Missing Numbers: Costs To Create Images

Posted on 4/8/2011 by Jim Pickerell | Printable Version | Comments (1)

Many photographers licensing images at RM and traditional RF prices believe that it is impossible to have as profitable business licensing images at Microstock prices. They argue that despite the fact that some microstock photographers earn significant revenue due to sales volume their expenses must be so high that there is very little profit for their time invested.

Over the years I’ve written a lot about the gross revenue generated by the stock photography industry and the revenue earned by individual photographers. Getting a handle on the costs to generate that revenue is much more difficult. Photographer surveys that we did in the early 2000s showed that on average a photographer’s net revenue after deducting expenses and before taxes and paying themselves a salary for their time tended to be about 40% to 50% of the gross revenue they took in. However, this varied widely from photographer to photographer. For most photographers as gross revenue rises the cost of operating their business tends to become a smaller percentage of gross revenue. For the most part photographers tend to be unwilling to talk about what it costs to operate their businesses.

In addition, given the ways the stock photography business has changed in the last few years, I’m not sure we can rely on old ratios to extrapolate net costs and profit based on gross revenue. Film and processing used to be a major cost. That cost has now been replaced with storage media which I suspect is cheaper in the long run for producing a similar number of images. On the other hand, now photographers must spend much more time after the shoot preparing images for marketing than used to be the case.

Any photographer who wants to earn his or her living taking pictures must track and try to control costs. Among the variable costs are models and how much the photographer pays for their services; whether he has studio overhead or works out of his home; access to certain locations and sets; the cost of labor in preparing the imagery for distribution and a host of other factors. Thus, the fact that one photographer can’t have a profitable business at a certain level of income doesn’t mean no one else can.

When considering the revenue a photographer can generate from microstock sales another thing to consider is that many photographers are producing images as a sideline to another line of business. Many graphic designers are creating and licensing images as a sideline to their primary business of designing brochures and web sites. The majority of their income comes from their graphic design work. The revenue generated from licensing stock imagery is simply a lucrative supplement. Graphic designers also tend to have some major advantages over photographers who do nothing but create images. They tend to have a better understanding of what customers want because they are customers themselves and buy photography. In addition, trained graphic designers often have the ability to manipulate photographs in Photoshop and Illustrator and create images that have more appeal to some customers than images straight out of the camera. Many photographers believe customers should want to buy “their vision” while the customers have their own ideas about what they want which may be quite different from what the photographer would like to sell.

Ron Chapple, a very successful photographer in the film era, has shared details of his experiences in trying to establish a microstock business. He concluded that he couldn’t make the business profitable with a collection of over 17,000 images and despite having a significant number of sales. Many photographers then concluded that if someone as successful as Ron couldn’t make microstock profitable then no one could. On other hand, I know of another experienced traditional RF shooter who is submitting images exclusively to iStockphoto and has fewer than 2,000 images in his iStock collection. In 2010 his net royalties were a little less than $500,000. He shoots people and lifestyle and knows what the market wants. If anyone were to look at his portfolio and consider what it probably cost to produce that imagery, I think they would have to conclude that he has a profitable business.

Another iStock photographer organized a model released crowd shoot in a theater. This is high demand subject matter because the vast majority of existing theater images are not released. This photographer was able to get approximately 50 models – a local theater group – to participate for free and the shoot has become very profitable. If it had been necessary for him to pay for models there is no way he could have ever justified doing the shoot. A big part of profitability depends on a photographer’s skill at controlling costs.

While we usually have no idea what various shoots cost iStockphoto provides information that helps photographers make more educated guesses about the potential income any given image might generate than is possible to discern by looking at Getty, Corbis, Alamy or any of the other traditional web sites.

Photographers can go to my story Microstock Income Potential – 2010 Figures and see the number of times the images belonging to various photographers have been downloaded in 12 months along with estimates of net royalties earned. Then they can go to iStockphoto and look at the portfolios of any of these photographer’s, see the kind of work they do and the number of times individual images within the portfolio have been downloaded. With that information they can estimate what it would cost them to produce the same or a similar images and the possible demand for such images.

Photographers can also search for subjects they are planning to shoot and see how frequently they are in demand. They can use rough estimates of how much the average photographer earns per download and make an educated guess at to how frequently a picture they might produce will sell. While this is far from perfect information it is vastly superior to what it is possible to learn from looking at the web sites of traditional distributors.

Stock has always been a risky and speculative proposition. In one sense it is much more risky today given the huge and ever growing oversupply of imagery relative to demand. But, with the information available today it is possible to make more educated judgments than was the case in the past, if the photographer is willing to take the time to do the research.

Based on information I have been able to collect over the last few years from photographers who earn 100% or their annual incomes from image licensing, I believe I can identify more with profitable businesses who are licensing their images at microstock prices than those who license their images as rights managed. This involves some very speculative and unscientific judgments, and I may be wrong, but I think many rights managed photographers are under estimating the potential of microstock and failing to accept where the demand for still photography is headed.

Copyright © 2011 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 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.  


  • Ellen Boughn Posted Apr 11, 2011

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