Sub-Agent Percentages

Posted on 9/27/2002 by Jim Pickerell | Printable Version | Comments (0)

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SUB-AGENT PERCENTAGES



September 27, 2002

Many experienced stock photographers are still confused by the percentages they are giving up
when their images are being licensed by foreign sub-agencies. I recently received the following
question from a photographer.


    "What is the 'typical' or 'industry standard range' for the percentages of the gross fee
    that is divided among the Photographer, Agency, and Sub-Agent (selling agent)? What I have
    noticed is that the agencies I am negotiating with don't reveal the full breakdown of their
    split with the foreign selling agents. This makes it impossible to determine the true gross
    license fee of images licensed by these agents."

The following is my answer. There is no industry standard. The percentages then to range from
30% to 50% for the selling agent. While 40% is probably the most common selling agency
percentage, many selling agents are now negotiating the right to keep 50% of the gross fee
collected. This is particularly true if the agency has some market dominance in their market.


In most cases the prime agency (the one dealing with the photographer) does not reveal the
arrangements they have with selling agencies. They do this in order to maintain negotiating
flexibility. They want to be able to offer different deals to different agencies depending on
the volume of sales they believe the selling agent will generate for them. If they give one
agent 50% and everyone else knows about it then everyone will want 50%.
Some of the deals require that the selling agent achieve a certain annual volume of sales, or
the contract is terminated or re-negotiated.


It is important to note that most commonly the "local selling agent" gets this percentage off
the top of the sale regardless of whether it is an independent company, or a wholly-owned
subsidiary of the parent company. Thus, in virtually every case, if a sale is being made
outside the territory of the parent company, a percentage of the gross fee collected is being
subtracted before the photographer's percentage is calculated.


Most photographer contracts say they will be paid 50% (or 40%) of what the parent agency
"receives" from the licensing of the image. Thus, if the sale is made by a foreign selling
agent for $100 and the agent keeps 50% the parent agency "receives" $50 and the photographer
gets 50% of that or $25.


While 50% for the selling agency is the highest I heard of at the moment, don't think that it
will never go higher than this. The selling agent is in a good negotiating position because
they have direct access to the customers and they are the ones servicing the customers. The
photographers and the prime agents need this access. The prime agent can withhold its content,
but depending on the other options available in the particular market this may just be giving
away sales.


In the RF arena some suppliers are now being asked to give Getty Images 60% to 70% of the gross
sales if they want their images to be marketed on GettyImages.com. Some suppliers are agreeing
to these percentages given Getty's market dominance and the volume of sales they can generate.
Once Getty starts getting such percentages other sellers with market clout in their particular
market will start asking for more. While this is all RF at the moment, these kinds of
percentages could spill over into the Rights Managed arena as well.


The photographer also asked, "Is it reasonable for the photographer to insert language in the
contract that requires that the foreign percentage be capped within this range?"


Is think it will be very difficult to get any agency to agree to this. They all want to retain
their negotiating flexibility. If some cases agencies will agree to tell the photographer once
the photographer has signed the contract, but they want to keep this information away from the
other agencies they might be negotiating with. The agency might also agree not to offer the
photographer's images for sale in certain countries unless they were receiving some stipulated
percentage, but the process for the agency of making some images in its file available, but not
others, becomes difficult to manage. It becomes almost impossible if the images are in a
printed catalog.


The fact that true "gross sale" fees are usually not reported can work to the disadvantage of
both the selling agency and the prime agency. Many U.S. photographers believe that usage fees
are much lower in other parts of the world than they are in the U.S., given the royalties they
are receiving for these sales. As a result many
U.S. photographers are not very interested in selling their work outside of the U.S. market.
Often the sub-agent fees are somewhat lower, but not as much as the photographers tend to
think. Photographers tend to compare a $20 or $25 royalty with a $50 one from their home
territory and fail to see that the gross license fee in all cases with $100.


Copyright © 2002 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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