September 2000 Selling Stock

Posted on 9/10/2000 by Jim Pickerell | Printable Version | Comments (0)

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SEPTEMBER 2000 SELLING STOCK


Volume 11, Number 1


œ2000 Jim Pickerell - SELLING STOCK is written and

published by Jim

Pickerell six times a year. The annual subscription rate is $80.00 to have the printed

version mailed to you. The on-line version is $72.00 per year. Subscriptions may be

obtained by writing Jim Pickerell, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone

301-251-0720, fax 301-309-0941, e-mail: jim@chd.com. All rights

are reserved and no information contained herein may be reporduced in any manner whatsoever

without written permission of the editor. Jim Pickerell is also co-owner of Stock

Connection, a stock agency. In addition, he is co-author with Cheryl Pickerell of

Negotiating Stock Photo Prices , a guide to pricing

stock photo usages.

Thought For The Month

Become a possibilitarian. No matter how dark things seem to be or actually are, raise your

sights and see possibilities -- always see them, for they're always there.

Norman Vincent Peale


Story 334

UNDERSTANDING BUSINESS STRATEGY

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Contract Negotiations vs. Business Strategy

Contract negotiations is the buzz word among photographers today. Cobris is developing a

new contract (partially revealed, but evidently still not in its final form) which affects

photographers with Sygma, Saba, The Stock Market, Sharpshooters, those formerly with

WestLight and those who have signed directly with Corbis.

As Getty Images integrates The Image Bank, FPG, The Telegraph Colour Library and the other

VCG companies they need to produce new contracts that will let photographers who were

formerly with these companies know where they stand in the new relationship. Getty feels

there is no great rush to develop new contracts because all the existing contracts which

they inherited remain in full force and effect until there is a new contract.

On the other hand, the photographers recognize that the goals and directions of their new

company are different from those of their old companies. There are changes in the working

relationships and the purpose of contracts is to spell out and codify such changes. At the

very least photographers are likely to slow production until they have a clearly defined

deal with the new company.

In addition, Stone's contracts with their photographers are due to expire in the fall of

2001. Already many Stone photographers are talking about changes they want to see in the

"new contract."

There are many issues that photographers want to see changed. I discussed some of these with

relation to the Corbis contract in www.pickphoto.com/sso/stories/st325.htm. Two years ago,

I published an interview with Jonathan Klein (www.pickphoto.com/sso/stories/st169.htm) when

the revised Stone contract was released. It dealt with many of the the issues that

concerned photographers at the time. These stories outline some of the issues, but by no

means all of the places where photographers would like to see modifications.

Business Strategy Analysis

However, the central problem with most current photographer proposals is that they fail to

adequately take into account the radical differences in business strategy between the ways

stock agencies used to operate and the ways the Internet focused businesses of Getty Images

and Corbis intend to operate.

No amount of negotiations will force G&C to operate their businesses as stock agencies were

operated in the past. Yet, that is what many photographers seem to want. G&C believe the

stock photo business will eventually be 100% digital delivery and that the vast majority

will be e-commerce. Thus, unscanned images simply will not exist.

At this point in time maybe 20% of the stock photo business is digital. Last quarter 44% of

Getty's business was e-commerce (excluding TIB and VCG which were not fully integrated at

that point). If sales of CD-ROM's were added to this, more than half of Getty's business

would result from digital sales.

A case can be made that a high portion of gross stock revenue for the industry will come

from researching analog files for a long long time. G&C either don't believe that is true,

or they think it is irrelevant to the success of their business model. Unfortunately, the

future of analog sales is not irrelevant to the business models of many photographers.

If analog images do represent a significant portion of future sales Getty and Corbis will

get little of that business because they are structuring their operations to do away with

their analog files. This won't happen overnight, but Getty's goal is to return all

unscanned images to the photographers and Corbis wants to return all images -- even those

scanned -- to their photographers.

C&G may modify contracts so long as the modifications are consistent with their overall

strategy, but it is highly unlikely that any group of photographers will be able to apply

enough pressure to convince either of these companies to totally alter their business

strategy.

Each photographer needs to focus on understandings the distinctives of these business

strategies, and their implications for the marketing of the specific type of work the

photographer produces. If the strategy itself has flaws then no amount of negotiation is

likely to provide a satisfactory long term relationship. Nevertheless, individual

photographers may be able to use Getty or Corbis to improve their short term options, as

they continue to look for better long term solutions.

It is interesting to note the number of photographers who were among the top producers at

Stone three to five years ago, that no longer seem to be getting images into the Stone

catalogs. If you are acquainted with any of these people it might be interesting to talk to

them and determine why. They may have figured out early that Getty Image's long term

strategy was not consistent with their long term goals for their photography.


Story 327

GETTY PRICING STRATEGY

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An article in the June 2000 issue of Fast Company on Getty Images gave the following

insights into Getty's pricing strategies.

In September 1996, a Tony Stone sales rep made a $63,000 sale -- the largest in the company

history at that time. When Mark Getty went to congratulate her he asked how she had come up

with her asking price. She initially had asked for more, but the customer responded that he

could get a photo from one of Stone's competitor for half of the price. She countered by

saying, "But our photo is twice as good." Then they negotiated. Still thinking about the

company's elaborate, 92-page pricing guide, Getty pressed her again. Where did her original

asking price come from? She shrugged. "I just thought it was a really good photo."

The article went on to say, "That transaction, as successful as it was, is also a legacy of

a pricing system that is both enormously complex and strangely random -- and that has

plagued the stock-photography industry since its inception. Every company starts with "list"

prices based on obscure algorithms that take into account company size, volume of business,

how a photo is used, and duration of exclusive rights. But reps routinely discount or

increase prices based on what it takes to close a deal.

"Getty and his colleagues realized that if one of the basic promises of the Web is

simplicity -- of selection, of acquisition, and of service -- they would have to drastically

simplify their pricing process as well. So Getty handed down an ultimatum. Forget 92-page

pricing guides. The new pricing guide would be one page. That one-page solution became a

slick digital form on the gettyone Web site, where customers answer 12 questions and get

back a price instantly. What's more, once a customer purchases a photo online, gettyone's

Web site immediately updates the photo's licensing rights in the company's database so that

the image is no longer available to other customers."

I agree that pricing stock photo uses is "enormously complex and strangely random," but I

don't see it as a "plague" for the industry. I believe sellers will benefit greatly if the

person closing sales is someone who has a solid grounding and experience in the industry,

who understands why certain photographs are worth more than others in certain situations,

and who is not just an order-taker.


Story 327

GETTY CALL CENTER STAFF

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One of the critical issues in the e-commerce environment is the number of sales that will be

fully automatic and require no intervention from a salesperson as compared with the number

where a salesperson will be necessary. Getty Images has more than 665 call center sales

staff worldwide. This number would be much larger if they were to include marketing teams

and other sales related functions.

Getty's on-line pricing for Rights Protected images seems to be structured to drive buyers

to call negotiators rather than complete the transaction themselves on-line. The Royalty

Free pricing is such that buyers could more easily get what they want through an automatic

transaction.


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NEW CORBIS CONTRACT

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In early July Corbis released another version of their contract. I published an analysis of

that version, along with some recommended negotiating positions for photographers in my

Story 325 on July 14th.

Since the contract's release, photographers have been clamoring for additional

modifications. Corbis has held meetings with photographers in New York, Miami and Seattle.

Corbis now says a new version of the contract will be released shortly.

Director of Editorial Photography, Peter Howe, who has been instrumental in trying to get

Sygma photographer to accept the contract has left the company as of the end of August. The

official statement for his leaving is a follows:

    "Peter Howe has decided to leave Corbis for a new opportunity with a technology start-up

    company (Rightspring.com). While we are very sorry to see him go, we look forward to

    maintaining a close relationship with Peter as we all move into the bright future of an

    exciting industry.

    "As a former photographer, Peter has always been a voice for our photographers' concerns,

    and has helped us focus our position within the photographic community. His imprint on

    Corbis will be felt for a long time as one of the strongest and most visible leaders of this

    company during these formative years. Corbis is quickly becoming the most

    photographer-focused agency in the business, and Peter has been a driving force behind that

    evolution. We'll now look to other leaders within Corbis to continue the charge, many of

    whom share Peter's passion and vision, including Francois Hebel, Eliane Laffont, Patrick

    Donehue, Marcel Saba, and Charlie Borst, to name a few. As we complete our acquisitions and

    integrations of The Stock Market and Sharpshooters, we'll also welcome the leadership of

    Richard Steedman, Edie Tobias and others.

    "In an effort to sharpen our focus on photographers even further, we had been planning to do

    some internal restructuring. ARCD has done a terrific job of leading our photographer

    relations efforts, but we have long wanted to make our entire organization more

    artist-centric. It was our plan to distribute the energy, spirit, and function of ARCD

    throughout the company, so that our focus on photographers and photography will become

    deeply embedded in the fabric of our corporate culture, rather than centralized in a single

    unit. We had envisioned Peter in a key leadership role, and are disappointed that he won't

    be around to help us affect this change. However, we will move forward with our plans. We

    have no plans to replace Peter, but will be restructuring his team's critical artist

    relations activities within our broader organization."


Story 337

TANNENBAUM LEAVES CORBIS

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While most photographers seem to have issues with Corbis relative to their new contract,

many Sygma photographers are finding the situation untenable. Longtime Sygma photographer,

Allan Tannenbaum, has sent the following letter to his colleagues.

Dear Colleagues;

After 20 years as a Sygma photographer I told Corbis Sygma this week that I would be moving

on. I had already asked for the return of my most valuable archives, containing some of the

last photos of John Lennon and other significant subjects. I feel that this is the best

career decision I have made in my life.

You may be negotiating in good faith, but Corbis is not. Over the past year since our

acquisition, they have acted dishonestly and ineptly, breaking promises and arrogantly

telling photographers who built the agency to take a hike if they didn't trust Corbis. We

thought Corbis wanted to restore Sygma to its former glory - instead they went on a search

and destroy mission. The instances and examples have been amply documented.

Corbis wants your pictures, but they don't want you. I told Steve Davis many months ago that

prior to Sygma, Corbis bought collections, but now they had acquired lives. He didn't care.

Look how they treated Jean-Pierre Laffont who was one of the founders of Sygma in the early

70's. At Corbis you will be just a number. The Sygma accountant used to write 125

photographer's checks per month - now he writes 400 for Corbis Sygma photographers.

Les Stone, Andrew Lichtenstein, and I are award winning Sygma photojournalists who have all

had exhibits at Perpignan. We are all revolted by the Corbis way, which had destroyed Sygma,

debased photojournalism, devalued our archives, and disrespected us as human beings. We have

left the agency as has Ted Soqui in L.A. and others following soon. It is profoundly cynical

and hypocritical for Corbis to co-sponsor the photojournalism festival at Perpignan while

treating their own photojournalists with such contempt. That's Corbis: all P.R. and spin.

For someone in a field where honesty and integrity are paramount, it's insupportable.

You can avoid the disillusionment and frustration that the Sygma photographers have

experienced by getting out now. Solidarity is perfect if everybody just pulls out of the

deal. Corbis is playing hardball, so it's time for us to play hardball too. But not by

their rules, for we shall surely lose against the deep pockets of Bill Gates. The day after

I resigned, I got a call from a Corbis exec asking me to participate in a panel with Corbis

to find out what the photographers were unhappy about!!! I patiently reminded him of our

lunches, the contract meetings, a meeting I had with Steve Davis, a lunch with Peter Howe,

and a lunch with Leora Kahn. He had the PBP (point by point) already. I told him that I

thought they were a day late and a dollar short.

The time and money you will waste trying to reform Corbis will be much better spent

transforming your career. America is wonderful - we have freedom of choice and the

entrepreneurial spirit. If you were looking for an agency, you would never choose Corbis,

which lost $50 million last year, has a bumbling bureaucracy, no real plan, a lousy website,

and is, as a high level Corbis exec admitted to me, "incompetent". This is not a time to try

to appear neutral, or courteous, or unemotional, or timid. We are photographers because of a

passion for the medium, and what Corbis has done to Sygma and what they will do to you is

criminal. In a message to Eliane Laffont which she onpassed to the Corbis honchos, I

compared Corbis to the Titanic, and the Corbis execs to the captain and designer of the

ship, filled with hubris and pride at the size and speed of their ship. The biggest iceberg

is us, followed by the US DOJ et. al. Would you have boarded the Titanic if you knew her

fate? Do you want to be fiddling on the deck while she sinks?

I feel very liberated by my decision and positive things are happening already. I will not

contribute photos, I have my most valuable archives back, my other originals will be

returned from Paris, and whether I leave the remainder of my archives with Corbis depends on

changes that I will continue to fight for. Our open and bright office is being Corbisized,

and my instincts tell me that before long there won't be many people I know there. It's time

to find our collective cojones and walk away from a very, very, very bad situation. You are

all bright and talented people and should not forget that we have the upper hand, not

Corbis, because we have what they want. Don't give it to them!

As Woodie Guthrie sang, "Some will rob you with a six-gun, some with a fountain pen."

Courage!

Allan Tannenbaum

ex Sygma photographer


Story 335

FINDING MARKETING OPTIONS

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August 24, 2000 - Many photographers believe that Getty Images and Corbis have such a

commanding hold on the market that a photographer must be represented by one of these two

organizations, or he or she will be unable to sell stock images.

I would remind photographers of a few facts. At best, Getty and Corbis control 45% of the

world market. That means that at least 55%, and probably more, of the stock photo revenue

generated worldwide comes from sales made by other organizations.

In the Selling Stock annual survey this spring 62% of the photographers responding were

represented by more than one agency. In a recent PACA survey of photographers 66% of those

responding were represented by more than one agency.

In the Selling Stock survey 37% of photographers earned more from direct stock sales to

clients than from any single agency that represented them. Of the total income reported by

all photographers, 29% came from direct sales to buyers. This figure was up from 24% in the

1999 survey.

There are still opportunities for stock photographers. But in the changed environment,

photographers must reevaluate their marketing options. Strategies that worked in the past

may no longer be the surest road to success.

Product and Service

There are two elements in the stock photo business -- production of the product and the

service factors involved in getting that product to a willing buyer. Even Getty and Corbis

don't control much of the production side of their businesses. That is still in the hands

of thousands of small suppliers. Those suppliers still have options.

G&C have set in place systems to centrally control all the service factors needed to place

images produced by freelance suppliers into the hands of buyers. While this is one approach

to the stock photography business, it is not the only approach that will work. It is an

approach that doesn't necessarily benefit ALL the photographers these companies represent.

It is clear from the on-line discussions that photographers are in a reevaluation mode.

Strategies that are more focused on benefiting photographers are likely to develop. Such

strategies may include putting some images with Getty or Corbis, or to be totally separate

from their operations. It is likely that the marketing strategies most photographers will

employ two years from now will be radically different from the strategies they employed two

years ago.

Here are some of the issues I believe photographers need to consider as they look for new

ways of marketing. There is no priority order to this list.

  • Centralized search. Clients will not search 10,000 individual photographer

    sites to find images. If they know the photographer; have learned of his or her URL through

    some means other than Internet advertising; and know that the photographer is likely to have

    what they need then they may go to the site. Otherwise they will go to sites that bring

    together a broad cross section of material from many photographers with many styles. This

    allows them to find what they need in a much more efficient way.

    By definition this probably means some type of Stock Agency site. Individual photographer

    sites are most useful for generating assignments from buyers who learn of the URL through

    some other type of promotion. They are unlikely to be of much use for stock.

  • A system of worldwide distribution. There are lots of good small to medium

    sized agencies around the world still operating very effectively in their local markets. If

    these agencies find a way to consolidate resources they could be a very powerful third

    force.

  • An opportunity to get more images seen. Photographers need some way to get a

    larger percentage of their production into venues where the images can be seen by potential

    buyers. All indications are that both Getty Images and Corbis will only scan a very small

    percentage of all the images they currently have in their files. They will be extremely

    selective in picking new material from future productions. This does not mean that images

    not selected for scanning are unsalable. It simply means that they will not be shown by G&C

    to potential buyers.

  • Pricing. Photographers need a system that will maintain good prices for as

    much of the work as possible. Royalty free is a fact of life. I estimate that in the U.S.

    more than 50% of the uses of stock photography are of RF images. Even if we accept that a

    lot of these are new uses that weren't available in the early 90's, it means that a huge

    percentage of uses that were formerly available at negotiated rates no longer exist. This

    does not mean that in order to make sales you have to match RF prices. Now, when someone

    comes to you looking for a negotiated use of a Rights Protected image, for one reason or

    another, they have not been able to find what they needed in RF. They will be very happy if

    you will give them use of your image for RF prices -- but they will pay more.

    The following two stories illustrate this point.

    In the first six months of 2000 Stock Connection had average license fees that were $925 per

    image. This was up from $705 per image in the same period in 1999, a 31% increase. (By way

    of comparison, Getty Images says Stone's average price is around $500.)

    One might suspect that by keeping our prices high, we would be making many fewer sales. In

    fact, the number of units licensed was off 12% when 2000 was compared with the same period

    in 1999. However, there was no indication that the number of sales made, relative to the

    number of calls received, was changing in any significant manner.

    We believe the number of calls are down because more people are choosing to buy Royalty Free

    before they even consider a rights protected option -- a fact over which we have little

    control. Nevertheless, gross revenue is up 15% in 2000 over 1999. This certainly points

    out that even in today's competitive environment a strategy of holding the line on pricing

    can result in higher average prices per unit sold, and overall revenue growth.

    On the other hand, a European photographer, represented by one of the Getty Images

    companies, reports that he recently received a call from a client who wanted to license

    rights to two of his images for the same basic use. The photographer had rights to license

    one of the images directly, but rights for the other image were controlled by the Getty

    Images company. The photographer negotiated a fee of approximately $400 for the image he

    controlled and then gave the client his agent's telephone number.

    A while later the client called the photographer. He told him that the agent had licensed

    rights to the other image for about $20 (that's twenty, not two hundred). The client said

    that while he was happy to get the image for $20, he wasn't complaining at all about the

    photographer's price because he thought $400 was reasonable and fair for the usage involved.

    He just wanted the photographer know what his agent was doing.

  • Negotiated Prices. Fixed pricing only works well at Royalty Free rates. If

    you want the benefits of negotiated rates based on usage then there must be some provisions

    to handle complex negotiations as needed. This becomes particularly complex when you want

    to sell outside your home country. When dealing in a foreign country you may have little

    information about local use rates, and you may have to negotiate in another language and

    deal with collection problems.

  • Supporting Analog File. One of the critical issues with Getty and Corbis is

    that, long term, neither expect to be managing an analog file. Their plans are to edit the

    cream, aggressively market the cream, and return the rest to the photographers. One of the

    intangibles, of course, is how they define cream.

    The best way I know is to talk to photographers who have been with these companies for a

    long time and learn from the experience they have had in the recent past. Those experiences

    would indicate that a lot of good pictures that would sell if they were available for

    clients to look at will not be put into G&C's files. The question is where to put these

    pictures so they can be seen. This may require some new ways of thinking.

  • Local Sales and Marketing. The world may be getting smaller through

    communications, but people in different parts of the world still have widely diverging ideas

    about the kind of images they want to buy and how they want to do business. Local marketing

    and service will be important to effectively sell to these people.

  • Local Editing. Systems need to be in place where local sellers participate in

    the editing of the files. Photographers who submit directly to mid-sized foreign agencies,

    or to specialist niche agencies, often find that the image selection these agents make is

    markedly different from the selection made by big agency editors in New York, Los Angeles,

    Seattle or London. Photographers tend to make more sales when multiple editors, coming from

    different perspectives, review their work, than when there is one single central arbitrator

    determining what is a "good" image.

    The more G&C focus their editing to one, or a few locations, the more opportunities the 55%

    have to expand their markets by making available to their customers images that G&C would

    reject.

  • Experienced Researchers. Many buyers will continue to want and need picture

    research. Often it is impossible to fulfill their needs from the limited number of on-line

    digital files. The images they want are only available in analog form. Research needs to

    extend beyond the digital files. Experience with particular analog files and experience in

    a specialty is invaluable.

    In the process of acquisition and consolidation it is likely that much of the "experience"

    at some of the major companies will be lost. This will put some of the smaller companies

    that have avoided acquisition in a better position to serve the customer.

  • Selling Direct To Clients. All photographers need to develop better systems

    for making direct sales to clients. The principle benefits of direct selling are that you

    retain 100% of any fees negotiated and you retain control. This works well if you are a

    specialist and can easily identify the majority of people who would be interested in your

    type of imagery. The downside is that in addition to the marketing you have to personally

    handle all the negotiating, delivery and collection tasks that an agent would normally take

    care of for you. If you have an easily identifiable prime customer base, then dealing

    directly can be the most efficient way to market stock.

    Some agents are willing to handle some of these services for you, for a lesser percentage,

    and still allow you a lot of say in how the images are marketed and priced.

  • More Control. Some of the factors are: pricing whether the image will be

    licensed at bulk rates, or not; length of the contract; ease of moving to a different agency

    when your not satisfied; return of work when necessary. There are lots of variations

    available.

  • Return of Images. There are two issues here. First, images that are offered

    to the agent on an image-exclusive basis should be edited promptly and those not chosen

    quickly returned to the photographer so he or she can attempt to market them elsewhere.

    Secondly, if images have been accepted into the general file, but are not being marketed

    aggressively through a print of digital catalog then the photographers needs to be able to

    get these images back so he or she can attempt to market them elsewhere. This should be

    possible without the necessity of the photographer terminating the agency agreement for

    those other images which the agency is marketing aggressively.

    The trick here, if you are represented by one of the many agencies that have been recently

    acquired, is determining that point when only newly produced images are being considered for

    the on-line catalog and the agent has stopped mining the older files for possible on-line

    images. As long as there is a possibility of getting file images into the on-line catalog

    it is probably wise to leave them with the agency for consideration.

    It should also be recognized that the agent has two incentives not to go to the trouble of

    pulling images from their files and returning them to the photographer. First there is the

    expense. In addition, if the photographer has an opportunity to place the images elsewhere

    they could end up competing against some of the images the agency has spent so much money

    promoting. It is better from the agency's point of view to keep these images out of

    circulation and the best way to do that is to keep them in their files.

  • Embrace the efficiencies of the web without ignoring the efficiencies of older

    existing systems.

    Web efficiencies include:

    1 - Production and distribution of a catalog of images.

    2 - Updating of the catalog.

    3 - Developing specialist catalogs within a larger catalog.

    4 - Delivering images to the buyer.

    5 - Reducing the need for dupes (if large file is available on the web)

    Web inefficiencies and limitations include:

    1 - Scanning and keywording are too costly to make all images available on the web,

    particularly since this is an up front investment.

    2 - The cost of generating high-res scans of ALL images makes the continued use of original

    film and dupes more efficient in certain cases.

    3 - On-line search does not solve the problem of finding images that only exist in an analog

    file.

    4 - Fixed pricing has its limitations as discussed above.


    Story 330

    INTERNET SELLING WORLDWIDE

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    August 11, 2000 - Many photographers believe that the Internet will totally eliminate

    the need for sub-agents to handle the licensing of their images around the world. They

    believe there will be centralized sites where they can place their images and clients

    worldwide will rush to buy and pay by credit card.

    This belief is encouraged by "dot com" designers, who often have little or no experience in

    selling anything, let alone photography. Nevertheless, they are convinced that the Internet

    can solve every problem in the universe. They offer to totally eliminate the middleman,

    which can be very seductive to photographers. Some are offering to give photographers up to

    90% of all fees paid by the buyer. Don't accept such promises on simple faith. Consider

    whether it is really possible.

    Our industry definitely has some advantages when it comes to on-line marketing. Unlike many

    other industries who must use traditional methods to deliver their produce, we can deliver

    on-line. Also, customers can determine by looking at our product on-line whether it will

    meet their needs exactly. This is not true in many other industries. But the Internet does

    not eliminate EVERY problem.

    Consider A Few Things:

      1 - Are ALL customers likely to be willing to pay by credit card?

      2 - If they are willing to use a credit card, will they enter the number into their

      computer, or do they want to call and talk to someone who will accept the information over

      the phone?

      3 - Is it possible to provide a price schedule that adequately covers the wide variety of

      rights protected uses, or do on-line price schedules tend to push pricing in the direction

      of the Royalty Free model?

      4 - Is it possible to get many customers to come to your site without print marketing?

      Getting customers is not cost free.

    Quick Answers:

    1 and 2 - First, a few facts about Getty Images, the leader in e-commerce sales of

    stock images. Forty-four percent of their core business revenue last quarter (excluding TIB

    and VCG who are not very e-commerce enabled at this time) resulted from pictures found on

    the web. But, Getty has more than 665 sales people worldwide manning their call centers.

    Would they need that many people if everyone was paying by credit card? [This 665 does not

    include marketing teams or other sales support functions such as picture researchers who

    pull images from analog files. If those people in support functions were added to the number

    of people just taking sales calls, the number of people involved in sales at Getty Images

    would be much larger.]

    Getty won't tell us what percentage of their digital sales are performed without human

    intervention, but it can't be much if 665 sales people are required to deal with the rest of

    the sales.

    3 - If you are trying to sensibly price for a rights protected use, recognize that

    every use is different and has unique characteristics. There are price schedules such as

    "PhotoQuote" and "Negotiating Stock Photo Prices" and many others. These provide STARTING

    POINTS, not THE PRICE. Judgement by an experienced sales person is necessary, if you want to

    establish a win-win "price."

    Automatic prices can work with Royalty Free sales where the customer gets a particular file

    size for a fixed price, no matter what the usage. Automatic prices will seldom work

    effectively in the rights protected arena.

    To give an example, lets take a look at Stone's automatic price schedule. It is a single

    page. For some uses like advertising, point of sale, billboards and book covers the customer

    is required to call no matter what the usage. But let's look at one of the listed usages

    with a price.

    The price for inside brochure use, between 1/8th and 1/2 page, with a circulation of between

    10,000 and 100,000, in one country for one year is $740.

    Consider this from the customers point of view. Suppose the customer's print run is going to

    be 15,000; or the usage size is 1/4 page; or he expects the brochure to be used more than

    one year; or he expects a small quantity to be distributed outside the U.S.; etc. etc. etc.

    Isn't that customer going to want to call and negotiate rather than pay $740 for the usage?

    The only time the customer should be happy with the $740 price is if the picture is actually

    being used half page and the print run is close to 100,000. Is this "customer friendly"

    pricing? All a price schedule with such broad ranges does is get the customer into a general

    ball park before he or she makes the call. It also takes care of those very rare emergencies

    when the customer needs instant response and doesn't have time to call.

    4 - If print marketing is not needed, why does Getty Images continue to produce so

    many printed catalogs? Here's some of the catalogs produced by the Getty brands since

    January 1999:

      Stone -- 1999 - V18, Life, Work

      2000 - Road Trip, Quest, and Play/Players

      TIB -- 1999 - C24 Perceptions, C25 Attitude, Bokelberg 7, C26 Annual

      2000 - People/Contemporary Living and Retrospective 2

      FPG -- 1999 - Selects V9, Historical Select Volume 4, StockDirectory 7, Sports,

      Higher Ground

      2000 - Temptations, Business

      VCG -- 1999 - Stock Directory 8, Best of Selects, Business

    In 1999 the combined print runs for all catalogs were -- more than 400,000 for Stone; more

    than 500,000 for TIB; more than 200,000 for FPG; and unknown for the rest of VCG.

    Try to think of any major "dot com" company that hasn't used a lot of print and TV ads to

    draw customers to their site. Have the RF companies stopped sending out catalogs as more and

    more of their sales are on-line? Sixty percent of PhotoDisc's sales were on-line in the last

    quarter. How did any of these "dot coms" draw customers to their sites in the first place?

    Is any of this advertising to attract customers free?

    With the answers to these four questions you should be getting the idea that sales people

    and extensive print marketing will continue to be needed, even if the image catalog is

    on-line and delivery is on-line. Only if you are willing to settle for RF prices are you

    likely to be able to make significant on-line sales without sales people involved in the

    transaction. At present, the average price for a RF usage of a single image is

    approximately $80. The average price for single image licensed by Stock Connection in the

    first 6 months of 2000 was $925. (See Story 327) Take your pick. And don't forget that

    marketing costs are not free.

    So when someone tells you they will give you 80% to 90% of the gross sale, consider how many

    sales they are likely to be able to make if they don't have a sales staff and they don't

    spend much on marketing.

    Overseas Sales

    But that isn't the end of our story. If you are a U.S. photographer making sales in the U.S.

    maybe you can negotiate your own sales. Maybe you can find some way to share, on a co-op

    basis, the costs of marketing your site so users will know where to find your images.

    What about the overseas sales? Close to 55% of the worldwide revenue generated from stock

    photo licensing comes from outside the U.S. For some U.S. photographers, and with certain

    types of work, the percentage of sales outside the U.S. is even higher. What is the best way

    to deal with such sales from a U.S. base? Do you know:

  • What prices are reasonable and fair in the UK, Germany, France, Belgium, Italy, Spain,

    etc? What are comparable rates in each of these countries for a particular usage? Where are

    rates higher?

  • How are you going to market and let buyers in these countries know that your images

    exist? Will the marketing strategies you use in the U.S. work in these other countries?

  • What rights are normally licensed in these countries?

  • If negotiation is necessary, how do you communicate with someone who doesn't speak

    your language? Do you only do business with those who can communicate in English?

  • What are the customs relative to negotiation in the country where you are trying to

    sell?

  • What are the various business and legal rules for operating in each country? What are

    the copyright laws? (Hint: They are not the same in every country.)

  • What do you do about the time differences if there are deadlines?

  • If the customer wants to be billed instead of paying by credit card what do you do? Do

    you require that the client make a bank transfer before you deliver the file? What will that

    cost both you and the client in bank fees and time wasted? Is this user friendly?

  • On the other hand, if you bill, how do you collect if the customer is slow in paying,

    or just decides not to pay at all. (Read about collection problems further down).

  • How do you monitor usage to make sure the client isn't making more use than they paid

    for?

    Clearly, photographers are going to need help if they want to maximize the sale of their

    work overseas. At the moment there are basically two options -- Getty and Corbis -- with an

    infrastructure in place capable of effectively marketing worldwide. On the other hand there

    are well known disadvantages to dealing with Getty and Corbis that I won't take time to

    enumerate here.

    Will there be a third, fourth or more choice, and when? There are PictureQuest and Workbook

    in the U.S. with sites that consolidate the work of many agencies, but so far neither of

    these companies have much reach outside the U.S. There are foreign agencies with sites, but

    most of them don't sell much in the U.S. There are lots of options in the planning stages,

    or the early stages of development. Before the end of 2001 photographers will have many more

    choices.

    What U.S. photographers need is strong representation in the U.S. and some type of

    affiliation program that will allow their work to be agressively marketed and licensed in

    other parts of the world. One solution is for photographers to make their own separate

    arrangements with many different agencies throughout the world. The other solution is for

    the photographer's U.S. agency to make such arrangements on the photographer's behalf.

    It is highly unlikely that the perfect solution is going to present itself and be obvious to

    everyone. Most photographers will need to simultaneously test various options for a period

    of time in order to settle on what works best for them. This probably means that

    photographers need to be more agressive in seeking image-exclusive, or non-exclusive

    relationships as they move ahead.

    Online Sales And Nothing Else

    Don't lock up your images so they can only be sold on-line. Some on-line operations want

    the photographer to give them image-exclusive (with similars) which means the image can't be

    made available for sale in any other way, but on-line. This is probably not in the

    photographer's best interest at this time.

    After the first two quarters, Getty Images is on a growth track to have about $170 million

    in sales in the year 2000 that resulted from on-line search. For the most part, on-line

    delivery was also supplied with these sales. This should represent about 36% of Getty's

    total sales for the year. Add in the sales made by Corbis, PictureQuest, the agencies

    represented on Workbook and individual agency sites around the world, and I estimate that

    the gross sales worldwide in 2000 that result from on-line search will be in the

    neighborhood of $250 million, or 18% to 20% of the worldwide sales.

    Every stock photographer ought to be involved in devising ways to market their images

    on-line. But at the same time there is still a huge demand for analog material and most

    people in the industry believe that is likely to continue. Photographers need to position

    themselves so their work can be available in both the digital and analog environments -- at

    least for a while.

    Certain types of users -- textbooks for examples -- may rely on analog files, and their

    depth, much longer than hard news users who have greater need for speed, and for whom image

    resolution is not as big an issue. Unfortunately, many of the current digital options focus

    exclusively on digital at the expense of analog.

    Why Photographers Need Foreign Agents (Sub-Agents)

    The material above provides a general summary of why photographers will need agents to

    handle marketing and sales of images in on-line catalogs when these sales are being made

    outside the photographer's local area. The following will explore, in more detail, many of

    the reasons for this continuing need. It should also make clear that foreign sub-agents are

    legitimately entitled to a significant share of the usage fee they generate.

    Language and Time. Probably the most important service the foreign agent provides is

    having someone available for the customer to talk to in their own language and their own

    time zone. Particularly during the early adoption phase of on-line usage there needs to be a

    lot of customer education. They will need help in learning to navigate the site and use its

    various features effectively. With constant software upgrades this is likely to be a

    continuing need. Customers may also need larger scans, next day delivery of film, or other

    special services.

    Frequent buyers may need less support as time goes on. Infrequent users are likely to need

    help every time they enter the system. Even large publishers who buy lots of images may

    have staff turnovers that require continued training and support for new users. The

    customer wants to be able to talk to someone when they have a problem. Preferably it is

    someone local and someone they know.

    Consider the problems an English speaking seller will have in trying to make a sale in

    another country; where another language is spoken; where there are different business

    traditions; and where there are different attitudes toward copyright.

    Research. Many buyers will want someone to help them with research and e-mail

    thumbnail catalogs of selects. This will be particulary true when the image was originally

    keyworded in English and the customer's native language is different. Yes, it will be

    possible to use other languages for searching, but not every language.

    In certain specialty areas, having researchers with expertise in the field is of great

    value. This is the kind of support niche agencies have always provided. A few examples of

    subject matter where special expertise is invaluable are: automobiles, aviation, food, fine

    art, history, medicine, biology, education, wildlife, underwater, travel location, religion,

    theater and dance, sports, dogs, cats, horses, science, etc. Many buyers need more

    information than captions provide. The chance that a sales person in a large impersonal call

    center is going to have this knowledge, or have any idea how to get it, is slim.

    Keywording. English keywords may not translate conveniently. If you think the

    Internet is going to easily solve this problem then you ought to read "Hello World" in the

    May 2000 issue of Wired Magazine. This article is available on-line (in English, of course)

    at http://www.wired.com/wired/archive/8.05/tpintro.html. This in depth study is must reading

    for anyone who thinks translation of keywords into other languages will be a snap.

    Basically, the more images in a database, the more complex the keywording must be. The more

    likely there will be a communication breakdown in translation. Good keywording is

    necessary. But there will be users who need aid in the search process, particularly when the

    language of the searcher is different from that of the keyworder.

    The sales and marketing system that doesn't take this problem into account in its basic

    structural design is likely to eventually fail -- even if it makes a fast start.

    Marketing. Foreign agents know the local buyers. They have the best lists of

    potential customers. They also understand what marketing strategies work with their

    customers. These strategies tend to be different in every country, and among various user

    groups. It is important to understand these distinctions if you want to reach a large user

    base. It is important to adjust your marketing to local conditions. U.S. photographers, and

    for the most part U.S. agents, will need to develop marketing relationships with local

    foreign agents, rather than trying to market in other parts of the world themselves.

    Catalog marketing is changing. Getty Images is producing catalogs that are physically

    smaller and often on specialized topics. They mail more frequently rather than just mailing

    one major catalog a year. Catalogs may become more positioning pieces designed to draw

    buyers to the Web, rather than to sell specific images in the catalog.

    Other means of advertising and promotion may become as important, or more important than the

    print catalog. If possible, photographers should participate in and test several different

    marketing strategies in this transition period for the industry.

    Negotiation. Most U.S. buyers use Royalty Free images for many purposes. This is

    likely to be true worldwide in the not too distant future. Thus, with fewer opportunities to

    negotiate, each negotiation takes on greater importance. It is critical for the seller to

    speak the buyer's language, understand local customs and laws, including the local

    understanding of copyright and to have experience in licensing rights.

    This is particularly true when it comes to complex advertising sales where the picture will

    be used in a variety of magazine ads and collateral uses.

    Restricted Use. Some customers are willing to pay large fees to restrict competitors

    from using an image during the duration of their license. Such uses need to be carefully

    negotiated and monitored.

    Defining Terms For The Customer. It is becoming more and more important to carefully

    define terms with the customers before delivering images. The existence of royalty free is

    causing many customers to believe that any time they pay a fee, no matter how small, they

    have unlimited rights to use that image forever. Those who are licensing specific usage

    rights need to get that understanding in writing before they allow customers to download

    their full size image files.

    With fax machines this is relatively easy. You get the client to sign off on the terms

    before you make the delivery. But, the discussions and the writings must be in the buyers

    native language. If these kinds of details are taken care of in the "negotiating phase"

    there are often a lot fewer problems in the "collection phase" of the sale. I will discuss

    collection problems a little later.

    Large Users. Certain large users, like book publishers, prefer to deal with agencies

    that can supply them with a broad cross section of the imagery they need. This can reduce

    the publisher's administrative costs. Often the publisher is able to negotiate per image

    discounts based on the quantity of images they are buying. Smaller agencies and individual

    photographers are usually locked out of the chance to make sales of this type.

    This method of selling has advantages and disadvantages for the photographer. Photographers

    should try to understand how the agency's pricing and discount strategies work, and

    carefully weigh the benefits of participation. There is a potential for volume sales but at

    lower prices. It is not always clear that the individual photographer benefits enough from

    the volume to justify making the images available at lower prices. On the other hand,

    holding out for higher prices and giving up the opportunity to participate in this market

    can be frustrating.

    Usually, the agency has a particular strategy and photographers are only given one choice.

    The only option open to the photographer is to move to a different agency. However, in the

    Internet environment it is technically possible for each agency to offer photographers

    greater flexibility and to allow each photographer to make certain images available to the

    Large User (Bulk Sale) market and restrict others to the high end market only. It will be

    interesting to see if some agencies offer such options as Internet marketing develops.

    Model Releases. Customers may need to check releases to determine if they adequately

    cover the use. In some countries laws vary as to when releases are needed to publish

    pictures of public buildings or private homes. France has new laws that protect the privacy

    of individuals photographed in news situations and photographs used in news publications.

    Going by U.S. law because you produced the picture in the U.S., or are selling the picture

    from the U.S. may get you in trouble. Various professional organizations are trying to find

    ways to identify divergent rules and harmonize the rules internationally, but it may be

    quite some time before such "harmonizing" becomes a reality.

    Collecting. If all payments are not made by credit card at the time of the sale

    (unlikely) someone needs to collect funds in the local currency. Collections in the stock

    photo industry can be difficult in the best of situations. They often become impossible if

    there is no one locally to provide systematic follow up. The goal is not just to get images

    used. The goal is to get paid for the use of images.

    As part of this process it is important to establish the credit worthiness of a client

    before the image is delivered. Get a faxed signature on a delivery memo before supplying the

    high resoultion file. It is important to also recognize that you are not even safe when you

    are paid by credit card. While stolen credit cards are used in only 1.2% of all Internet

    sales, e-tailers are ten times more likely to be ripped off by credit card buyers than

    bricks-and-mortar stores who are able to get signatures from their customers and check ID's.

    Stolen cards are much more likely to be used to purchase consumers products than for

    business-to-business transactions. Nevertheless, Deborah Williams of Meridien Research told

    USA Today that as much as 26% of on-line sales made by some sporting goods and clothing

    e-tailers are fraudulent. Other vulnerable web sectors are computer hardware and software,

    electronics, music and games.

    In the U.S. there are on-line sellers in the stock photo industry who have as much as 20% of

    the sales they invoiced six to twelve months ago still unpaid. Much of this is likely to

    turn into bad debt. Part of the solution to this problem is more attention to detail in the

    negotiating phase of the sale and persistent follow up.

    Why might this problem be more prevalent on-line than in the traditional system of personal

    negotiation? First, in the personal negotiation process you build a relationship with the

    client and you work out a clear understanding of the rights your licensing for a particular

    price, before the image is delivered. With on-line there may be too much pressure to say yes

    to everything and quickly close the deal. Every image is different, every use unique and

    there can be endless variations. It takes time to negotiate a sale properly. Often the

    people assigned to buy images are clerks, not experienced art directors. They often need a

    lot of education (through the negotiating process) as to why we are asking for a particular

    price, and what the industry standards for such transactions are.

    If a little more time is spent during initial negotiations nailing down certain details, a

    lot of aggravation in collection can be saved later. Assuming that foreign buyers are no

    more or less honest than those in the U.S., photographers can benefit greatly from having

    local representation.

    Some Internet marketing systems are designed to eliminate communication as much as possible;

    to make it easy for the buyer to get something he or she wants; and then collect, if

    possible. The more automatic the sales process becomes the more likely photographers will

    be giving away uses for no fee through bad debt.

    Monitor. It is helpful to have someone to monitor usages. Without such monitoring, or

    its threat, there will be a great temptation to make uses beyond those licensed. In some

    cases legal action will be necessary. That is only practical if the action is brought in the

    country where the sale and usage took place.

    Legal Action. This doesn't happen often, but the fact that it does happen encourages

    buyers in general to be honest. In the marketplace, there is a constant need to pile

    contract provision on contract provision and clause upon clause to try to protect one's

    rights.

    One thing that agencies can usually do better than photographers, because they have the

    manpower and more incentive, is keep up with industry developments and changes that need to

    be built into the paperwork and processes. One of the ways they do this is through

    participation in trade associations.

    All things considered, it is not even a close call as to whether you need a foreign agent

    representing your interests. By now it should be clear that any photographer who wants to

    sell outside of his or her local territory needs a representative in every region where

    sales are to be made.

    Double Dipping

    Many photographers who have listened to the mantra of the Internet gurus, and believe that

    the Internet should be eliminating the middleman, are beginning to get much more upset about

    "double dipping" or the situation where a parent agent in the U.S. makes arrangements with a

    foreign sub-agent to handle sales for them in a particular territory overseas.

    This is particularly distasteful and hard for photographers to accept when the foreign

    office is wholly owned by the parent. Photographers want to receive the same percentage of

    the "gross fee paid by the customer," no matter where the sale is made.

    Nevertheless, there are legitimate reasons for why the costs of marketing and selling will

    increase as the sales chain from producer to buyer gets more complex. If a photographer is

    producing something in San Francisco and selling directly to a customer right around the

    corner there is a much less complex sales chain than if that same photographer is trying to

    sell to someone in Greece who he has never met and knows nothing about -- and if the

    photographer hopes to collect for the use of his image.

    I have outlined above all the things the selling agent does to earn his share of the fee.

    Depending on the specifics of the situation the Primary Agent or the Parent Agent certainly

    has less costs in making overseas sales than when that agent makes sales in their home

    territory direct to clients. The parent agent is not involved in the negotiation or the

    collection of the sale. Thus there may be an argument that the Parent agent is entitled to a

    lesser share of the fee.

    The parent agents participation in the foreign marketing may be less. The parent does have

    the additional costs of putting together a network of foreign agencies and making sure they

    are the most efficient operators in a particular country. The parent agent also has to make

    sure funds are transfered properly and that photographers are paid promptly.

    The foreign selling agent is involved in the most critical work. There is an argument that

    the Primary agent has less invested in the foreign sale than in a local sale and thus should

    take a lesser percentage. On the other hand even if the prime agent's percentage stays the

    same they are earning less in real dollars because it is calculated on the remainder after

    the selling agent takes their percentage. As we move from analog selling to digital selling

    there may need to be some adjustments as to which group receives what percentage of the

    gross sales, but clearly all parties -- photographer, prime agent, foreign sub-agent -- are

    still providing necessary and important services, and each must be compensated.


  • Copyright © 2000 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.  

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