The economic downturn is likely to hit traditional stock shooters hard. Advertising theory says that when sales go down, it is important to increase advertising spending in order to increase market share. Combined with the possibility of assignment budgets moving toward stock, some professional photographers hope that advertisers will buy more images. This is highly unlikely.
After the 2001 U.S. recession, it took two years for Getty Images to recover. Its revenues declined on a quarterly basis, despite being an industry leader, content acquisition and continuously increasing market share.
|THE LAST RECESSION: GETTY IMAGES QUARTERLY REVENUES
There are indications that this recession will be worse: In 2001, the European economy remained strong while the U.S. declined; this time, the downturn is worldwide. Magazine and newspaper advertising pages were already down before this latest crisis hit; now, ad revenue expectations are being revised further downward by experts.
Prior to Getty Images’ change of ownership, Goldman Sachs predicted the industry leader’s creative sales would be $100 million less in 2008 than the previous year. Given the continuous decline in the global financial markets since, the loss of sales is likely to be higher.
If advertisers are not going to produce more ads, will they at least cut back on expensive assignments and use more stock? Unlikely, because many assignment shooters have already drastically cut their prices to get work. The ratio of assignment to stock will probably stay about the same, though advertising agencies will be spending a lot less money.
In addition, buyers negotiate harder during tough times. Getty Images’ Premium Access and Jupiterimages Unlimited Plus demonstrate the industry leaders’ willingness to cut prices. Photographers are complaining that their sales reports show more and more $10 sales but no significant increase in the number of licensed images. Therefore, there’s a great likelihood that the average price per unit licensed will go down.
Whether or not negotiating is involved, budget-conscious buyers will go for the cheapest option. In 2001, the segment of the market that showed the most improvement was the then-cheapest product: royalty-free stills. Today, the cheapest option is microstock, which may see some growth in volume—but the rest of the industry will not.
Even some of the more successful microstock shooters are reporting flat or falling volume in the last few months. In addition to the dwindling economy, the decline in contributor earnings could be caused by the continuous and dramatic influx of new microstock contributors and images. While micro distributors many not see a decline in revenues, it is entirely possible that most microstock contributors will.
Microstock also has the advantage of opening new markets of users, who have never been able to afford traditionally priced images. That market still has the potential to grow, even though it could also decline as consumers and non-traditional buyers reign in spending.
Still, traditional image markets of magazines, newspapers, brochures and various corporate uses have absolutely no growth potential. In situations where customers need rights control—few do—they will be forced to go to rights-managed imagery or shoot what they need themselves. If they can get by with royalty-free images, they certainly will not pay traditional prices, when very good microstock images are available.
The best hope is that the traditional image markets’ decline will not be too severe.