407 TIDBITS FROM CEPIC
June 2, 2001
I just returned from the 8th annual CEPIC Congress held this year in
Amsterdam. There were over 400 individuals in attendance representing 238
firms from 37 countries. This was the first time I had attended a CEPIC
Congress and I found it a great opportunity to share ideas with colleagues
and get a perspective on where the industry is headed.
CEPIC stands for Confederation of European Picture Agencies and represents
national picture associations in most European countries. Picture agencies
who are members of PACA and from other countries outside of Europe are
invited to attend. There are 943 agencies who are members of the various
associations and collectively make up CEPIC. These agencies represent over
One of the main events of this Congress was the presentation of the
results of a recent survey of CEPIC agencies. The gross turnover (sales)
for the 193 agencies reporting was 174,900,000 euros. If we extrapolate
these results to the whole European industry (and I'll provide more
details in a separate story later in the month) approximate annual sales
would be about $720 million at current exchange rates. This makes the
European market slightly larger than the North American market.
For those of us who are "language challenged" and speak only English there
was no problem in fully benefiting from the information available because
all presentations were in English.
A major interest of those in attendance was the variety of online portals
that are coming on the scene. This includes existing agencies joining
forces and completely new start ups. Two U.S. portals that were
represented were Workbookstock.com and Stockmedia.net. One of the
interesting things about portals is that there are as many strategies as
to how a portal should be organized and operated as there are companies
engaged in this activity.
My general conclusion is that there are a number of good ideas and it is
very hard to say that any one will eventually dominate the others. Most
participants were intensively gathering information as they tried to
decide where to put their images. In my opinion, most agencies will need
to simultaneously test several different portals -- with exactly the same
images on a non-exclusive basis, if possible -- rather than focusing on
any single portal.
Another major factor that could not be missed was the growing number of
new Royalty Free players. There is a tremendous redundancy of imagery on
the classic business, people, lifesyle subjects. If you look at what is
being offered by all the RF producers, there are now so many different
variations on the relatively few themes that the RF buyers probably don't
have to worry any more about their competitors using the same RF image.
With so many to choose from, the odds against two different art directors
choosing the same image are greatly reduced.
Most RF producers are pushing up prices and complaining about the costs of
production. Most shoots are art directed by an in-house staff and they
tend to work with photographers who will give them buyouts. One producer
said it generally takes three one day shoots to produce a disc and on
average they will have four to six models on each set. Costs, not
including photographer's fee and staff time are in the $6,000 to $8,000
range per day. Considering the photographer's fee and the staff
pre-production costs, it probably costs upwards of $30,000 to produce many
people oriented RF discs.
Producers freely acknowledge that a major part of what they sell goes to
our traditional business customers, but they say the challenge ahead of
them is to find new ways to market and sell to a much broader market than
that which currently exists. When you try to pin them down on who would be
included in this new customer base they talk about PowerPoint users and
business customers who could improve all the various things they do by
using more images.
How you find and market to this new customer base that doesn't know about
RF is a mystery considering that PhotoDisc has been making itself known
for ten years and Eyewire mails to 800,000 business buyers every month.
There seems to be more RF use in Europe than I expected, but it still may
be no more than 10% of the world market for RF and represent no more than
3% of the gross turnover of European sellers. The major users of RF are
still in North America. In Europe almost 85% of all RF revenue comes from
disc sales, not single images online. Many sellers believe "their
customers" will continue to buy high priced discs rather than making a
dramatic move to single-image online sales as has been the case in the
There is still a great interest in print catalogs and they are
certainly a more significant part of marketing in Europe than is currently
the case in the U.S.
The usage of online to search for commercial images seems to be at
about the same point of development as it was in the U.S. 18 months ago.
Many sellers in Europe believe the switch to online searching will take
longer than it did in the U.S. Based on the communication infrastructure
already in place, I think the change over is likely to happen more rapidly
than it did in the U.S.
ImageState had a big launch party for the new RF catalog they are
about to release. Most of the images in this catalog are from the John
Foxx collection. ImageState has also released a catalog of Rights
Protected images from the Adventure Photo collection and they are working
on a third catalog.
Many were asking, "What will Tony do?" (Tony Stone, of course).
Some expect his re-entry to have a strong impact on the market. Several
feel that anything he does will be much more photographer friendly than
most of the major companies currently operating in the industry. There are
also rumors that before the purchase of Tony Stone Images Tony and his
financial backers were given assurances that their ideas would be listened
to by Getty management. Once the deal was signed they were almost
immediately and totally ignored.
For the most part agencies are much more focused on competing with
each other, than in joining forces to more effectively deal with the costs
and benefits of technology. This works against the portal strategy. In my
opinion most of the small and medium sized agencies (which makes up over
90% of the players) will have to find ways to work together on many
fronts, and effectively share costs, if they expect to continue to grow.
This concept seems to be better understood in the U.S. than in Europe
Zefa (now known as VMI) will announce by November when and how they
will establish an office in the U.S. They will not buy any existing
operation as they have explored that option and determined there is
nothing worth buying. Thus, they will be establishing some type of U.S.
office. They are looking for someone with strong selling experience in the
U.S. market to be their U.S. Operating Officer.
A new online sports agency has opened operation in the U.S. at
www.sportschromeonline.com. Their headquarters is in New Jersey and Frank
Elge, their COO can be reached at 201-568-1412. They are looking for
Index Stock Imagery announced they had recently signed a deal with
one foreign sub agency to take only 30% of gross sales and remit 70% to
Index for splitting with the photographers. This reflects the new
realities in the digital world. The parent agency has increased costs in
preparing and making images available and in operating the online site.
The selling agency does not need to maintain a separate image file, thus
reducing their overhead costs.
Nevertheless, the concept got a very cool reception from the assembled
audience who felt that 40% was still a necessary selling agency
Everyone seemed to be showing a lot of the MTV type or "edgy"
imagery - particularly Rights Protected sellers and even some RF sellers.
I am beginning to believe that a fair number of these images are selling,
not only in Europe, but also in North America. These images are probably
selling for high fees in the U.S. so a relatively small number of uses
could produce high gross revenue.
I have always found it difficult to see how an art director could use the
vast majority of these images to sell products or services, but maybe the
primary purpose of the imagery is simply to stop or repel the viewer, and
in that instant the viewer will read enough of the copy to get the
At any rate, I found one theory of what is happening in the market
interesting. Think of the image market as a pyramid. At the top are a few
images are sold for very high dollars. Many of these are the MTV type
images. There may not be a lot of sales of this type, but when these
images are used it is often in a big campaign for high dollars. It's hard
to tell which image will appeal to any given art director, but if you
throw enough out there the AD will find something he or she can use.
The bottom level is RF which provides classic images on all the commonly
needed subjects at very low prices. In Europe, this bottom level still
represents a very small share of the total images used. In the U.S. RF
uses make up at least 60% of total uses.
The middle section provides classic rights protected stock imagery with
much greater variety of subject and approach than is offered in RF.
Pricing is based on use. Buyers also get a chance to restrict other uses,
but at much higher prices. To put some numbers to this for the purpose of
illustration consider let's look at a hypothetical $500 million U.S.
Num. Images Used
Average Fee For Each Sale
Percent Total Images Licensed
Total Images Licensed
In this model 71% of the images used are Royalty Free and they produce 30%
of the dollars. At the high end 3/10's% of the images sold are used for
very high dollar sales and they generate 10% of the revenue. The remaining
60% of the revenue is generated from about 28% of the images. The idea is that
a very small percentage of images may sell for high dollars, but the odds that
any photographer's image will be picked for one of these uses are slim. In
many cases you will have a better chance of success by betting in your local
The number of uses of the middle section will be pushed more and more
from both the top and bottom. Royalty Free is pushing up in terms of
number of uses and cutting into the Rights Protected sales. The percentage
of large uses also seems to be increasing as those planning major
campaigns make more multiple uses of the images they select. Expanded
campaigns helps increase overall revenue, but the odds that any particular
image will get used become less and less. The odds that any particular
photographer will get a lot of these big sales -- no matter how high-end
his imagery -- are slim. The bread and butter sales that used to
support many photographers are disappearing and going to Royalty Free.