

$66.192

$63.56

Royalty Free

$29.46

$33.096

$35.31

News & Sports

$10.20

$9.456

$8.24

Archival & Footage

$9.06

$9.456

$10.59



Average Price Per Usage

The average price per image, worldwide, for Rights Managed Images was $539 in the 4th
quarter a drop from the $560 in Q3 2002 but still well ahead of the $500 for Q2 2002 and
$490 for Q1 2002. One of the reasons for these big jumps is that this average figure
can be very heavily influenced by a few large sales. A more interesting figure, we believe,
is the actual number of units sold which can be easily calculated by dividing the
average price into gross revenue. We have provided that analysis below.

The average price of an RF image in the Q4 2002 was $120, up from $103 in Q3 2002 and
$99 in Q2 2002. This was due to selected price increases and the strength of sales of
the 3rd party content (mostly Digital Vision images) that are priced higher than those of
PhotoDisc. Despite this price increase RF volumes were down about 10% sequentially when
compared to the previous quarter. This was attributed to an expected seasonial slowdown.

CFO, Liz Huebner said, "Bear in mind that our reported revenues for Royalty Free
collections include CD sales which represent about 20% of our RF revenue. The
price-per-image numbers that we provide are for single images only and as a result take
no account at all of CD sales so it is not possible to get a 'precise' measure of overall
Royalty Free volume using price-per-image data."

Selling Stock believes that while we can not determine a "precise" number of single
images sold by deducting 20% of revenue for CD sales we should be able to get a ballpark
figure which we believe provides useful trend information.














<

















































  

Q2 2002

Q3 2002

Q4 2002

ROYALTY FREE

  

  

  

Gross Revenue

$29.46

$33.096

$35.31

80% - online sales

$23.568

$26.477

$28.25

Price Per Image

$99

$103

$120

Number Images Licensed

238,060

257,058

235,400

  

  

  

  

RIGHTS MANAGED

  

  

  

Gross Revenue

$64.58

$66.192

$63.56

Price Per Image

$500

$560

$539

Number Images Licensed

129,160

118,200

117,922

  

  

  

  

Total Images Licensed

367,220

375,258

353,322

Percent RF

65%

69%

67%

Percent RM

35%

31%

33%




By setting aside 20% of the RF revenue for CD sales (close to $7 million in the Q4)
for the last three quarters we have made some estimates of the total number of
images licenced and the percentage of these images that were RF or RM. While the
RF numbers may not be as "precise" as some others in this report they may
provide useful trend information. According to these figures the number of RF
images licensed is about double the number of RM and clearly RF use is rising
while RM use is falling. A very high percentage of customers are finding what
they need in RF imagery.

Geographic Breakdown

The geographic breakdown of sales worldwide remained roughly the same as the previous
quarter, with the Asia/Pacific region showing the strongest upward trend for the
entire year. The numbers were:














  

Q2 2002

Q3 2002

Q4 2002

North America

58%

57%

56%

Europe

37%

37%

37%

Asia/Pacific

5%

6%

7%



Goals for 2003

The top priority for 2003 is to grow revenues according to Klein. With high gross margins
and relatively fixed costs most of the increased revenue can drop to the bottom line as
profits. Revenue growth will come from a broad range of initiatives aimed at maximizing
the current business opportunities as well as expansion. Six key areas of focus in 2003 are:

  • Near the end of the first quarter all RF offerings will be consolidated under the PhotoDisc
    name with a new brand and logo, new imagery, differentiated pricing and an innovative
    approach to marketing the collection. They will also be a new segmenting of categories and
    re-pricing some of the categories at both the high and low end.

    Klein points out that RF has been slow to be exported to Europe and he believes that is mostly
    because of the lack of relevant content. Getty will be adding much more content designed
    specifically for the European market as they believe the split of the RF business between
    North America and Europe has for some time been a function of focus and content. In order
    to get appropriate European content the research staff that determines what the customers
    want is being beefed up in Europe and art directors to work with European photographers
    are being added.

  • To leverage their distribution system Getty has always focused on offering a full
    range of the products and services their customers need and value. They will be augmenting
    the range of content on their site by adding more 3rd party image providers. 3rd party
    providers are responsible for all the sourcing of the imagery, the digitization and
    preparation of the images for online and CD delivery, and most of the marketing. Digital Vision,
    the 2nd largest seller of RF images in the world is already making significant sales on
    Gettyimages.com and Getty has signed up many more 3rd party image providers whose work
    will soon be infront of there customers. These providers range from additional
    RF collections, to film partners to other 3rd party relationships like Time-Life.

    Getty expects 3rd part sales to go from approximately $20 million in 2002 to around
    $40 million in 2003.

  • In the 4th quarter they began a film digitization project that will revitalize the
    film business. The entire core collection is now digitized. It will be available for
    customer search and download by the end of March and a new marketing campaign for film
    called "No Compromise" will be launched. This greatly enhances the customer experience
    because they will be able to view footage online and make immediate buying decisions,
    rather than being faced with the current system of having a tape shipped to them for
    their review. At the moment 15% of final fulfillment of motion picture footage is being
    done online.

  • There will be new product offerings for editorial customers to drive the News,
    Sports and Entertainment business. The recently acquired a small Entertainment photography
    business.

  • They will leverage the data and knowledge that the new back office and tracking
    systems now offer. They now have a full year of data on customers and sales and can
    leverage the current customer base as well as identify new customers and business
    opportunities. Klein said they are already seeing how this can help Getty "better optimize
    pricing, increase efficiencies and provide better customer service."

  • They will begin to develop two new revenue sources designed to enhance their partnership
    with their customers. These are:

    • Hosted media asset management services. These are a natural extension of Getty's
      core capabilites. Some examples are the hosting of Boeing's Photo Store and an agreement with
      FIFA (the governing body of World Cup Soccor) for Getty Images to host their digital assets
      including all logos, marks, photography and video clips for all events through 2006.

    • Assignment services. When customers need to hire a photographer they want them to
      come to Getty Images to fulfill that need. There will be a simple directory of assignment
      photographers and in some cases Getty will directly manage assignment shoots for their
      customers.

    They do not expect significant revenue from either of these sources in 2003, but believe
    they will grow as lines of business.


  • Copyright © 2003 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.  

    Comments

    Be the first to comment below.

    Post Comment

    You must log in to post comments.

    Stay Connected

    Sign up to receive our FREE weekly email listing new stories posted.

    Follow Us

    Free Stuff

    Recent Stories – Summer 2016
    If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
    Read More
    Corbis Acquisition by VCG/Getty Images
    This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
    Read More
    Finding The Right Image
    Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
    Read More
    Where Is The Stock Photo Industry Headed?
    For new readers, or those who may have missed some of what I have written over the last few months, the following are a list of stories worth looking at to get a sense of where the industry is headed.
    Read More
    Photography As A Career
    It’s that time of year when high school seniors are waiting for college acceptance letters and thinking about future careers. If you know someone who is thinking about photography as a career you mig...
    Read More
    2014 Stories You May Have Missed
    For many the end of the year is a time to review past experiences and consider whether it makes sense to chart a new course in the year ahead. Stock photography has changed dramatically for professio...
    Read More
    More Stories In 2014 You May Have Missed
    Every so often I put together a list of the most important stories we’ve published in the recent past. If you are engaged in the business of stock photography the links below are to stories that we’v...
    Read More
    Getty: A Three Month Review
    In all the excitement about 35 million FREE images it is worth looking back at some of things that have been happening at Getty Images in the last three months. After watching revenue decline for the...
    Read More
    State Of Stock Photo Industry: 2013
    If you’re looking for an overview of the state of the stock photo industry as of October 2013 the stories listed below are a good place to start. Regular readers of Selling-Stock will have seen all t...
    Read More
    Education Market Shifts To Digital
    If supplying pictures for educational use is a significant part of your business plan you need to be aware of how the market is trending toward digital delivery and how that is likely to affect the p...
    Read More

    More from Free Stuff