New Business Model - Issue 9

Posted on 9/26/2007 by Jim Pickerell | Printable Version | Comments (0)

Issue 9 - Is it all about the customer? Customers will always want more for less, but at some point, there has to be enough revenue for the producer to justify continued production.

Since Getty Images came into existence, CEO Jonathan Klein has always focused on the customer. Back in 1998 in a keynote address at Photo Expo, he said, "Our industry - and when I use this phrase I am focusing on the stock photography business - has found it very difficult to think of our product and our business from the perspective of the customer."

In the stock photo industry, for the most part, the producers' business is separate from the sellers who set the price and negotiate the sales.

Unfortunately, it is very difficult to determine the "cost of production" because in almost all cases, the largest share of costs are laid on the photographer or image producer who is not allowed to participate in setting the price for the usage. Consequently, the only costs the seller worries about are his own.

The seller will lower price to increase volume until it reaches total market saturation. At that point, the seller may begin to raise prices to increase revenue and profits. Sellers tend to believe that because their costs are covered and they give the producer a percentage of sales, the producer is adequately compensated. But if they have no idea what the producer's costs are, they have no way of determining whether the compensation provided is adequate to the producers needs.



In most industries, the one setting the price knows what it costs to produce and bases the price on that, plus a certain degree of profit. In the stock photo industry, we have several problems. We have no idea what a specific image, or even a collection of images, will generate in sales over a period of time. We can not depend on the rate of growth in new customers, and we have no idea how competition will affect sales. Thus, we are constantly at risk of establishing prices that don't cover costs.

We've all heard about companies that were put out of business by Wal-Mart, despite the fact that their sales volume was increasing. Wal-Mart keeps demanding that the product be sold for a lower price until the company eventually reaches a point where the price of the product is lower that it costs to produce. To some degree, the same thing has already happened in the stock photo industry - and the number of producers put out of business seems likely to increase.


Copyright © 2007 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.  

Comments

Be the first to comment below.

Post Comment

Please log in or create an account to post comments.

Stay Connected

Sign up to receive email notification when new stories are posted.

Follow Us

Free Stuff

Stock Photo Pricing: The Future
In the last two years I have written a lot about stock photo pricing and its downward slide. If you have time over the holidays you may want to review some of these stories as you plan your strategy ...
Read More
Future Of Stock Photography
If you’re a photographer that counts on the licensing of stock images to provide a portion of your annual income the following are a few stories you should read. In the past decade stock photography ...
Read More
Blockchain Stories
The opening session at this year’s CEPIC Congress in Berlin on May 30, 2018 is entitled “Can Blockchain be applied to the Photo Industry?” For those who would like to know more about the existing blo...
Read More
2017 Stories Worth Reviewing
The following are links to some 2017 and early 2018 stories that might be worth reviewing as we move into the new year.
Read More
Stories Related To Stock Photo Pricing
The following are links to stories that deal with stock photo pricing trends. Probably the biggest problem the industry has faced in recent years has been the steady decline in prices for the use of ...
Read More
Stock Photo Prices: The Future
This story is FREE. Feel free to pass it along to anyone interested in licensing their work as stock photography. On October 23rd at the DMLA 2017 Conference in New York there will be a panel discuss...
Read More
Important Stock Photo Industry Issues
Here are links to recent stories that deal with three major issues for the stock photo industry – Revenue Growth Potential, Setting Bottom Line On Pricing and Future Production Sources.
Read More
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

More from Free Stuff