Moving Forward In Educational Licensing

Posted on 10/24/2011 by Jim Pickerell | Printable Version | Comments (1)

In discussions with stock agents, and listening to publishing clients explain their needs, at the 16th PACA International Conference in New York this past weekend a few things became clear.
    1 – In today’s business climate educational publishers really have very little idea as to how an image will be used when they license rights. New ways of delivering educational information are being constantly invented and developed. The content in a book may also be delivered on an electronic tablet, a phone, in a power point presentation, multi-media products that use a lot of imagery, on the Internet, via a video, in a game and who knows what new delivery method will be invented next week.

    2 – Budgets are tight, if not non-existent. McGraw Hill recently asked a professional photographer to supply images for textbook use GRATIS. The photographer said, “I thought it was a joke, but they were serious!”
Some of the things publishers try won’t work. In other cases they must give things away in order to support and encourage use of their primary product. Naturally they are reluctant to spend a lot of money on creating something which may not generate additional revenue for them. (Of course, they will pay the technology people who come up with the new product ideas.)

Consequently, buyers want unlimited rights, forever, to use the image in any manner they choose. They manipulate this “forever” concept by extending the “time limit” or by enlarging the “print run” (or circulation, or unique users) to some number that it will be impossible to ever reach. For example, recently some agencies have licensed usage rights for 50 years, and just last week we had a request from Pearson Education for a 5,000,000 print run for a product that is only supposed to be used in Ecuador. (Ecuador has a total population of less than 14 million.) Thus, these uses are effectively unlimited. The publishers don’t intend to track or report them. Image licensors don’t have any way to track them on their own.

Unlimited rights works for royalty free licensors because there is a high demand from a wide range of individuals and businesses for the type of subject matter they choose to produce. But there is also unique subject matter that will never be of interest to more than a few buyers. This type of work is licensed as rights managed and ultimately there must be higher compensation for such images in order to insure their continued production.

It is interesting that while acknowledging that Scholastic Inc. “uses a lot of microstock,” Steven Diamond, Executive Director of Photography said that 60% to 70% of what they need is being licensed as rights managed and that they expect to have a strong continuing need for RM. Certainly they will use the cheapest images they can find whenever possible, but it appears that in a large number of cases they can not find the specialized imagery they need from the cheaper sources.
    3 – Some photographers are beginning to tell their agencies to stop licensing rights to their images for textbook use because the fees paid are insignificant. In addition agencies are beginning to tell their distributor networks to stop licensing the images the agency supplies for textbook use. Some distributors and agencies will honor these requests; others won’t.
In theory, while this would be an immediate loss in income, it is often so minor for the individual creator, and even in some cases for the agency, that it does not represent a significant loss. Moreover, if it is specialist, not easy to find imagery there is always the chance that the publisher will be forced to seek out the prime agency, or the creator, in order to find the needed imagery. In such a case the license fee is likely to be much higher and with fewer or no cuts.
    4 – Individual suppliers can no longer trust big businesses (particularly publishers) to treat them fairly. Maybe there was never a reason for such trust, but it does seem that a decade of more ago there was more reason to believe that contract terms would be honored and there was less aggressive exploitation of suppliers.

    5 - Publishers are unwilling to sit down and talk to agencies, distributors or individual creators about how to develop new systems for pricing usages that will make it worthwhile for creators to continue to create.

    6 – Finally, the stock photo industry needs an entirely new approach to licensing educational uses. In order for this to happen, licensors need more open discussions among themselves. They also need to find a way to get the publishers to the table to talk.
Modest Proposal

We may need to throw out the entire strategy for pricing educational uses that has been used in the past. Publishers have a very unclear vision as to how they might want to use the images they license over a period of time. That situation is unlikely to improve. If anything, it is likely to get more murky, rather than clear. Thus, our attempts to precisely define certain allowable uses over a long period of time simply won’t work.

At the same time, low fees for extensive uses over a long period of time don’t work for creators and don’t provide incentive for continued production, or for the creator to even to go to the trouble to make already produced images easy for publishers to find.

Thus, I believe we should begin to offer the educational publishers (and only them at this point) a license for unlimited use of an image for two years. At the end of the two year term a new invoice for the same amount and for an additional two years would be submitted. If the publisher does not want to continue to use the image, then there is no need to pay the invoice. But, in that case the image must be removed from all online databases and the customer’s internal storage. If the publisher wants to continue to use the image he pays the invoice to “rent” the image for another two years.

If the seller fails to present a new invoice the publisher may continue to use the image without any violation of copyright until a new invoice is presented. A new invoice will be presented every two years until the publisher determines that he is no longer interested in using the image.

Normally, the price for each additional two years would remain relatively the same as the price on the original invoice, but the price could be adjusted for cost of living increases and to take into account dramatic adjustments up or down in how the image was being used at that time.

Two years seems a reasonable time without entailing burdensome administration on either party. My preference would be to invoice every year, but I can see how that might be burdensome to the publisher, although I could certainly charge a much lower fee if it was only for a one year rental.  Three to five years is way too long. That would be unfair to the creator and make a fair fee too difficult to calculate.

I will be writing more about this strategy and what may be necessary to get publishers to agree.


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 301-251-0720, 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

  • Bob Daemmrich Posted Oct 24, 2011
    Thank you, Jim for keeping up with this topic. Pricing issues have to be simplified moving forward to make a workable solution for creator and publisher. In my opinion the business relationships and trust of the past has eroded so far that it's no longer a wise option for an upcoming talented photographer to specialize in education publishing.

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