65 Sales Activity At PNI
March 4, 1997
Picture Network International is certainly the most successful of all those
selling to new media users. Most agencies represented by PNI report a marked
improvement in the number of sales per month since PNI started operating
their Publishers Depot site on the Internet in late 1995. (http://www.publishersdepot.com)
I estimate that PNI's gross sales for stock agencies was running in the
neighborhood of $250,000 a month (or $3 million per year) at the end of
(I want to emphasize that PNI licenses rights to a number of other products
on their site. I have no way of determining what fees they earn from such
licenses. Thus, the company's gross income may be much higher than $3 million
per year, but this is of no particular concern to stock agencies or photographers.)
PNI has about 375,000 images from stock agencies so this works out to an
average annual gross sale price of $8.00 per image. (It is interesting to
compare this number with the $2.50 to $3.00 per image average gross sale
figure that has been a standard for stock agency general files for years.)
Initially, I made my estimate based on a very small sample of information.
I then sent a survey to the stock agencies represented on PNI. I did not
ask them to provide specific numbers, but quoted my estimates and asked
if, based on their proportion of the total images in file, and the payments
they were receiving, they felt my estimates were high, low or about right .
About one-third of the agencies represented on PNI responded to my questions.
Based on who responded, I believe I have a fair cross section of the total
in terms of large agencies, small agencies and those with special file characteristics.
The two agencies that had higher per image sales volumes than my estimates
have relatively small numbers of images in the PNI file and their work is
biased toward corporate and business users rather than editorial. Higher
rates of sales for business uses, at higher dollars per use, may have helped
push their gross sales figures up, but I have no way of determining that
I estimated 2,000 transactions per month from PNI's 375,000 stock agency
image database. No agency reported that their share of transactions, based
on their proportion of the total images in the file, was higher. Some said
their number of transactions was lower. Thus, I suspect the actual number
of transactions is a few hundred less than 2,000.
From what I learned initially, I estimated the average sale price paid by
traditional users to be around $200. Based on the responses it would appear
that the average price to traditional users might be quite a bit higher,
but the number of units sold lower than the 40% of total sales I estimated.
This still resulted in the figures for average gross receipts being "about
right" for most agencies.
From initial conversations with agencies it appeared that about 60% of PNI's
total sales were for new media uses. This estimate was confirmed by Jeff
Weiss of PNI before I sent out the survey. However, later I obtained information
that would indicate that for at least one major agency the new media usage
may be as high as 75% of total sales.
In responding to the survey over 80% of the agencies indicated that the
average price for new media uses was nearer $40 than $100. Jeff Weiss says
the average is between $80 and $120. In February, 1997 some photographers
were receiving $9 payments on certain PNI sales which would indicate a gross
usage fee of $30.
One explanation for the differences between these figures is the lag time
between payment and sales. PNI has been raising prices in recent months.
Weiss may be reporting what he sees in recent sales reports. By the time
clients are billed, pay PNI, and the funds are transferred to the agencies,
and photographers several months can pass. Reports from agencies of what
they received at year end may reflect sales made in the summer or early
fall of 1996.
Based on all this information, and assuming that the average new media sale
is between $40 and $60, PNI's gross annual sales for new media is probably
somewhere between $600,000 and $850,000. For the most part the photographers
are receiving 30% of these figures. However, Black Star photographers told
me that Black Star is giving up its entire commission on $40 (or lower)
sales and paying the photographers the total it receives for these transactions.
Methods For Collecting Data
Obviously, my method of collecting data left quite a bit of room for error,
particularly if a majority of the agencies had indicated that my numbers
were high or low. In fact, almost all respondents indicated that my numbers
were "about right" based on what they are currently receiving
from PNI. I did not ask for specific numbers because I didn't think anyone
would answer such questions.
One stock agent suggested that it was useless to do such a survey because
everyone who answered would lie. I don't have quite so byzantine a view
of human nature. I believe most people, if they will talk at all, will tell
you the truth, as they see it. Readers must be the judge as to whether this
information is useful, or not.For those who would like to see the exact
wording of the questions, Click Here to go to
Agents seem to be encouraged by the volume of sales, but many are still
bothered by the new media prices.
In the past couple years PNI has made a number of adjustments to their pricing
structure. More adjustments to the new media price, as well as additional
restrictions on usage, may be needed. PNI must find a way to satisfy the
stock agencies that anything sold for the new media price goes to a customer
that the agency could not have reached any other way in order to collect
a higher fee.
Several agencies believe that many of the new media customers regularly
buy from them and would pay more, if there images were not available on
PNI. This is likely to be a critical issue when it is time to negotiate
We are told that two of PNI's major new media users are Microsoft and the
Discovery Channel. As might be expected, Microsoft is also a heavy user
of the Corbis database. Photographers who have images with both Corbis and
PNI indicate that the gross sale price for images sold to Microsoft is in
the range of $90 to $120 for images purchased from Cobris and $40 for those
purchased from PNI.
While $8 per image on file is not spectacular it is very encouraging in
many ways. It has clearly broken a barrier for a large image database. The
same type of barrier the Dow Jones went through when it broke 3,000 -- and
the interesting question is, how long will it take to break the 7,000 barrier,
in comparative terms.
PNI has demonstrated that it is possible to edit a general file in a much
broader way than has traditionally been the case for print and CD-ROM catalogs.
They have achieved this improvement in return per image in the database
while on-line search is still in its infancy.
Due to the costs of digital filing, the return per image is still not high
enough to be really exciting, but the volume of sales provides information
about demand that will be helpful in future editing.
It is very good news for editorial shooters. Their imagery has been locked
out of the catalog market because the long range sales potential for the
average image was not high enough to offset the costs of catalog placement.
Now there appears to be an option. It is important to recognize that agencies
should not randomly dump everything they produce into this database. Careful
editing is critical. But by carefully defining those editorial subjects
that are in greatest demand agencies may be able to reap important additional
returns in the future as the number of on-line users increases.
On-line usage is dominated by a few big users like Microsoft and Discovery.
There are many potential users who have yet to learn how to make effective
use of a database like PNI's. This indicates a potential for growth.
It is also interesting to note that Sue Klemens, chief of picture research
at Discovery Channel, was one of the lead people in PNI's captioning department
when the bulk of the images were put in the database. She understands the
system and how to take full advantage of it, which may be one reason for
Discovery's dominance as a user.
One of the more interesting aspects is the volume of sales to traditional
buyers, for traditional uses, at traditional rates. At the moment, at least
two-thirds of the income comes from sales to traditional users, even though
this represents less than one-third of the actual number of sales. This
sales volume might improve substantially (and drive that $8 per image in
file way up) if the file contained more images that satisfied the needs
of advertisers and brochure producers. This could present an opportunity
for agencies with the right type of material.
There is relatively little material in the PNI database that was shot with
the corporate and advertising market in mind. There were indications that
those who have this type of material are earning more than the average agency
on PNI. At the moment, PNI probably doesn't have much penetration into this
market due to a lack of strong files in this area. They will have trouble
attracting these users until this segment of their file grows. On the other
hand, PNI is actively seeking this type of material, unlike Corbis which
is only interested in editorial and documentary images.
Opportunity For Prepared Images
Stock agencies receive, on average, 60% of PNI's gross sale price. Some
suppliers indicate that this figure may be negotiable, and it certainly
has been in the past. At an average return of $4.80 per year (which must
be split with the photographer) an agency will find it difficult to justify
the costs of preparing images for the file.
These costs include:
- keywording or captioning
- annual storage charges (if any)
- minimum image requirement
In order to justify putting new images on-line an agency must believe:
- the volume of sales will steadily grow,
- through editing they can do better than the average return on investment,
- the costs of putting images on-line will be significantly offset by
There are several aspects to this third point that are worth mentioning.
If an agency already has images scanned and keyworded as with the agencies
that have just pulled off of KPX, or agencies that have images on CD-ROM
the up front preparation costs may be very low.
However, nearly everyone has used keyword search in these other systems.
PNI's "natural language" search technique was originally designed
to search through a specially written description of the image. To write
descriptions for new images could be very costly, and possibly not economic.
But, it is a simple process to upload keywords that have been prepared for
other search engines.
Some of the newer agencies on PNI have tried this, but we don't have any
information concerning their results. Many users have complained about the
"natural language" search, and the poor results it often produces.
It is possible that keyword searches would produce more accurate hits.
In her very useful book "Finding Images Online" Paula Berinstein
points out, "Boolean logic on Seymour (the name of PNI's search engine)
is not strict 'yes or no' matching....The natural language approach--that
is, typing a sentence or phrase in plain English--casts a wide, fuzzy net....As
long as one of your words is present, the picture is considered relevant,
whether or not the other (words that would narrow the search) appear."
"For example, when you type 'little boy playing with dog,' you get
a number of pictures with the words 'boy,' 'play,' 'young boy," and
'dog' in the description, concepts or caption--not necessarily all in the
same field. The fourth picture is the first one that actually shows a little
boy playing with a dog, and it isn't until you get to picture number 19
that dogs once again appear."
For many agencies it may be time to take another look at PNI. There is enough
activity to begin to determine the types of images in demand, whether keywords
produce good results, and how to edit one's file for this marketing vehicle.
Return to New Media Sales
Letter and Survey
The following letter I sent to the stock agencies represented by PNI. I have made a few estimates based on what I have been able to glean about
current digital sales by PNI. These figures may be high, or low, but provide
a starting point for some analysis of the new media market. I would like
to know if, based on your proportion of the total images in file these sales
figures seem: About right, High or Low. Obviously, if I get a high proportion
of either high or low responses, I will have no way of knowing exactly how
high or how low. Variations in actual fees paid can also affect the estimates.
Nevertheless, I believe as we plan for the future it will be helpful to
everyone currently selling through PNI, as well as agencies considering
establishing a relationship, to get some idea of the size of the new media
market and be able to relate it to total industy sales.
From conversations I have had with agents it appears that most would agree
there has been a steady improvement in sales since PNI went on the Internet
in November 1995. This improvement must be viewed relative to the total
market. The only way that is possible is to have some idea of total sales.
The only way agencies can know whether their experience is typical of all
agencies represented by PNI is to have some baseline to measure against.
Hopefully, this survey will get us into the ballpark. I have tried to structure
the questions so we can develop some useful information for everyone without
requiring anyone to reveal actual sales. I will hold all specific responses
confidential, and only use the information to develop averages that might
give some idea of the relative size of the market.
PNI currently has about 375,000 stock photos on-line. The agencies with
whom I have talked indicate that they are getting traditional rates for
about 40% of PNI's sales although the averages sale might be a little lower
than the standard agency averages due to the buyer mix. Jeff Weiss indicates
that about 60% of the sales are for new media. I told him I had heard that
most of these new media sales seemed to be running around the $40 rate and
he indicated that the average new media sale would be around $80 to $120.
It also seems PNI's total sales for all stock agency images might be in
the range of 2,000 transactions per month. Using these figures I have made
the following assumptions.
For the 40% the average fee is $200 $160,000 per month
For the 60% the average fee is $75 $90,000 per month
Total: $250,000 per month
PNI keeps 40%: $100,000
Agency Share: $150,000
Without telling me your exact figures, are your monthly receipts from PNI
sales higher of lower than your portion of $150,000* based on your percentage
of PNI's 375,000 images? (If you have 50,000 images your average monthly
payment should currently be about 13% of $150,000 or $19,500. If you have
5,000 images your monthly payment should represent 1.3% of $150,000 or in
the range of $1,950.)
About Right Our Sales Are Higher Our Sales Are Lower
* Some agencies get more than 60% of the gross sale price for sales to tradi
tional customers. These agencies were given a higher number then $150,000
to divide their proportionate share of the images into. This should have
put all users on a level playing field.
Does the total number of sales I have estimated for all agencies (2000 monthly)
appear to be correct based on you current total transactions per month,
and your percentage of the total number of images?
About Right Higher Lower
If your figures are higher, do you feel it is because the images you have
in the database are aimed more toward the commercial market than the average
image in the PNI file? (This file is weighted toward editorial and documentary
material and I believe everyone would expect the agencies that have a higher
portion of commercial images in relation to editorial images to be making
a higher return per image.)
Yes Other Reason _________________
I understand that sellers are seeing a growing percentage in the number
of units sold per month since PNI has gone on the Internet. Has that been
The indications I have received are that buyers, particularly at the new
media rate, are new customers that would have not normally come to a stock
agency to search for images. PNI has been saying all along that they would
open up a new market for imagery and expand the industry. That seems to
be true. Has this been your experience as you review your sales?
Is the average fee you are receiving for New Media sales closer to $40 or
$ 40 $ 100