Why Photographers Need Stock Agencies

Posted on 10/23/1998 by Jim Pickerell | Printable Version | Comments (0)

178

WHY PHOTOGRAPHERS NEED STOCK AGENCIES


October 23, 1998

Many photographers look to the global village future and

think that once we move to digital search and delivery for most stock photo

uses they will be able to negotiate sales worldwide without the aid of

agents.

A large digital file of the original will be stored in one location. After

proper permissions have been negotiated that file can then be made available,

at the click of a button, for the client to downloaded to his computer.

Such systems are in place at PNI, PhotoDisc and a few of the large

traditional stock agencies. It is becoming quite common to deliver digital

files, rather than film, to clients by next day air. These image files are

written to CD-ROM's or zip discs. As transmission speeds over the internet

improve there will be less need for this intermediate step.

However, even in the digital environment agencies will continue to supply a

number of important services, many of which are often overlooked by the

photographer.

Some agencies supply a greater variety of services than others. Agencies

also charge photographers, or deduct from royalties, a variety of fees for

various services. There are so many variations that there is no industry

standard. In some cases the fees or percentage paid may be more than can be

economically justified, and photographers need to carefully compare options.

Before signing with an agency try to understand how the agency will handle

each of the activities listed below and how you benefit. In some cases, the

top producers tend to receive, proportionally, much greater benefit than the

average photographer. A few may get extensive production advice and the

small producers end up paying for this service that they never use, through

standard across the board commissions. Make a careful assessment in the

beginning of what you need and what will benefit you and there will be fewer

unpleasant surprises down the road.

Also understand what the agency will expect from you on a continuing basis.

Some have much higher expectations than others.

Services

  • Always On Call. One important service an agency provides is

    being prepared to respond quickly to the customer's need whenever they call.

    The epitome is an on-line system that allows the customer to call at midnight

    on Sunday evening, search the database, determine the price and download an

    image for their next project in a few minutes.

    While 24-hour-a-day, 7-day-a-week service is the new buzzword, immediate

    response during normal business hours seems to be satisfactory for 98% of the

    buyers.

    At the other end of the spectrum is the photographer who tries to handle

    sales himself. It never fails that clients call when the photographer is out

    shooting. They never call when he is in the office between jobs, or, if he

    happens to be in the office to take the call, he is so busy with other work

    that he doesn't have time to pull the images the client needs. It never

    fails that the biggest stock requests always come on the busiest assignment

    day of the month.

    The important thing for the photographer to recognize is that the degree of

    service offered clients varies from agency to agency. Most agencies are

    constantly trying to upgrade their level of service.

    Nevertheless, it is important when choosing an agency to have some

    understanding of the level of service provided, and how that compares with

    the competition.

  • Quick Response. When the call comes in at 5:00pm getting the

    image out by Federal Express for next morning delivery.

  • Defining Terms For The Client. It is becoming more and more

    important to carefully define terms with the client before delivering images.

    The existence of royalty free is causing many clients to believe that any

    time they pay a fee, no matter how small, they have unlimited rights to use

    that image forever. Those who are licensing specific usage rights need to

    get that understanding in writing before they ship images to clients..

    With fax machines this is relatively easy. You get the client to sign off on

    the terms before you make the delivery. In spite of its ease, many agencies

    don't take this crucial step.

  • Marketing Systems. Marketing, or letting potential clients know

    what images exist, is the major job of an agency. When mailing a marketing

    promotion, whether postcard of print catalog, there are economies-of-scale.

    Large agencies or large groups of photographers can reach more potential

    buyers for a lower unit cost per buyer reached than small agencies or

    individual photographers.

    An agency that can distribute over 100,000 catalogs on a regular basis, or

    has a well known on-line site will probably generate many more sales than the

    individual working on his own and trying to make clients aware of his

    existence.

    Customers like to be able to go to one or two sources rather than having to

    search out hundreds of different sources for what they need.

    Large agencies have their own print catalog, their own on-line service and

    their own CD's. Smaller or more specialized agencies can offer the customers

    one-stop-shopping by participating in products like the Stock Workbook Disc

    that contains work from approximately 40 stock agencies. Photo buyers know

    that by going to this one product they can see the best work of 40 agencies

    rather than having to go to each agency separately.

    Another part of marketing is identifying potential users and keeping them

    informed of new offerings. This can be a very time consuming and costly

    process. Potential buyers move often, so mailing lists need to be updated

    constantly.

    Most agencies are testing new systems to try to get a market advantage. With

    anything that is untried there is always a risk. Some new ideas won't work.

    Assessing when a marketing system is outmoded is as important as adopting new

    systems. Some believe that print catalogs will be replaced by on-line

    catalogs in the near future. On the other hand, PhotoDisc, one of the most

    successful digital marketing organizations, relies 100% on digital delivery

    and spends as much, or more, on printed marketing materials than most major

    stock agencies licensing rights to film.

    As a photographer you need to be aware of the various marketing options

    employed and determine whether this type of marketing is likely to aid in the

    sale of your work.

    The industry is in a transition and methods of marketing may change

    dramatically in the next few years. Photographers need to test a variety of

    options and stay flexible until it is clear which marketing systems will

    dominate in the future.

  • Editing. When it comes to editing it is important to understand

    the agency's editing philosophy. You may get a better sense of this by

    talking to some of their photographers and getting their perspective on the

    editing process, rather than relying totally on the statements from agency

    management.

    In most cases the philosophy stays the same for rather long periods of time

    (years), but in the past year or so we have seen some rather dramatic shifts

    at some of the major agencies. These shifts have caught many of the

    experienced photographers working with these agencies off guard and has

    dramatically changed their ability to earn income from that agency.

    You need to understand if they are taking images for catalogs only, or if

    they are putting images in the general file. If images go in the general

    file, what percentage of sales of the agency are made from the general file.

    If the agency is distributing images overseas, is it the same images that are

    selected for the U.S. market, or do they select differently? If they select

    differently, do they only distribute catalog images overseas, or do they

    send dupes of non-catalog images?

    It is also important to understand how tightly the agency expects the

    photographer to edit.

  • Maintain Databases. The digital environment provides the

    potential for tracking a great deal of useful information that can aid

    photographers in their decisions as to what to shoot. The greater the number

    of images a seller licenses a month the better idea the seller should have of

    what customers want to buy. Those with lots of information should be able to

    give the photographer good guidance as to what to shoot, but to be useful

    that information must be stored, analyzed and disseminated.

    Many agencies have such information but currently don't communicate it well

    to their photographers. The photographer wants to look for an agency that

    will not only collect the information, but communicate it.

  • Learning What Clients Want To Buy. Many technically excellent

    photographers want to sell what they like to shoot, rather than shoot what

    the clients want to buy. This can be very dangerous in a saturated market

    like we have today. Many agencies have excellent systems where editors and

    art directors work closely with photographers, even attending shoots, and

    guide their production.

    On the other hand, certain agencies may have a shortage in certain subject

    areas and be able to market a photographers work better than the agency that

    is known to have a good selection of that kind of material.

  • Digital Delivery. Being able to FTP a digital file to the

    client when needed.

  • Negotiating the Fee. The more one negotiates particular types

    of usages the better idea they will have of what clients are willing to pay.

    In addition, some people are naturally better negotiators than others.

    This is particularly true when it comes to complex advertising sales where

    the picture will be used in ads placed in many magazines and collateral uses

    as well. The big agencies to get more opportunities to negotiate high

    dollar sales. I know of one photographer whose agency recently licensed

    rights to one of his images for $26,000 for one year use and $7,500 per year

    for three years to another of his images -- all in a one month period. (The

    photographer will receive 50% of these figures.) Big agencies that make

    frequent sales of this type know the value of a large advertising usage and

    have the courage to ask for decent prices.

    Advertising agencies tend to like to deal with the major agencies for this

    type of sale because they know they can trust the agency's rights control

    system. They do not have the same confidence when dealing with small

    agencies or individual photographers.

    On the other hand, there are times when the same agencies will seek volume

    over price. They may offer bulk deals and attempt to maintain customer

    loyalty by always matching a lower price from a competitor. Once the

    customer learns that an agency is willing to do this it becomes relatively

    easy for the customer to drive down the price on future sales.

    While agencies may occasionally get higher fees than the photographer would

    be willing to ask, we have seen many cases where photographers ask for, and

    get, more than the agency. In pricing unique images, photographers tend to

    hold out for better prices, and lose the sale if the offer isn't good enough.

    Seldom will the agency get double what the photographer would ask,

    off-setting the 50% commission paid the agent, but very few photographers are

    able to reach as many clients or make as many sales as an agent.

    Weighing the price vs. volume issue is almost impossible to do in advance of

    actual experience with a specific agency. Nevertheless, photographers should

    watch this closely and recognize that it is a potential benefit offered by an

    agent.

  • Determining Usage. There are at least two reasons for being as

    specific as possible when determining usage. First, a client's initial

    description of the usage is often not totally accurate. If you base the

    price on that initial description you may be selling the image for less than

    you could have received. It is important to get as detailed an understanding

    as possible of the actual usage. People whose full time job is to negotiate

    sales tend to do this better than photographers.

    Second, you need to determine if this is a sale you are really comfortable in

    making. Does the photographer want to sell to anyone, no matter what the

    usage, or are certain buyers unacceptable to the photographer or models. Is

    a model or property release needed for this use and is the one available

    adequate.

    We gave some examples in our story on PhotoDisc that illustrate this point.

    David Falconer took a cheek to cheek photo of friends of his at their 50th

    wedding anniversary. He placed the image on a PhotoDisc CD-ROM which does no

    checking of its users.

    Whitaker Wellness Institute purchased a copy of the disc and used the image

    in a brochure to market vitamins and other products entitled "Healing

    Miracles". The wife was given a fictitious name and a quote that said, "I

    was saved from a $300,000 heart transplant by using...."

    Friends of the wedding couple received the brochure, recognized the couple

    and started making jokes about the heart transplant and other "healing

    miracles". The couple was upset and humiliated by this use.

    In another brochure Whitaker used a Falconer photo of a young couple kissing

    at sunset on a Hawaii beach under the title "Dr. Whitaker's Uncensored

    Secrets to Sizzling Sex at Any Age..."

    At Stock Connection a few months ago, a bank in Southern California wanted to

    use one of our close-ups of a elderly couple for their brochure. They found

    the image on the Stock Workbook disc. However, they had to come to us to

    license rights and get film.

    The copy they intended to use under this picture was, "My husband was laid

    off from the aerospace industry and we were about to lose our home. XXX bank

    gave us the loan we needed."

    The couple had signed a model release, but they were also friends of the

    photographer, and certainly hadn't anticipated their photo being used in

    connection with something that implied this type of false personal testimony

    and endorsement. The photographer was contacted and together we decided to

    refuse to make the sale. When a selling agent is talking directly to the

    client refusing to do business remains an option.

    Photographers need to recognize that the way images are used may totally

    mis-represent who the people are, particularly if there is no checking or

    control on the users.

  • Additional Caption Information. In some markets - mostly

    education and editorial - the client often needs additional information about

    the image that is not supplied on the mount. Often the agent can supply this

    information from their own knowledge, but if not they serve the client and

    the photographer by tracking down this information so the sale can be

    completed.

  • Due Diligence. Establishing the credit worthiness of a client

    before a sale is extremely important. Given the nature of our business every

    agency is often making sales to people in other states with whom they have

    had no previous experience. Every agency occasionally has some uses on which

    they are unable to collect, but proper procedures will keep these to a

    minimum.

    In their recent contract, Tony Stone Images took the unprecedented step of

    guaranteeing photographers that they would pay them their share of any

    negotiated fee, even if TSI is unable to collect on the sale.

  • Invoicing. The paperwork must clearly define the use. This is

    extremely important if we are to continue to be able to sell multi-use

    rights. There must be a clear understanding with the customer as to what

    rights were licensed, and exactly what the customer can legally do with the

    material in his or her possession. There are an increasing number of

    instances of clients claiming more rights than was understood from the verbal

    discussion.

    The photographer has no protection if the rights were not clearly spelled out

    in writing and even then it is often difficult to collect. When digital

    files are delivered this can still be handled by faxed paperwork.

  • Collecting. Once the job has been invoiced there needs to be

    systematic follow up until the invoice is paid. Many companies have policies

    of not putting invoices on the payment list until they receive a follow up

    call from the company that submitted the invoice.

  • Tracking Lost Sales. Agencies receive a number of requests that

    don't develop into sales. Sometimes the price was too high, sometimes the

    buyer finds a better image somewhere else and sometimes the project is

    canceled. Following up on requests and determining why the sale was lost can

    be very useful for future planning. Many agencies have procedures for doing

    this. Few photographers have time to devote to this activity.

  • Checking on Usage. It is important to follow up after the sale

    has been made and check on actual usage. Getting tearsheets, or tracking

    on-line uses can be difficult, but we often find that in spite of our best

    efforts to define the use at the negotiating stage the client actually made a

    larger use than was authorized in the invoice. When this is discovered there

    is an extra fee.

    The ease of scanning, the difficulty in defending against misuse, and the

    proliferation of the idea that all images should be "royalty free" is making

    this step more and more important. Nevertheless, with careful attention to

    what happens after the sale photographers can protect their rights and get

    significant extra income from second uses.

  • Research. Having researchers that understand the special needs

    of certain clients is where small specialty agencies really shine. They can

    often out perform big general agencies because their researchers have a

    better understanding of their specialty subject matter.

    Their are all kinds of specialty subjects where this can be important

    including: historical, fine art, medicine, biology, education, wildlife,

    underwater, aircraft, cars, etc.

  • Preparing Images For Delivery. For people working from a large

    general file this can be a very time consuming process, even if the file is

    well organized. It is not unusual for a complicated request from a textbook

    publisher to take a day or more to research.

    As clients tend to request images specifically from catalogs, this process

    can become much easier because the seller will be dealing with many fewer

    images and it is much easier to organize them in a simple numerical order

    rather than subject categories.

  • Image Return. Follow up to make sure the images are returned.

    A small percentage are lost and photographers need to get payment for such

    losses.

  • Refiling. Refiling of single images chosen from a catalog is

    not that big of a job, but if 50 of more were pulled from the general file

    for client consideration, the time to replace them in the file may be

    substantial. Thus, the refiling job varies with the kind of clients you are

    trying to sell to.

  • Remounting. Most images that are used need to be re-mounted

    before they are returned to the files. This is a time consuming, but

    necessary, process.

  • Keywording. As on-line search is used increasingly to find

    images, the quality of the keywording becomes extremely important. Most

    agencies handle the keywording for their photographers. Keywording is a

    difficult and time-consuming skill to learn, but the more images you keyword

    the better you can do it.

  • International Distribution. Many agencies provide international

    distribution of the photographer's work through sub-agencies and sometimes

    wholly owned offices. Approximately 55% of the worldwide sales of stock

    images are made outside of North America.

  • Legal Action. Instituting legal action occasionally to force

    compliance with rules. This doesn't happen often, but the fact that it does

    happen encourages buyers in general to be honest. Some agencies have

    substantial collections for unauthorized uses.

    Some large agencies have lawyers on staff, and most small agencies have

    established an on going relationship with a lawyer to provide legal counsel.

    Thus, when problems arise it is easier for them to get solid legal advice

    than it is for photographer. Recognizing this fact, clients who might try to

    legally intimidate the individual photographer are more reluctant to take the

    same position with an agency.

    Collecting through the legal process can be extremely difficult and time

    consuming. Negotiation is the better course, if possible. In a recent

    situation Price Costo used images of Galen Rowell and a number of other

    photographers in in-store advertising without their permission. Rowell sued

    for copyright infringement. As they moved toward trial there were 100

    separate filings with the court, most of them multi-page, time consuming

    reports to prepare. The case was finally settled out of court for an

    undisclosed amount.

    In the marketplace, there is a constant need to pile contract provision on

    contract provision and clause upon clause to try to protect oneself, and this

    often falls short in the end.

    One thing that agencies can usually do better than photographers because they

    have the manpower and more incentive is keep up with industry developments

    and changes that need to be built into the paperwork and processes. One of

    the ways they do this is through participation in trade associations.

    Some photographers believe that stock agencies should provide all these

    services for 50% of the fees collected. Increasingly, agencies are saying,

    "we can't make a reasonable profit if we only get 50% of the fee. Thus, if

    you want to work with us we have to get a larger cut."

    Photographers will have to decide, with all the costs they already have,

    whether it is worthwhile to continue to produce and attempt to market stock

    images with these added marketing costs. Their production costs already

    include: cameras, film, developing, mounting, scanning (sometimes),

    captioning, transportation, shipping, computer manipulation, responsibility

    for model releases, litigation expenses, increased editing duties, risk of

    loss of transparencies, insurance, office, office equipment and staff

    support.

    Sometimes it seems that the photographer is paying for everything and the

    agency is paying for nothing. But, the photographer will somehow have to

    cover the costs of the above services if he chooses to market and sell

    directly to the clients. The real question is what is a fair fee, or a fair

    percentage for providing these services.

    Foreign Agents

    So maybe there is value in having a U.S. agency, but as digital selling

    becomes more common can't that agency handle foreign sales without the

    necessity of getting a foreign sub-agent involved in those overseas sales?

    I believe foreign sub-agents will still be needed and legitimately entitled

    to a share of the usage fee for the following reasons:

  • Language and Time. Probably the most important service the

    foreign agent provides is being someone the client can talk to in their own

    language and their own time zone. Regardless of the degree of digital

    automation there will always be some need for human to human contact.

  • Marketing. The foreign agent knows the local buyers and

    currently controls the market lists in their country. They will be the ones

    to either encourage or discourage the use of various on-line services. If

    they are cut out of the loop they will naturally discourage on-line usage.

    Particularly during the early adoption phase of on-line usage there will need

    to be client education. The foreign agent can facilitate that education.

  • Negotiation. If there is negotiation, which is to the seller's

    advantage, someone will be needed who can speak the local language and who

    understands local trade customs. In a negotiated deal it is important to

    have an understanding of the going rates in the local environment.

  • Collecting. If all payments are not made by credit card at the

    time of the sale (unlikely) someone will need to collect funds in the local

    currency and arrange for transfer to the seller. Collections in the stock

    photo industry are difficult in the best of times. They become virtually

    impossible if there is not someone local who speaks the language to follow

    up. The goal is not to get images used. The goal is to get paid for the use

    of images.

  • Monitor. It will be helpful to have someone to monitor usages.

    Without such monitoring, or its threat, there will be a great temptation to

    make uses beyond those licensed. In some cases legal action will be

    necessary and that is only practical if brought in the country where the

    infringement took place.

  • Service. There will be service issues in making sure that

    everything is supplied in a format that can be used and in a timely manner.

  • Keywording. English keywords may not translate conveniently and

    users may need guidance and support in order to learn to use on-line search

    systems efficiently.

  • Research. Some foreign clients will want local agents who are

    bi-lingual and understand the photo research process to do preliminary

    research for them and forward a tightly edited selection.

  • Restricted Use. Some customers will want to restrict

    competitors from using an image during the duration of their license.

    Clients are willing to pay large fees for such restricted use, but this will

    need to be negotiated and carefully monitored.

  • Model Releases. Model releases may need to be checked. In some

    countries laws vary as to when releases are needed to publish pictures of

    public buildings or private homes. Going by U.S. law because you produced

    the picture in the U.S. or are selling the picture from the U.S. may get you

    into trouble. Various professional organizations are trying to find ways to

    identify divergent rules and harmonize the rules internationally.

  • Local Laws and Customs. The foreign representative is aware of

    local laws and customs that regulate the industry in their country.

    Copyright laws are different.

  • Analyzing Data. The digital environment will provide a lot of

    data about client needs that was never before available. This data is

    useless unless analyzed. Proper analysis and dissemination of the

    information can enable photographers to do a better job of producing images

    that will be needed in the future and lead to less wasted effort of producing

    redundant imagery.

    The duties of the foreign stock agent may change. In a few years many may no

    longer maintain large files of images. They won't have to worry about

    getting transparencies back and re-filing them, but they will need to find

    ways to be sure that the client doesn't make unauthorized uses of the digital

    files that have been delivered. This should result in staffing changes, but

    there will continue to be a need for foreign agents.

    My estimate is that 55% of the market is outside the U.S. Many of these

    sales are for images produced within the U.S. Some U.S. photographers make

    as much as 70% of their gross income from sales outside the U.S. Do not

    avoid the foreign market.

    Typically, the photographer gets 25% to 30% of such sales, if their U.S.

    agency is handling the distribution through a foreign sub-agent. The actual

    return can be even less if catalog costs and dupe costs are taken into

    consideration.

    The reverse will be true for European, Asian and South American photographers

    who want to sell in the U.S. Their local agencies will become the primary

    agency that handles the scanning, keywording and other preparation of the

    image for the digital database. The U.S. agency will provide the negotiating

    and collecting services of a sub-agency and remit monies to the foreign

    agency.


  • Copyright © 1998 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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