5RANDOM THOUGHTS 110
October 11, 2005
Another Paradigm Shift
Think buyout. Most photographers will react in horror. But I see a lot of evidence that the big distributors are going to move to wholly owning as much of the imagery they distribute as possible. We've seen Jupiter move strongly in this direction and recently Corbis bought Image 100. I'm getting hints that there are a lot more deals of this type in the pipeline.
Many RF production companies are trying to do more deals where they own the images produced rather than take them in on a royalty basis. This is not a totally new phenomenon with RF, but I think the emphasis on wholly owning is increasing.
One of the reasons is so the images can be marketed in many ways at many different price points including subscription
So what's this mean for photographers? For one thing it probably means that many of these companies will be more inclined to work with photographers who will give them a buyout price for a particular project, rather than insisting on a royalty on everything. Given current royalty rates at many companies, photographers need to think long and hard about whether it makes more sense to insist on being paid a royalty and hope that the images will generate significant revenue over time, or to take an immediate payout for doing a project and invest that money in more shooting, or somewhere else.
Photographers who have built an extensive file over a period of years - of the kind of imagery that doesn't really go out of date -- should consider whether they want to sell their file, or a significant part of it, outright, rather than hanging onto the imagery in hopes they will earn even more revenue over time. In used to be difficult to find a buyer for a file. Presently, I think there are a lot of them lurking in the wings.
And finally, recognize that some photographers are going to take advantage of this opportunity to sell images. Complaining about this trend will probably do no more to stop it than complaining about RF did to stop it. Also, the imagery the distributor wholly owns is likely to be given the best position in the search order on the portals making it that much harder for those who insist on royalties to get their images seen in a way that will enable them to earn anything from the images.
Non-Released At Getty
There are early indications that Getty Images may be more open to accepting some images from 3rd Party providers on a non-exclusive basis as well as editorial images that are earmarked for editorial sales only.
This could open the door for a wave of new material and make it possible for agencies previously rejected to get material on the Getty web site. If the company makes serious moves in this direction it will be because they want to expand their editorial offering and take market share away from Corbis, Jupiter and Alamy.
The weak point in Getty's offering has always been editorial feature images that illustrate specific editorial points needed by book publishers and special interest publications. It seems unlikely that Getty will want to take on staff photographers to produce the wide ranging types of imagery that is needed in this segment of the market. The cost could be huge relative to Getty's potential return on investment. On the other hand, if they can get such imagery from 3rd Party agency suppliers at virtually no cost, and keep the lions share of any fees generated by the licensing of these images that might be very attractive.
Photographer's Choice Update
It pays to be able to supply totally cleaned up and color corrected scans to Getty. Some of the Getty contract photographers whose images require no additional work on the part of Getty are now being allowed to put as many as 50 images per quarter (200 a year) onto Photographer's Choice. (There are still charged $75 per image.) Most photographers are only allowed to submit 20 images per quarter.
There are also indications that PC images are not generating the quite as much revenue as they were when the program was first introduced. At the end of the first year it was believed that revenue generated by the average PC image was about twice that of other RM images on the site. In November 2004 the average image on the Getty site was generating about $673 in revenue annually meaning that the average PC image might have been generating over $1,300 in gross sales. With the huge number of Rights Managed images that Getty has added recently it is not surprising that the average sales per image is going down.
Getty To Integrate Editorial With Creative
Getty has plans to integrate its Editorial offering with the Creative offering in the spring.
There are several interesting questions related to this move to ponder.
Will searching on the Getty site differ significantly from that of Corbis as it is now structured?
How will this will effect the search order positioning of existing 3rd Party Suppliers as many more editorial images will be part of the default search?
Will this be an opportunity for more editorial content suppliers (particularly those with feature material) to become 3rd Party suppliers?
Kennelly Receives Entrepeneurship Award
Jerry Kennelly, founder and CEO of Stockbyte has been honored as Emerging Entrepreneur of the Year in Ireland. Kennelly was one of 24 finalists chosen for the Ernst & Young Entrepreneur of the Year Awards program, which consisted of three televised profiles and live TV coverage of the awards ceremony in Dublin.
The award was presented by Micheál Martin, Irish Minster for Enterprise Trade and Employment on live TV at a gathering of 800 of Ireland's business leaders. Mr. Martin called the awardees "exceptional entrepreneurial role models."
In an industry where companies are increasingly being acquired by the big three, Stockbyte is the largest independent creator of premium royalty free images in the world. In 2005, Stockbyte's creative team will produce more than 30,000 new images.
Mr. Kennelly said that the award outlined Stockbyte's position as a global leader and proved that it was possible to achieve this position from Ireland. "I believe it is recognition too for the faith shown by everyone in Stockbyte since its inception - our first rate team, distribution partners and suppliers have been critical in allowing us to punch beyond our weight and achieve our dreams" he added.
What's The Difference Between RM and RP?
What's the difference between RM and RP? Some people use RM because it was adopted after a discussion at a PACA board meeting a few years ago. Others think RP better describes the licensing model. As a practical matter, I think there is no difference.
The following are my definitions for RM or RP.
Definition: A creative Work whose licensing is carefully controlled through
use of exact and limiting wording of each successive grant of Usage rights.
While it is possible to restrict the use of a Work by others, no restrictions
on the use by other buyers or competitors is guaranteed unless specific
limitations are negotiated and agreed to.
Additional Info: Works are normally licensed for one-time non-exclusive
use unless specific limitations on other uses are negotiated and agreed to.
Some have tried to make a distinction between the two on the basis of whether the ability to place restrictions on other uses is "immediately available" or not. As far as I can see after looking at various organizations that use the two terms there is no consistent distinction.
In theory the reason for having a complete and up-to-the minute sales history is so a customer can license an "exclusive" automatically. However, if an image with a primary agency is being licensed through any distributor anywhere in the world, who is not inputting information directly into the primary agency's network, then it is impossible to license a worldwide exclusive until all those distributors have provided timely information on current sales.
For the most part having incompete information is not a problem because seldom does anyone want a worldwide exclusive. Usually, customers want an industry exclusive or a regional exclusive. With most of the big agencies the information on sales within most of the major territories is instantly available through the agency's database and it might be possible to set up a system that could automatically offer certain limited exclusivities.
However, it is questionable in these cases whether it makes more sense to try to set up a system to offer such exclusivities automatically, on simply put the customer in touch with a human being who can deal with unique characteristics of each specific case.
a21 Closes On $3.2 Million In Financing
a21, Inc has announced it has raised $3.2 million through the sale of common stock to new and existing institutional and accredited investors through the exercise of outstanding warrants. The funds will be used for general corporate purposes, including working capital and/or acquisitions.
"This financing, in addition to the $1.2 million raised in September, not only provides us with the capital to execute our business plan, but allowed us to minimize dilution by using existing warrants," said Albert H. Pleus, Chairman and CEO of a21. "We appreciate the support from our new and existing investors, who demonstrated their confidence in our business prospects by participating in this financing."
Those investors included StarVest Partners, L.P., Ahab Partners, L.P., and Ahab International, Ltd., which purchased nearly 60% of the deal.
Multiple Use of RF Images
One of the reasons for the success of RF is that there are a huge number of customers that don't seem to care if someone else - even their competitor - uses the same image they do. All they want is a pleasing illustration that they can use to promote their product or service. Recently, three top internet providers in France -- Wandaoo, GEAGETEL and EstVideo - all used the same RF picture from Digital Vision for the home page on their web site.
Wandaoo is the leading Internet Service provider in France with a one-third market share, and is a part of France Telecom, the former national telecommunications company; CEGETEL recently partnered with 9Telecom and is now competing for third place on the ISP market with Free Telecom; and EstVideo is a regional ISP owned by Telecom Italia.
Many photographers shooting RM would like to believe that it is important to customers that none of their competitors use the same image they do. While this is important for some customers when they do major ad campaigns, it seems that in the vast majority of licensing situations whether or not a competitor makes some use of the same image is very low on their priority list for choosing the image.