647 UPPER CUT IMAGES
July 16, 2003
Upper Cut Images is a new Rights Managed stock agency that expects to launch in early 2005 with 10,000 to 20,000 high end images covering all the major advertising categories according to Ellen Boughn, Vice President and Creative Director. The agency has currently signed about 20 photographers and is looking for a few more experienced stock shooters who are aggressive producers.
A few photographers who are considering joining the Upper Cut team have asked me for my opinion of the venture, so here it is. Upper Cut's plan is to limit the number of people they represent to under 100 in order to aggressively represent the work of each person. They are also funding some shoots. You can read more about their offering at www.whyupprecutimages.com .
The company is owned by Miles Gerstein, CEO of Punchstock, a portal licensing rights to Royalty Free imagery. Gerstein is very experienced in the RF arena and his company probably generates in excess of $12 million in sales annually. He represents about 600,000 RF images from all the major brands, but does not produce any RF images under his own brand. Gerstein has a team of 10 to 12 full-time sales people (and some part-timers) that regularly visit advertising art buyers to encourage them to use the Punchstock site for their RF needs. These visits are the perfect opportunity to promote and RM Upper Cut offering.
In the last year or so the industry has seen an increased emphasis on personal contact marketing, relative to direct mail or e-mail marketing, and Punchstock is well positioned to take advantage of this change. Punchstock has a customer base of 22,000 photo buyers.
According to Gerstein, Punchstock was pushed in the direction of also selling RM by many of their customers who regularly say, "We like your RF offering, but when are you going to give us RM as well?" However, Punchstock is not unique among RF sellers now looking to offer RM. Many of the companies with strong RF portals have started to look for ways to add RM to their offering. This may be partially due to the fact that all the major RM sellers are also offering a broad selection of RF imagery, and in order to compete any major portal must now acknowledge and offer both.
There are a couple other factors that could also be motivating this move. RF sellers have discovered that a high percentage of the customers they deal with (particularly as they have raised RF image prices) also occasionally buy Rights Managed images. Thus, an offering that includes RM and RF is likely to increase traffic and overall sales.
Another motivating factor may be that RF sellers are beginning to see a leveling of sales. There is an oversupply of RF content and adding a lot more RF content doesn't necessarily increase sales. Certainly some RF sellers are seeing growth by taking market share from others, but overall I believe the growth of RF sales in the industry as a whole is flattening in terms of number of images used. The only hard numbers I have to make this guess are those of Getty Images so I could be way off base, but this is what I think is happening.
So we accept that it is a good idea for a seller of RF images to also be selling RM. The critical question then becomes, "What strategy should they use to acquire those RM images?" It is on this point that I question the Upper Cut Images strategy. I think most buyer want to go to sites that have a very broad cross section of both RF and RM. Getty, Corbis, Alamy for example. While occasionally RM buyers need exclusive rights to the images they purchase, the vast majority of RM revenue is generated from non-exclusive sales, so exclusive rights to image - while nice to have when the buyers need it - is not critical to generating significant revenue from RM sales. I believe that in the current environment the tighter a company edits, and the more they limit the number of photographers and images, the less chance they have to license rights to a significant numbers of RM images.
Ellen Boughn came from Workbookstock. She was the driving force behind their philosophy of tight editing that aimed for a small image collection that would outdo Stone and would directly compete with Getty's Stone collection. To an extent they have been successful in achieving this goal. When Workbookstock makes a sale it is often for a high end use and for good dollars, but I don't think they make enough of those sales to generate reasonable revenues for most of their photographers. In addition, a whole lot of the images that the photographers are producing -- which would sell if they could be seen -- never make it online. (This is what I hear from photographers, but I don't have enough solid data on Workbookstock sales to be sure this is true, so maybe I'm wrong.)
It does seem clear, however, that Boughn's philosophy for Upper Cut Images is much the same as she had for Workbookstock -- with a couple small exceptions. She emphasizes that she is looking to work with less than 100 photographers giving each photographer a higher percentage of the collection. However, each photographer will also have to be a significant producer for Upper Cut Images to ever have a large, broad based collection. Indications are that editing will not be as tight as it is at Workbookstock and that more "sister" images will be included in the offering. Another exception is that photographers will be allowed to add up to 15% of the images rejected by the Upper Cut editors to the online collection.
This is in recognition, I believe, of what Getty has learned with their Photographer's Choice collection. Getty has discovered that photographers do know a little bit about what buyers want in the way of images and that often their agency editors don't have perfect foresight as to what buyers will want in the future. (Getty's sales statistics indicate that the average Photographer's Choice image generates almost twice as much revenue as the images picked by their editors.)
A small, highly productive group of photographers is also characteristic of how a lot of RF imagery is being produced. RF producers tend to work with very few photographers and give them a lot of direction and guidance. This may be beneficial for the photographers accepted by Upper Cut Images, provided they enjoy working in this manner.
However, as I see it the small tightly-edited sites are having a great deal of trouble getting buyers to come to them. With aggressive marketing buyers may come a few times, but if they can't find something they can use they are likely to go somewhere else the next time. And if the site doesn't have a very broad collection of imagery there's a good chance the buyer won't find anything that will fit his specific need -- even though the site may have a lot of great images that would fulfill other needs. On the other hand, the fact that these buyers CAN fulfill a lot of their RF needs on the Punchstock site may be enough to keep them checking out the RM options there too. From my observations the broader the variety of material an agency tends to offer the better it seems to be doing for the big producers as well as the small, more specialized producers.
Gerstein says, 'The Upper Cut images will be made available through the Punchstock site and the default search will be to pull up both RM and RF with each search. If the customer wants to look at only RM or only RF there will be options to do that, but the default will be to bring up RF and RM images side by side." He also indicated that according the Getty 90% of their customers use the default search. "That's obviously the way to go and not something we have to reinvent," he continued. The Upper Cut URL will also have all the Punchstock images.
One thing that appears not to have been resolved at this time, is the priority that Upper Cut images will be given in any given search, relative to the RF images of the other brands represented. Will all the Upper Cut images come up first before any of the RF are shown? While that is one possibility, I doubt that is the approach they will take because that might detract from the usefulness of their site for those customers only interested in RF, and RF is Punchstock's major bread and butter. They could put up 3 or 5 images from each brand before they put up additional images from the brand. That would be democratic, but won't push RM over RF because the overall returns will be so predominantly RF. Balancing this so it increases RM revenue while doing nothing to detract from RF revenue may be a very tricky algorithm as Getty learned in 2003 (See Story 578 ) when they overbalanced their site toward RF and had to readjust to increase their RM sales. Since the images in the default search will be predominately RF (600,000 to 20,000) the way this algorithm works will have a major impact on how frequently the RM images of the Upper Cut photographers are seen.
In the past one of the big arguments for a tightly edited site has been that it was important that the buyer should not get too many returns from any given search because this would discourage him from using the site and he would likely go somewhere else. It is a nice theory, and it may have been true when online search was in its infancy, but in practice it hasn't really seemed to work for several years.
In the near future, Punchstock will also be introducing a search-within-a-search option, that will include a history of all the steps within each search. This is designed to make it easier for buyers to narrow searches when they get many returns from a particular search.
Another thing to consider when looking at tight editing is the potential that effective Visual Search offers down the road. Punchstock plans to have a visual search system available for its staff to test in September 2004, and they expect to roll it out for end users later in the Fall 2004. (I did an in depth story on this technique in my last newsletter or you can check out the SimSearch feature on www.wonderfile.com to get an idea of how one of the visual search offerings works.) In the next couple of years I believe Visual Search will make totally irrelevant the number of returns that come back from any keyword search because the buyers will be able to visually adjust their search criteria to fit exactly their particular need at any given moment.
Upper Cut photographers should also recognize that the images they produce will be sold through agents in countries other than the U.S. and UK and the percentage of the total license fee will be reduced by the agents sales commission.
Thus, I am skeptical, that the Upper Cut strategy of working with a few photographers will be successful for the photographers, although any positioning up-market and increased revenue will be a success for Punchstock. If it doesn't generate the desired resultes, Miles Gerstein will still be in a good position, given the success of his Punchstock operation, to modify the strategy. And, because no one except possibly Getty and Corbis has accurate statistics on a lot of things that happen in this industry all we can really do is guess about the future.
I think the trend that is more likely to successful is one where a portal with a good distribution network like Punchstock's accepts content from a variety of suppliers and requires those suppliers to scan and keyword the images and prepare them so that all the distribution company has to do is load them on their site and sell. This dramatically cuts the distribution company's costs. To a great extent, this is what Getty is doing with its third party strategy, and other companies are following the Getty lead. The photographers may not get as high a percentage this way (because there is a second cut in the royalties), but the indications are that many of the photographers currently involved in such arrangements make more money because they get more images online faster and they make a lot more sales.