May 2002 Selling Stock

Posted on 5/1/2002 by Jim Pickerell | Printable Version | Comments (0)

476

MAY 2002 SELLING STOCK




Volume 12, Number 5



©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
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

"When people are free to do as they please, they usually imitate each other."


Eric Hoffer





TEXTBOOK REVENUE




More Rights For Same Money = Less To Bottom Line

March 15, 2002 - (Story 466) Pricing textbook uses is getting more and more complex as publisher seek
broader and broader rights for the images they purchase. The request are no longer a simple 1/4 page
North American rights, for under 40,000 copies of a particular title.


With the variety of ways a new publishing product can be sold it is also easy to understand why
publishers want to acquire such broad rights. For the most part we have no problem with publishers asking
for broad rights, and in licensing such uses. But the fee charged needs to be commensurate to the rights
granted. What is tending to happen is that publishers are often getting rights to make many uses for a
fee that is only slightly higher than a single use fee.


Image sellers must take the time to carefully break down broad rights requests before quoting a price.
Failing to do this may not result in an immediate drop in revenue in the current year. The long term
effects are often overlooked, but they can lead to a significant loss of income for both stock agencies
and image creators in years to come, if the trend isn't immediately corrected.


Consider a recent request that many photographers and agencies received from a publisher for a new book
project. I will not identity the publisher because this is an example of the current practices of many
publishers.


Request


XX is developing a new middle school World Cultures and Geography program to be published by XX. XX
anticipates publishing this program in three versions, a full survey (all units), an Eastern Hemisphere
volume (Unit 1 & Units 4-8), and a Western Hemisphere volume (Units 1-4), for first publication in the
year 2003. Regardless of which volume your image(s) appear in, the total print run for all three volumes
combined will not exceed 250,000 for the life of the program. We would like to use the images listed on
the next page in the pupil books with a facsimile of that pupil book page also to appear in an annotated
teacher's edition. XX requests the following non-exclusive rights, for use in this program:


  • Publication date: 2003


  • Language: English


  • Binding: Hardcover


  • Term: 10 years from the date of this agreement or life of the program, whichever is later


  • Other Formats: Password-protected companion web site (5 year term)


  • Estimated First print run (entire program): 30,000


    Life of product print run (entire program): 250,000


  • Territory: North America - United States, U.S. territories and dependencies, Canada and schools
    that serve U.S. military and other U.S. agency related personnel.


    While the primary sale of the pupil edition will be in hardcover form, we also request the right to bind
    the material in which the image(s) appear(s) as a separate soft cover module. XX estimates that less than
    10% of its customers prefer this format.


    XX may need to make minimal changes in the program to meet state-specific adoption requirements.
    Therefore, we request that you allow XX to publish minor revisions of this program (less than 10%) within
    the term of this agreement.


    We request the right to sublicense the images on a non-profit basis, for publication in whole or in
    part, in forms and special formats for individuals with disabilities who are unable to read print in a
    conventional manner.


    We also request the right to show facsimiles of some complete pupil's edition and/or teacher's edition
    pages in XX's promotional materials related to the program.


    That's it. The publisher wants a single price that will cover all these uses. In discussions various
    sellers had with the Photo and Art Manager it seemed that if all of these rights weren't granted the
    publisher would choose another image.


    So lets break it down.


  • The only limiting factor is the total press run of 250,000 copies. There are two different
    strategies that might be used to calculate the base price since the images may be used in three different
    books. One is to price the use as three books. The other is to price it as a single project.


    Historically, the way to approach this would be as three separate books with a different price for each
    unique ISBN number. However, with the advent of custom publishing and the fact that they intend to make
    "minimal changes in the program to meet state-specific adoption requirement," it is entirely possible
    that there will be in excess of a hundred different ISBN numbers before this program is completed. It
    would seem unreasonable to price each one of these uses (some with tiny circulations) as separate books.


    In responding to this request, some agents used the three book strategy. Clearly that will result in a
    much higher number than a single project with 250,000 circulation. Some sellers concentrated on the total
    number of copies to be distributed. One thing that becomes very clear is that anyone who is still pricing
    textbook uses on an "under 40,000" and "over 40,000" strategy needs to quickly develop a sliding scale
    for higher press runs.


    I will offer separate breakdowns here for pricing the use as a single 250,000 circulation projects, and
    as three separate 80,000 circulation books. I will use the 1/4 page numbers in Negotiating Stock Photo
    Prices
    on pages 274-275 as a basis for these calculations. The highest base figure offered in NSPP is
    for 200,000 circulation. We have interpolated that up to $410 for the 250,000 circulation.


  • The prices in NSPP are for English Language, North American rights. Some sellers set their base
    price for U.S. English Language use and add an additional 25% for the rest of North America.


  • For the separate annotated teachers edition stock agencies we normally add between 15% and 25%.
    We'll use 15% here.


  • For web use most agencies normally add 50% of the base North American rights figure.


  • The state revisions factor is a real problem. Many stock agencies have historically charged an
    additional 10% for each revision that has a separate ISBN number. However, this fee was normally charged
    when there were only a few revisions. If there are ten or more with only slight modifications, this
    add-on seems inappropriate. What is happening now with the ease of manipulating pages digitally is that
    there are lots of "custom" editions and none of the publishers are giving us very straight answers about
    how many that might be. (Often, in up front negotiations they probably don't know because that will not
    become clear until they start selling the book.)


    If the concept of additional payment for future revisions is eliminated, then it may be necessary to
    make some increases in the price for higher circulations in order to compensate for the loss in "revision
    payments" that were made in the past. This may be the only practical way to make the total compensation
    for the use of the photos equitable.


  • An additional percentage of the base North American rate of 25% to 50% is normally charged for a
    separate soft cover edition. Since in this case it will be basically the same book and no more than 10%
    of the total press run, we believe it is reasonable to allow the publisher to produce these books at no
    additional charge so long as the total number of copies of all versions of the book is less than 250,000.
    On the other hand, based on past practices, and past pricing structures there is justification for
    charging an additional percentage for this use.


  • The publisher is asking permission to sublicense the image for other formats. This is a dangerous
    door to open. In this case the "special formats" is narrowly defined. However, it is not clear that each
    of the "special format" uses is counted as part of the 250,000. They should be. Giving a user the right
    to sublicense should be avoided whenever possible.


    Despite our concerns relating to this use, we would have suggested in this case that nothing additional
    be charged for the "special format" use as long as the publisher is paying a reasonable price for the
    basic use.


    Here's how the numbers break down.



































         

    Circulation   

    Circulation   

         

    250,000   

    80,000 - 3 Titles   

         

         

         

    Base Price   

    $ 410.00   

    $ 291.00 per title   

    Teachers Edition 15%   

    62.50   

    43.65 per title   

    Web Use 50%   

    205.00   

    145.50 per title   

    State Revisions 10%   

    41.00   

    29.10 per title   

         

         

         

    Totals   

    $ 718.50   

    $ 509.25 per title   

    Total 3 Titles   

         

    $ 1527.75   




    Now for the bad news. According to Photo and Art Manager on this particular project many major
    agencies were charging between $300 and $400 for this use. We checked with some of the agencies
    named and determined this was what they had charged. A fee of $400 doesn't look all that bad for
    a textbook use until you realized what rights are being given away for this price.


    In reporting to their photographers most agencies supply minimal details about a use such as "1/4
    page textbook, 250,000 circulation." In a case like this that is not a full explanation.
    The frequency of these expanded uses are rising dramatically, but the average fees for photo
    usage have not been keeping pace. Publishers have been raising prices to the consumer, but they
    argue that they can not afford to pay more to the content providers.


    Given the additional uses they are requesting it is worth working backwards and considering what
    a base price would be for a standard 40,000 print run project with no additional uses, if we
    assume that a reasonable fee for a project with this scope is in the range of $350 to $400.


    If the base price for 250,000 circulation were $220 and we added 15% for a teachers edition, 10%
    for state revisions and 50% for web use the total fee would be $385.




















         

    Circulation   

        

    250,000  

        

        

    Base Price  

    $ 220.00  

    Teachers Edition 15%  

    33.00  

    Web Use 50%  

    110.00  

    State Revisions 10%

    22.00

      

      

    Total

    $ 385.00



    Since the rates in NSPP for a 40,000 print run are about half of the rate for a 250,000 print run, if
    the base price is $220 for a circulation of 250,000, a picture printed in a corresponding book of only
    40,000 would only be worth about $110. If you are ready to sell this picture for $110 to the next
    publisher who comes along and wants to do a single book with a 40,000 print run then $385.00 may be a
    reasonable fee for all these uses. There are very few image sellers who would agree that $110 is
    unreasonable fee for a book with a 40,000 copy press run.

    If the publisher was buying 20 or 30 pictures from you that might be a justification for a somewhat
    reduced price, but some of the companies who were giving these low prices weren't licensing very many
    images to the publisher for this particular project.

    Why Are Higher Fees Justified?

    The prices students are charged for books has been rising dramatically. A textbook may sell for $40 to
    $60. The royalty for each photo in that book, based on the 40,000 circulation rate in NSPP is about 1/2
    of one cent per image. If the publisher sells 200,000 copies the price the buyer pays per copy does not
    drop, but the publisher realizes certain additional savings in marketing as a result of selling a larger
    quantity. Nevertheless, the royalty the photographer receives drops dramatically to only about 2/10ths of
    one cent per book. There seems to be no good reason why the creators income should be reduced so
    substantially relative to the publishers income. 200 images in a book might cost the publisher between
    $.40 to $1.00 of that $60 retail price.

    Reuse Revenue


    Significant income has been generated from re-use and secondary uses. Keep in mind that with the above
    project you have effectively eliminated reuses from this publisher for the next ten years. If reuse fees
    are eliminated it may have severe impact on the future profitability of a photographic operation. In the
    long run photographers will stop shooting many of the images publishers need because they can no longer
    make a profit for their efforts.

    Photographers and stock agencies have tended not to keep good records of that portion of their income
    that comes from reuse as compared to the original use. Some agents have estimated that 20% of their
    revenue comes from reuse. I believe in some cases that figure is probably much higher, but to lose even
    20% of total revenue can be a severe hit on a business.

    Assume total revenue from licensing to books is $100,000 and $20,000 of that was for reuses. Assume the
    average per image price for those $80,000 of first uses was $200 which means there were 400 uses. If
    reuses are eliminated, just to break even in licensing the same 400 images the average price per use must
    now be $250. If, in fact, the reuses make up 30% of that $100,000 in revenue then there are only 350
    first uses for that $70,000. In order to continue to earn same $100,000 you were making when there was
    reuse income each image formerly priced at $200 must now be priced at $285.71. These higher prices don't
    provide any increase in overall income, they are break even prices.

    Transition


    Part of the industry's problem is that we are in transition between an old system and a new one. In the
    old system it was a big deal to come out with a new version of a book. When a publisher produced a new
    title it was assured that lots of copies would be printed and few changes would be made. Thus, pricing by
    version made sense. Now it doesn't.

    As changes occur in what publishers can do with content, sellers need to adjust their methods of pricing
    uses to make sure they receive adequate compensation for all uses. Many sellers are afraid to quote big
    numbers because they vary so much from the kinds of numbers they were quoting previously. These sellers
    need to focus on how much additional use is being asked for, compared to what the publishers were asking
    previously.

    The photo industry also needs to have a better understanding of the portion of total revenue that
    currently comes from selling secondary rights beyond the initial publication right. And they need to look
    at what these figures were two or three years ago. These figures would help establish how much the prices
    for certain circulations need to be raised in order to balance the revenue lost by not charging for each
    new version.

    If publisher want long term rights, but can't afford to pay high fees up front then they need to develop
    some system for providing additional compensation to the creative suppliers in future years as the
    product continues to generate income. It is easy to understand why the publishers can not afford to pay
    high fees up front, but that is no excuse for denying creators an equitable share of future revenue.


    SOME PUBLISHERS PAY MORE


    March 29, 2002 - (Story 469) After publishing the story above on our online site we heard from several
    people who agreed that it was a major problem and who said they needed to more carefully examine the
    practices of their organizations.

    We also heard from some photographers who deal with publishers directly, instead of through an agent.
    These photographers are receiving significantly better fees for the images they license to textbooks.

    One photographer reported that he was regularly able to get fees in the $600 to $650 range for
    publication of a single title with circulations under 100,000 copies and including some additional web
    use.

    Another photographer reported a specific example where he negotiated a $320 fee for one-time,
    non-exclusive, English language use for a 1/2 page photo with a print run up to 40,000.

    A few months later the publisher returned and wanted several additional rights for the project. These
    additional rights included the rights to publish some copies in Spanish (but all to be sold in North
    America) and to raise the press run to 60,000. The publisher also wanted to include the image on a
    Student & Teacher CD-ROM with a print run of up to 5,000 copies, and a six year license to publish the
    same material on an internet/extranet password protected website. Finally, they wanted rights to make
    revisions of less than 10% in the overall content of the project without it being considered a new
    edition.

    The photographer got an additional fee of $1288 for these additional rights. Clearly, some publishers
    are willing to pay reasonable fees if you only ask.

    Interestingly, this same publisher told the photographer a year ago that they didn't want to deal with
    the intricacies of different rates for different sizes. They asked if the photographer could provide a
    single rate for any size up to full page North American use under 40,000 copies. The photographer said,
    "Sure, how about $320?" (At the time this was the up-to-40,000 full-page rate listed in the 4th edition
    of Negotiating Stock Photo Prices. Since then the 5th edition of NSPP has come out and the current
    full-page rate is $438.)

    Since that quote the photographer has been getting $320 for spots, 1/4 page, 1/2 page uses from this
    publisher. Now it appears that in at least a few cases the publisher needs even broader rights and they
    are willing to pay a reasonable fee for those additional uses. This publisher is not griping when the
    quote goes over $1,000 for inside textbook use.

    Reasonable fees are possible for those who hold the line.


    HARPER COLLINS SUED


    Unfair Dealings With Authors

    March 15, 2002 - (Story 467) If you had a book in print with Harper Collins between January 1993 and
    April 2001, you might be a class member in an action against the publisher in New York. The New York
    appellate court affirmed in December the certification of the class in this lawsuit.

    Plaintiffs Ken Englade and Patricia Simpson charge that authors were not treated fairly when Harper sold
    copies of its U.S. works to foreign affiliates for resale in foreign countries. The plaintiffs accuse
    Harper of selling books to its affiliates at improperly high discounts of up to 75%, leading to low
    author royalty payments for those sales. The plaintiffs claim that Harper breached its implied
    contractual duty of fair dealing and express royalty rates clauses.

    In the next several weeks class members should receive notice from the trial court about the action. The
    court's notice will contain instructions for authors who do not want to be represented in the
    class-action suit, giving them a chance to opt out. Those who remain in the suit would receive the
    benefits of any favorable court judgment or settlement, but would not be permitted to bring any
    individual claims they may have against Harper Collins for these same acts. If you have any questions you
    may contact Robert Lax, an attorney for the plaintiffs at 212-818-9150.


    ROYALTY PAYMENTS


    March 29, 2002 - (Story 468) It's tax time and photographers are taking a careful look at what they
    earned in 2001. Many are not happy. It is not just that sales were down in 2001, but in many cases
    photographers are not being paid by their agencies for all the sales that were made.

    Photographers are increasingly concerned that they are being cheated by their agents. The following are
    some reasons why.

  • In some cases photographers get sales reports in the month after the sale is booked. Their
    contracts indicate they will be paid for these sales three or four months after the sale is booked, or in
    the month after the money is collected. This practice would be fine if that's what happened, but too
    often it isn't.

    Photographers who are diligent in checking payments against sales often find that there are sales going
    back more than a year that have not been paid. Usually, they receive no explanation as to why this is
    occurring.

  • Some sales are legitimately cancelled when a customer changes his or her mind before using the
    image. However, there are a few problems with cancellations. First, in many cases cancellations are never
    explained to the photographer in a future sales report -- payment for reported sales just never shows up.

    Second, too frequently some agencies book sales before the customer has made a definite commitment to
    use the picture. When the customer comes back a day or two later with a slightly different use, they
    cancel the first sale and book a new sale for the revised price.

    Again, such cancellations are understandable, but what makes photographers very suspicious is when sales
    are cancelled months or even more than a year after they were initially booked. At the very least, this
    tends to make photographers believe that their agent wasn't doing a very good job of following up to
    collect after the sale was booked. Collection is an important part of the selling process, and the
    agent's responsibility.

    I recently reviewed one photographer's records of several year from one agent and over 13% of the sales
    (in dollar value) had been cancelled beyond what might be considered a reasonable period of time for
    cancellation. This seems to be a very high percentage.

  • Most U.S. agencies have a term in their "conditions of sale" that says if a sale is cancelled a
    "cancellation fee" will be charged. The time period and the amount vary from agency to agency, but
    agencies with the greatest number of cancellations usually don't provide any evidence that they charged
    their customers anything when sales are cancelled. The argument often given is that in order to maintain
    "good relations", the customers were allowed to cancel free of charge. However, this may not serve the
    best interests of the photographer.

    Normal cancellation policies of most non-U.S. agencies are not clear. It may be standard practice in
    other countries to be more lenient in allowing customers to cancel without a fee. Cancellations tend to
    appear more frequently in connection with foreign sales, than with U.S. sales.

  • A favorite trick of one agency is to write the royalty check in the month when the money is owed,
    but hold the check for a month or two before mailing. This gives the agent time to get cash in the bank
    to cover the check. It is not clear whether the oldest checks are mailed first, or whether some
    photographers are given favorable treatment. This agency must think that their photographers are not
    smart enough to look at the date on the check, or that if they do they will assume the postal service was
    at fault.

    Of course, the photographer can check the date on the envelope to see when the check was actually
    mailed. And when this practice is repeated payment after payment photographers quickly understand that
    their agent is not treating them in a fair and responsible manner.

  • Some agencies never pay their photographers until they call and request payment. Most photographers
    who supply images to such agencies are aware of this practice and make frequent calls to get their money,
    but photographers should not have to beg their agent to be paid.

  • One agency doesn't seem to know what they have paid their photographers. This agency sent one
    photographer a note saying, "tell us how much we paid you last year, and we will send you a 1099 form for
    that amount."


  • One of the favorite tricks of foreign agencies is to tell the photographer that they never received
    an invoice. In many countries the law requires photographers to invoice the agency before the agency can
    pay. The agency normally notifies the photographer of the amount due, and waits for the photographer to
    submit an invoice before they pay.

    Then the agency argues, sometimes as much as years later, that they never received the invoice and
    therefore they could not pay. We believe the "agent" has a responsibility to send the photographer a
    second notice, if they haven't received an invoice within a certain time period.

    Too often the attitude seems to be, "if the photographer doesn't try to aggressively claim what he is
    owed, then we'll just keep the money." One agent even said, "some photographers prefer to be paid once
    every couple years." I would like to meet a photographer who has this attitude.

  • Photographers frequently see uses of their images that are never reported or paid. Photographers
    who catch an agent doing this once immediately become suspicious that there are a lot more uses that have
    not been reported.

    It adds to the photographer's suspicion and mistrust if, once notified of such a use, the agent seems to
    make little or no effort to collect for the sale, or to get to the bottom of what happened and explain it
    to the photographer.


  • Photographers are amazed by agents who go for long periods of time without paying any royalties on
    collected sales, and then suddenly call to ask for additional permissions that might be necessary to
    license one of the photographers images for a big ad sale. If the agent hadn't been paying for past sales
    why does he think the photographer is going to help him license additional rights for another image when
    the photographer knows he will probably never see any money for this new sale either.


  • One might think there would be fewer accounting irregularities with big multi-national companies
    than with small agencies, but that is not always the case. Often some of the smaller companies provide
    more accurate and detailed reporting because they are dealing with fewer sales overall, and with fewer
    variations in types of sale.

    The acquisition and consolidation of brands in recent years have created some major problems for most of
    the acquiring companies. Each brand had different accounting procedures. Often, trying to integrated
    these into one unified system has led to confusion and incorrect reporting for long periods of time.


  • When sales drop off and an agency starts looking for cash to pay expenses the first thing many seem
    to do is stop paying photographers their royalty. They use the cash to cover their operating expenses.
    Operating expenses don't necessarily decrease when income drops.

    The rationale is that it is in everyone's best interest to keep the agency functioning. In theory when
    sales pick up the agent will be able to pay the photographers everything they are owed. Often that
    doesn't work and the agent ends up playing catch up for years. Of course, the agent almost never goes to
    their photographers and get permission to withhold some of the royalties for a specified period of time.

    On the other hand, I know one agent who did just that when he didn't have enough capital to invest in
    necessary digitization for the future. This agent went to some of his most productive photographers,
    explained the situation and asked permission to withhold some of the monies he owed them in order to pay
    other photographers their royalties and invest in the digitization. Each photographer was given the
    option to participate and who agreed would eventually receive all monies owed, plus interest. Many
    photographers supported the agent in this effort. During the time when monies were being withheld the
    photographers were fully informed as to the sales that had been made of their work, and the total of what
    was owed to them.

    If it is impossible to get a bank loan, this is the way to handle the problem. This agent's
    photographers respected him for the way he handled the situation.

  • A few years ago one agent bragged to me that he was a "past master" at figuring out how much of the
    total owed a photographer he needed to pay in order to keep the photographer happy. He said that as long
    as he paid the photographer about the same as he got in the previous pay period the photographer would be
    satisfied. Royalty payments were based not on the total owed, but on what the agent thought he could
    reasonably get away with paying.

    He even had a separate module built into his computer program so he could look at the total sales for a
    given photographer and then pick and choose which of those sales he wanted to pay. Fortunately, this
    agent is no longer in the industry.


  • When photographers call their agents with accounting questions they often get put off. This is
    understandable because the agent may not have the answer at his fingertips, but there is no excuse for
    the agent not to get back to the photographer with an explanation, which too often is what happens.

    What To Do?


    When sales are down two things begin to happen. The activities described above become more prevalent,
    and photographers start examining their sales and payment reports with greater care because they are not
    making as much as they had in the past.

    Agents get away with these practices because photographers have little recourse. The process of auditing
    an agent's records is difficult, time consuming and expensive. Contracts are often for long terms and
    hard to break. And when a contract is broken or terminated the photographer may have a major problem in
    getting the images returned. From time to time various groups of photographers talk about joining
    together to do an audit, but that seldom happens.

    On the other hand, agents should recognize that when these things happen photographers start talking to
    each other. With the internet that has become much easier. An agent can be pretty sure that if any of
    these things happen to any one of their photographer many of the other photographers the agent represents
    are going to hear about it.

    When photographers learn about such problems they tend to do several things.

  • They stop submitting work on a regular basis.

  • They start looking around for another agent to represent them.

  • They bug their agent taking up valuable time that the agent could be using to contact potential
    customers.

  • They start looking very hard at internet solutions that will enable them to handle sales directly
    without the aid of an agent.

    Photographers are also tired of being locked into on-sided contracts that allow agents to continue to
    license rights to their work without paying them any royalties.

    These problems are so widespread that even agencies that are providing honest and accurate reports to
    their photographers have cause for concern. An agent can't just assume that because they are not doing
    any of the things described above that they have nothing to worry about. Many photographers tend to
    distrust all agents because of the things they have heard about a few.

    To maintain a good reputation an agent must not only pay its photographers promptly, but keep them fully
    informed about what is happening at the agency. Photographers tend to trust those agents who send them
    statements and checks monthly. The statements must be easy to read and understand, but at the same time
    give detailed information about how the image was used. Checks should arrive on approximately the same
    day every month. Consistency is important.

    When this doesn't happen mistrust starts to breed.


    IMAGE STATE RESTRUCTURING


    April 15, 2002 - (Story 471) Recently, ImageState has gone through some major restructuring of its
    business. Sheldon Marshall, President of the company, says they had "geared up the business anticipating
    a much bigger business than it is. With the changes in the economy other factors, we found it necessary
    to downsize to meet the level of existing business that we have."

    They have scaled back their London operation and moved the headquarters of the group to New York.
    Marshall and Chief Financial Officer, Chris Adamson, will be working out of New York for the foreseeable
    future. All photographic content has been centralized in the New York office. All relationship management
    and content production will also be controlled from New York. Lindsey Nicholson, former VP of Index
    Stock, has recently been hired to be Director of Photographer Relations for ImageState.

    The International Sales Department will remain in London. Stephen Harvey Franklin, who formerly headed
    ImageState's London operation will be leaving the company. Marshall said, "As a result of the
    consolidation, fundamentally, we don't need someone of Stephen's caliber in the UK. We have downsized the
    management in the UK and are building up our management in the U.S." Currently ImageState has a staff of
    approximately 32 people in New York, and is looking to make additional hires.

    Until the end of March ImageState's had an office in Seattle. Most of the editing and the image files
    for the U.S. operation were handled out of Seattle. That office was closed in March and all the picture
    files were moved to New York by April 6th. In the process of the move the company has been editing the
    files and many of the images either have been or will be returned to the photographers.

    A significant portion of the work had been edited before the company left Seattle and those images that
    they had decided not to keep were returned to the photographers. When they made the move to New York
    there was still a large number of images that had not been edited and all of them were shipped to New
    York. As the editing is completed, any additional images ImageState decides not to keep will be returned
    to the photographers. Much of the imagery they decide to keep will be scanned and placed online.

    There have been rumors that images that are not selected for the files would be put in storage and not
    returned to the photographers. There is no truth to that rumor.

    ImageState has retained a "remote sales staff" in Seattle, but they will be operating from their homes.
    Rick Groman and Mark Karas, former owners of WestStock which was purchased by ImageState in November
    2000, have retired and will no longer be connected with the company.

    The www.weststock.com site will be retained and will focus on supplying smaller sized files for power
    point and SOHO users. Users that need a larger file size will be upgraded to the www.imagestate.com site.

    European photographers will still deliver their images to London where a photo liaison person will make
    an initial edit. However, the final decisions on what images will be added to the file, or selected for
    catalogs, will be made in New York. This will be the case for both Rights Protected and Royalty Free
    images. In the future, London will be primarily a sales office.

    The contract of George Sinclair who was Managing Director for North America was not renewed, and
    Marshall will be taking over operational control for the medium term. Sinclair will be handling a few
    specific integration projects for his remaining months with ImageState.

    John Macfie, former president of International Stock, will be leaving the company later in the year.
    Donna Sickles who was Director of Operations for International Stock is taking over the operations role
    at ImageState. In the last fiscal year ending June 30, 2001, Image State had gross sales of 3,164 million
    pounds and cost of sales (mostly royalties) of 1,203 million pounds leaving a gross profit of 1,961
    million pounds. Operating expenses, not counting a write down of loans to discontinued operations, were
    8,450 million pounds showing a huge loss on operations.

    There have also been rumors in New York that ImageState is in Chapter 11 bankruptcy and has closed its
    doors. There is no basis whatsoever for that rumor.

    Marshall says that in the past year they have been trying to get the company to a break even situation
    and, "now with the restructuring we have put in place, we have managed to do that. We had record sales
    last month and have a much healthier run rate. I believe we are moving forward toward profitability."


  • 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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