61WHERE DOES THE PRESS THINK WE'RE HEADED?
May 11, 2007
At its annual meeting PACA invited four representatives of the stock photo trade press to discuss current industry trends and share their opinions of what stock photo agents might expect in the near future. The title of the panel was "Where Does The Press Think We're Headed?"
The speakers were Daryl Lang of PDN (www.pdnonline.com), Chris Ferrone of About The Images (www.abouttheimage.com), Ron Rovtar of Stock Asylum (www.stockasylum.com) and this writer, Jim Pickerell of Selling Stock (www.pickphoto.com).
The discussion was wide ranging and the audience participated, not only with questions, but also with many insightful comments. In this article, I will try to outline several of the issues discussed. As might be expected in many cases there was no clear agreement on the issues.
Flat Demand For RM & RF
A major trend that tends to drive all the rest is what will happen with demand for imagery. I expressed the belief that demand for RM and RF still imagery will be flat at best and could very well decline. Not everyone agreed. Many hope there will be a turn around or a resurgence.
I base my belief on the fact that nearly all RM and RF images are used in some type of print publication. Print publications are on the decline. Much of the information and advertising that used to appear in print is now being distributed much more effectively online. While still images can and are being used online, it seems likely that much of the still image usage online will eventually be replaced by video. In addition a large percentage of the images that are being used online are not RM & RF, but priced at Micropayment levels.
Dramatic Increase In Images
There was general agreement that the number of images available for licensing has been increasing dramatically and much faster than demand, particularly in the traditional areas of the market. The end result is a lower average return per image. Agencies may be able to stabilize their revenue by adding many more images to their collections, but this presents a search problem for customers because there are too many images on any given subject to review.
It is also a major problem for photographers who must produce more and more images just to stay even. (See Story 959)
(In addition, many of the best photographers are killing themselves trying to produce images of a higher quality with greater production values while the market is increasingly willing to accept is images of lower quality.)
In his conference call to investment analysts earlier in the week Jonathan Klein, CEO of Getty Images, said, "There are changes in the purchasing patterns of our customers especially as advertising is being driven by new platforms like the web and mobile where customers are using many more images, but the images are smaller and have a LOWER AVERAGE QUALITY compared to those used in the old traditional formats like print and television."
Emphasis On Quality
So should there be an emphasis on Quality? Many believed the answer to the abundance of imagery is to develop collections with a higher level of quality. Ron Rovtar and Randy Taylor argued for developing high quality brands in order to license the images at premium prices. However, there are several factors in addition to Klein's statement above that work against this concept and were mentioned in the discussion.
First, high quality implies tight editing. Tightly edited collections tend to be overwhelmed by the volumes of imagery of somewhat lesser quality that is available at lower prices.
It also turns out that the images editors accept into a "high quality" brand are often not the ones picture buyers are willing to pay the most money to use. When it comes to high quality imagery, one of the industry's most successful editors was Tony Stone. But at its peak Tony Stone Images generated no more than 5% of the gross sales of the industry.
We also have the example of Photographer's Choice. When it was introduced Getty had a very high quality brands that was tightly edited. With the introduction of Photographer's Choice contributors were allowed to select whatever images they wanted to put in PC and they could even add images that had been rejected by the Getty editors. It turned out that for some time, at least, these rejected images earned more than twice as much as the ones the Getty editors had decided to keep. What photographers and experienced editors think are the best, most creative, highest quality images with the greatest production value are not necessarily what customers need or are willing to buy.
Ron believes competition will drive an ever increasing emphasis on quality. Buyers will come to understand that the quality of the images they use in their promotions are the main differentiator between them and their competition. It is my opinion that if all the features and price of any two products are exactly the same and the only differentiator in the promotion and advertising of the two products is the quality of the images used to promote them that's a pretty poor reason for a customer to use in basing a decision on which product to buy. With this reasoning I think we are raising the value of a creative photograph to a much higher standard than it probably deserves in the mind of the average customer.
Ron went on to say, "Markets tend to swing. We have been through a down period. Soon we will begin to see a shift back." He believes it is only a matter of time before customers begin demanding more creative images for Internet use. "At some point, once they get the idea of what this medium can do they will loosen up their purse strings and go for the more quality work."
I think it is more likely that the quality of some of the micropayment images will improve. An impartial editor might judge a particular micropayment image to be not as good as an available RM image, but the graphic designer looking for an images to use may find it perfectly satisfactory for the use. It is also important to remember that many of those designing Internet projects are working on the basis of a fixed fee for the project. Thus, if the designer can buy 5 pictures for $10 rather than paying $1,250 for them he can put a lot of extra money in his pocket.
Leila Boujnane of Idee Inc, said, "The online market does not necessarily need or want this 'quality', but may be much happier with a much more mundane image that is relevant, culturally appropriate and very specifically illustrates the point they want to make."
Another increasingly important trend will be the decline in the photographer/distributor relationship. Ron said, "I can't remember when it has been lower." And continued, "In a short period of time very few distributors will be able to continue to exist without a detailed photographer recruitment and retention program."
I pointed out that looking ahead, there will be many fewer photographers whose aim it is to earn a living producing stock images. A larger and larger share of the images used will be produced for purposes other than earning money from them as stock. Agents will find that a higher percentage of the photos they receive will be outtakes from other projects rather than being shot specifically for stock.
The vast majority of professional photographers will be forced to focus on productions that pay an up front fee, and secondarily may provide some outtakes that can be marketed as stock later. To a great extent professional stock photography will go back to what most of it was in the '70s and '80s -- outtakes from assignments.
Daryl also thinks. "There is going to be a very much reduced base of providers, providing imagery for the entire industry."
Betsy Reid of the SAA shared information about a survey the SAA conducted a year ago. Many of the responding photographers were highly dependent on Getty and yet were very dissatisfied with the relationship. Many also had images with Alamy, as well as Getty, and while Alamy only represented a small fraction of their revenue they tended to be very satisfied in their relationship with Alamy. Betsy also pointed out that, "The neat thing about stock (for the photographer) is that you can stop producing at any time and the checks will roll in for quite a while." This is something for agents who need new content to think about.
In order to deal with photographer dissatisfaction and eliminate the payment of royalties many of the leading agents have moved toward wholly owning as much of their collection as possible. It looks like this trend will increase.
On the surface wholly owned production appears to make a lot of sense when average return per image is rising. Companies with good statistics can look at sales of a particular category of subject matter and estimate annual return per image for that type of material. Then, if they want to do a shoot that will produce 100 images and they want to cover all the costs in six months they can easily budget what they can afford to pay for the shoot. If RPI goes up they make their money back faster. But when RPI is declining at an unpredictable rate, due not only to the quality of the imagery produced, but the huge and massively growing oversupply, there is a much greater risk that payback will take much longer than estimated. To manage this problem they need to budget for a shorter and shorter payback and pretty soon what they can afford to pay for a major production will no longer be attractive to the photographer.
Ron argued that there may be trouble ahead for those who want to wholly own. "It will be difficult to find photographers at day rates to create the imagery agents need and at a rate they can afford. As the need for ever higher quality begins to manifest itself the pool of acceptable photographers will begin to shrink because few will be able to produce the needed imagery at a cost that enables them to make a profit."
Facing The Micropayment Challenge
Many of the people currently offering images for sale are not all that concerned about how much they can earn from those images, or whether earnings are greater than cost of production. It is estimated that 20% to 30% of the micropayment stock producers are buyers of images. In many cases their goal is not to earn money from the licensing of their images, but to support a business model that enables them to find cheap images for their design projects. The Internet and the micropayment sites have enabled this very efficient barter system.
A count of image suppliers at each of the micropayment sites comes to a total of in excess of 150,000. Ellen Boughn of Dreamworks says that a high percentage of these suppliers put their images on several sites and the generally accepted number of micropayment suppliers is closer to 50,000. If we accept that number then between 10,000 and 15,000 image buyers are also suppliers. That can have a major impact on the type of imagery that will be in demand in the future.
Some of the traditional sellers believe that the amateurs producing the best images for the micropayment sites will eventually realize that they can make more money through the traditional market and will move their best images to the higher level. Getty is now encouraging that with iStock photographers. Other traditional sellers just cross their fingers and hope micropayment won't take share from their businesses.
Daryl has been reading a lot of the blogs on the micropayment sites and he suggested that the quality will continually improve because, "A lot of smart people who are helping each other learn." He continued, "Amateurs want to learn about photography. They like the challenge of learning new things."
Daryl suggested that traditional sellers might want to actively participate on these blogs and assume the role of educators, not just license distributors.
The panel believed that footage will increasingly replace stills as a percentage of total image use on the Internet. Chris said it best when he commented, "While attending yesterday's panel about Stock Footage I got the sensation of hearing the first rumbles of a freight train, still in the distance, but unquestionably headed our way and at a very high rate of speed."
To read Chris' story on Footage, "The Next Big Thing" go to: www. abouttheimage.com/2007/05/the_next_big_thing_a_review_of_paca_stock_footage_panel.html.
Eugene Mopsik, Executive Director of ASMP said, "My concern goes to ... the growing threat to copyright. Orphan works is just the tip of the iceberg. Consider the effects of the file sharing sites that creates the understanding in the public mind that images are to be free. Ultimately that will have an effect on legislation. Rising demand from the public for free images will sooner or later create a pressure on Congressional leadership for new legislation. We can't stop it, but the future erosion of copyright is one of the big issues of the day."
Nancy Wolfe, legal counsel for PACA, pointed out that, "Young people want all information to be free (and they) will put a lot of pressure on the copyright laws. Copyright has never been stagnet. When this country was formed we were a country of pirates. We didn't protect any works from outside the US. All the publishers got started by making money by stealing British novels."
Other Trends Discussed
Portals such as Alamy, Digital Railroad, IPN and StockPhotoFinder may offer photographers dissatisfied with traditional stock agencies the option to exercise greater control over their image collections and receive a higher percentage. These portals do not restrict photographers from distributing the same images through other channels.
It was argued that the best way to maintain the value of imagery is to add value in terms of service. Providing better metadata with the pictures is one way to add value. However, I pointed out that the 80/20 rule may apply here. 20% of the buyers may care about metadata, but the other 80% base their decision entirely on the visual elements of the picture. In many cases the additional sales gained from supplying better metadata may not offset the additional cost involved in making that data available.
Producing stock images on speculation will become much more risky from a financial point of view.
Doug Dawirs said, "In my experience less than 5% of images accepted by agencies ever sell. Thus, if it costs between $50 and $200 to produce an "accepted image" you need to multiply by 20 the return that an image need to generate in order for it to be profitable." This gets you to somewhere between $1,000 and $4,000 per image.
In research done recently by the Bureau of Labor Statistics it was determined that for the first time ever in America the number of professional photographers has decreased. However, this was offset by an amazing increase in the number of part-time photographers that is beginning to emerge.
Ron pointed out that, "Fundamentally, the business (we are in) is the same as it was 50 years ago. There are a large number of creators on one side and a large number of people on the other side who need very specific imagery. The people in the middle are trying to match up images with customers in a way that makes a profit for them and the suppliers and provides a service, at a reasonable price for the buyer." However, will those people in the middle play the same roles as they have in the past? There will be a way for the people who need images to get what they want from the producers, but it may have very little to do with what this PACA members have been doing for a long period of time.