January 1998 Selling Stock

Posted on 1/10/1998 by Jim Pickerell | Printable Version | Comments (0)

112

JANUARY 1998 SELLING STOCK




Volume 8, Number 3


©1998 Jim Pickerell - SELLING STOCK is written and published by Jim Pickerell six

times a year. The annual subscription rate is $50.00. subscriptions may be

obtained by writing Jim Pickerell, 110 Frederick Avenue, Suite A, Rockville, MD

20850, phone 301-251-0720, fax 301-309-0941, e-mail: jim@chd.com. All rights

are reserved and no information contained herein may be reporduced in any manner

whatsoever without written permission of the editor. Jim Pickerell is also

co-owner of Stock Connection, a stock agency. In addition, he is co-author with

Cheryl Pickerell of Negotiating Stock Photo Prices , a guide to pricing

stock photo usages.


Story 113

NAFP LOSES FIRST ROUND TO ASSOCIATED PRESS


In early December the National Association of Freelance Photographers lost the

first round in their suit against Associated Press.

NAFP members claim they own the copyright to images which they produced on

freelance assignments for Associated Press. They are seeking a share of the

payments for secondary usages of their images when rights are licensed to

non-members of the AP. AP normally charges a per image fee for such uses.

U.S. District Judge Denise L. Cote dismissed five of six counts in NAFP's claim

against AP, but indicated that copyright ownership claims could still be brought

by specific plaintiffs.

The primary complaint was that AP required the photographers, as a condition of

sale, to surrender copyright and future earnings from the resale of their

pictures.

The fundamental issue in the case was whether AP's legend on the face of every

check transfers the copyright when the photographer endorses the check for

payment.

The legend in question reads: "In consideration of the transfer of any and all

copyrighted ownership in the news materials described above. Endorsement

signifies consent."

Judge Cote dismissed NAFP claims on the grounds that NAFP does not meet the

requirements of legal standing. Given that there will be slightly different

considerations in each plaintiffs claim she concluded NAFP would be unable to

testify as to these agreements and understandings. She held that individual

plaintiff's need to be named in order to provide actual facts on a case-by-case

basis.

"We are disappointed in the ruling," said Kevin Larkin, president of NAFP, "but

we're encouraged to see that the judge does see merit in our claims." The judge

indicated that AP's check legend might not be sufficient to transfer copyright

depending on the understanding of the photographer through all other related

communication..

"The fact that the NAFP does not have legal standing to represent our members

simply means that we will have to re-file some of our charges naming individual

plaintiffs rather than the organization as plaintiff," Larkin continued.

According to Judge Cote's 32-page decision, AP claimed, and the plaintiffs

conceded, that the use of "a legend on a check, may be effective to

transfer copyright under the proper circumstances." This point was

substantiated by case law cited in the decision.

Thus, the key issue in future cases will be the circumstances of check

endorsement as well as any agreements or understandings that were made prior to

receiving the check.

    [This case brings to light the fact that there are some instances where a

    check endorsement can actually transfer copyright. To the best of my knowledge

    the general understanding among non-lawyers in the industry has been that check

    legends were not sufficient to transfer copyright. This decision indicates the

    opposite may be true.

    Therefore, photographers should take care to scratch out all such legends before

    endorsing and depositing any checks. Future cases may provide a clearer

    understanding of what is and isn't permissible.]

"Although the ruling appears to be a preliminary victory for the AP, we are

confident that freelance photographers who oppose transfer of their copyright to

AP will ultimately prevail on this basic issue now that the court has indicated

individual photographers can prevail on the merits when they demonstrate there

was no intent to transfer copyright to AP," said Paul Hurschmann, NAFP executive

vice-president and a plaintiff in the suit.

Judge Cote also dismissed charges of antitrust, monopoly and restraint of trade

stating in effect that plaintiffs' allegations would establish that AP's conduct

could be detrimental to competitors (i.e. freelance photographers) but not to

competition itself, which is a prerequisite under the law.

A charge of copyright infringement by plaintiff Paul Hurschmann remains under

consideration. A similar charge of copyright infringement by plaintiff Kevin J.

Larkin was erroneously dismissed (AP did not ask for its dismissal and conceded

that it was properly brought).

Larkin's had applied for a copyright registration certificate, but had not

received the certificate prior to the court action.

Judge Cote said that a copyright infringement occurs only if the individual had

acquired a certificate of registration in advance from the U.S. Copyright

Office, and thus dismissed his application.

New charges are likely to be brought by several more individual plaintiffs

seeking a declaratory judgment on copyright ownership under guidelines outlined

in the decision, whereby individual plaintiffs could prevail on the merits of

individual claims.

"It is unfortunate that we must prolong our legal efforts, but we believe that

the law is on our side and we simply need to refocus our charges and our claims

as to what our entitlement to relief should be. This battle is by no means over.

The ultimate ownership of copyright to the images remains to be decided."

For more information and the full text of the decision see the NAFP web site at:

www.worldpics.com/nafp


Story 114

SELLING INDIVIDUAL RF IMAGES


Photographers supplying images to Royalty Free companies, and receiving a

percentage of sales rather than a flat buyout of their images, should examine

their contracts to determine what they will be paid when rights to individual

images are licensed.

This is important because the RF companies are moving very rapidly toward

licensing rights on-line rather than selling CD-ROM's. It may be a few years

before more images are individually licensed than discs sold, but this trend can

drastically change the economics for the photographer.

The current trend is to pay the photographer 20% of the gross sale of the

product irrespective of whether it is a disc, or an individual image. (In fact,

some photographers who have been with some of these companies for several years

will get less than 10%.)

The RF producers claim that at the $70 per image price for unlimited use that

they have to charge, they can only afford to pay 20%. I would argue that they

might be able to charge $100, or more for that on-line use since the competition

- traditional stock - is still priced much higher. They don't seem to think so.

If they charged $100 and paid the creator 30% they would still be making more

per unit sale than when they get 20% of $70. Their argument would be that their

unit sales will go down if they raise the price. I can't quite see why that is

going to happen because the clients still need the images and there is no

cheaper alternative, but that is what their financial projections show.

The interesting thing is that if they do figure out how to raise the price it is

highly unlikely that they will voluntarily rasie the percentage they pay the

photographers.

On the other hand, if they begin cutting the price below $70 to try to increase

market share they are going to want to cut the photographer's royalty even lower

so they can maintain their profit margins at the lower price.


Story 115

SUBJECTS THAT SELL


The principle demand for images that will be used in advertising revolves around

Business and Family Life situations. Concepts that illustrate Business and

Lifestyle principles are also in high demand.

Our agency, Stock Connection, focuses our marketing and promotion toward the

advertising community. Our sales by image type over the past three years are

the following percent of total dollar volume. (In general, these figures may

hold true for many agencies that sell primarily to the advertising market.

Agencies that concentrate on selling to the editorial market will have a much

different experience.)

 

Business 8.80%

Communications 1.70%

Housing 3.13%

Industry 2.19%

Medical 1.82%

Money & Banking 1.86%

People w/Computers 1.47%

Technology 3.57%

Transportation, roads 7.91%

Cities, skylines 2.14%

34.59

Concepts 6.54%

flags 3.18%

Abstracts & backgrounds 5.09%

14.81

Lifestyles 12.33%

Children 3.30%

Recreation, sports 8.63%

Travel 5.61%

29.87

Animals 4.65%

Water 3.45%

Sunsets 1.37%

Mountains,trees,desert 1.90%

Landscapes, other 3.19%

Nature 2.78%

17.34

Agriculture 1.29%

Disasters .51%

Editorial .17%

Education .67%

Other

(bridges,architecture, etc.) .90%

If we add to the concepts category: water, sunsets, deserts, clouds, fireworks,

roads, money, as well as still lifes in other business categories, we find that

better than 35% of our sales are for concept illustrations without people.

Images that illustrate the following concepts are always in demand: caring,

change, communication, elated, elderly, endurance, fast start, fresh,

futuristic, good life, graceful, happiness, healthy, joy, love, new technology,

power, risk, romance, security, simplicity, speed, strength, success, teamwork,

time, wealth, working together.

If you would like a free list of 200 concepts that are often used in advertising

send a self addressed stamped envelope to: Jim Pickerell, 110 Frederick Avenue,

Suite A, Rockville, MD 20850.


Story 116

SALES BY CATEGORY


Alfonso Gutierrez of A.G.E. Fotostock in Spain points out that worldwide there

are 10 big market segments and he defines them as: (1) Publishing, (2)

Decorative uses, (3) Advertising, (4) Packaging, (5) Calendars/Prints/Posters,

(6) Travel brochures, (7) Toys/Games/Puzzles, (8) Editorial, (9)

Music/Multimedia and (10) Miscellaneous as a final container for all other

unclassifiable uses.

Some of these market segments tend to get most of their images from catalogs and

others tend to rely on classic file searches. Certain of these categories are

more likely to use Royalty Free than others.

One of the things that interests me about this is that I believe our "segments"

here in the U.S. are much different from those in Europe. For the sake of

argument I would define the U.S. segments and their relative economic importance

in terms of gross sales in dollars as follows:

 

Print Advertising 20%

Brochures and catalogs of all types 35%

Non-publication Advertising

packaging, billboards, posters, POP 10%

Books - Textbooks & tradebooks 10%

Consumer Editorial Content in Magazines 15%

Corporate Editorial and other internal uses

Desktop Publishing, PR, a lot of

Internet use 5%

Calendars, Prints, Posters, Toys, Games

Puzzles 3%

Miscellaneous 2%

Different agencies are going to have different experiences depending on the make

up their files. Some agencies focus on selling to certain segments of the

market and pay less attention to others.

My guess is that the numbers for the market in Europe are totally different from

the U.S. percentages I have outlined above. The percentage in dollar volume for

Consumer Editorial is probably much higher and for Brochure use much less.

Calendars, Prints, Posters, Toys, Games, Puzzles, Music and Multimedia combined

represent a very small segment of the U.S. market while Alfonso has list them as

three of his ten segments.

I would be interested in comments from anyone in the U.S. or overseas who has

statistics that might prove or disprove my theories.

Accurate data would help everyone if we could find some ways to get accurate

comparisons between the relative economic importance of the Editorial market,

the Advertising/Brochure market and all the rest in various countries or parts

of the world.

In choosing an agency it is important for a photographer to understand the areas

where the agency tends to concentrate their marketing efforts, and to make sure

that this fits with the kind of material the photographer plans to produce.

The way we edit for the file, the way we handle requests and the way we

advertise and promote are very different for the Advertising and Editorial

markets. While most stock sellers make some sales in both markets, they also

tend to concentrate on one area or the other. I believe it is important to

allocate costs to each market area, and measure those costs against the returns

from that particular market.


Story 117

NEW ASMP HANDBOOK


ASMP has produced a new handbook called, "ASMP, Professional Business Practices

In Photography," that will be useful to every professional photographer, and

particularly

stock photographers.

This 400 page book has 124 pages that deal specifically with stock photography

issues under the heading of "The Business of Stock Photography."

ASMP has pulled together information from a number of industry leaders

including: Craig Aurness, David Barnes, James Cook, Jon Feingersh, Paul Henning,

Barbara Roberts, Richard Steedman, Vince Streano, and Susan Turnau. This book

is available through Alworth Press in New York at 212-777-8395 for $24.95 plus

P&H.

The sub-headings such as: Getting Into Stock, What Makes a Good Stock Photo,

Subjects that Sell, Choosing a Stock Agency and the articles by the various

experts are not well indexed so it takes a little digging to get to the meat of

what this book has to offer stock photographers. Nevertheless, it is worth the

trouble and the price.


Story 118

TIME-LIFE SYNDICATION


Time/Life is making an attempt to formalize the syndication arrangements with

their photographers by asking them to sign a letter of agreement concerning

re-use rights.

According to Debra Cohen, manager of Time/Life Syndication, the purpose is to

determine which photographers would like to be represented by Time/Life and

which have other representation arrangements. Agreement to use the Time/Life

Syndication service is not a condition for getting future assignments from any

of the Time/Life publications.

One phrase in the agreement has confused some photographers. It says

photographers will receive a 50% net split of the income from a sale (after

payment of all applicable direct expenses of the sale including commissions.)

Ms. Cohen says the language in the parenthesis is only meant to refer to

situations where foreign agents negotiate the sale. In such cases the foreign

agent would take a normal selling agent percentage (40% of gross) and the

remainder would be split 50/50 between Time/Life and the photographer.

This is similar to the arrangements most stock agents have with their

sub-agents, but photographers might want to negotiate a clarifying sentence

before signing the agreement.

Given the recent tendency of foreign sub-agents to insist on 50% of the gross

sale, rather than the customary 40%, photographers might want to write in a

clause that says, "under no condition will the photographer receive less than

30% of the gross fee paid by the client for the usage."

We discussed this percentage split issue under "Photographer's Contracts" on

page 5 of the September issue of Selling Stock.


Story 119

RIGHTS CONTROL AND RF


Paul Light had some questions after reading Henry Scanlon's major piece on

Royalty Free photography. This article first appeared in PDN and the full text

is available on Selling Stock Online Story #106 in the

Archive. Other photographers may be confused by the same issues.

PL - What is a rights-control database? I understand the basic idea, but

would like to know more about this?

JP - As I understand the way this term is used by Scanlon a

"rights-control database" would be any image database where rights to use images

found in the database are licensed through a fee structure based on usage. This

is the opposite of the "royalty free" philosophy where a one-time (usually low)

payment gets the purchaser unlimited use of the image, forever.

Prime examples of "rights-control database" are Stock Workbook Online

(www.workbook.com) or Stock Market's database at (www.stockmarketimages.com).

Users can locate images by using the database, but to license rights they must

call the stock agency representing the image and negotiate a fee based on usage.

Rights control is any database where there are limits on usage (see Survey

story).

PL - Should we all be thinking about taking some of our less than the

best stock images and marketing them as RF images?

JP - There are two questions here. Yes, we all should be thinking about

marketing some of our images as RF. But, it is probably not worthwhile to try

to put your "less than the best stock images" on such discs. More and more it

is becoming clear that the quality of images that are selling as RF is the same

as the quality of those appearing in print catalogs. RF producers are not

interested in less than your best.

If you find a disc producer who will put your "seconds" on his disc, the discs

probably won't sell well. If you are being paid a royalty the only way it pays

off is if the disc becomes a good seller. The whole idea that was originally

expounded that clip discs were a way to sell some of your lesser quality images

has never proven true.

When Getty and PhotoDisc merged (see article 105 online) we learned that

PhotoDisc's average earnings per image on their discs in 1997 will be about

$800. If you can get 20% of that figure and you are only averaging $1.00 per

image in the general file of any agency it may be worthwhile putting a good

image on a royalty free disc to try to get $160 per year. But also keep in mind

that we know of several PhotoDisc photographers who are not achieving this

average.

On the other hand, the average figures from the images of TSI's Master Dupe

Collection a year ago were $1,340 per image with the photographers getting 38.5%

or $511 per image, per year.

If there is any chance of getting select image from a general file in a major

catalog, or a major master dupe collection, it is probably better to keep it out

of RF.

Yes, you should be thinking about it, but the decisions are not easy.

PL - Can small agencies and individual photographers even be players in

the RF portion of the market?

JP - Index Stock put some images on RF discs for some of their

photographers four years ago. As far as we know they may still be doing it. We

have no idea what the return has been. West Stock was a small agency when they

started putting images for their photographers on the early PhotoDisc products.

They are certainly a much larger agency now, and many of their photographers

have done very well.

To be successful in Royalty Free it takes huge marketing expenditures. So far

the only companies that have shown much success are those that distribute a line

of discs rather than one or two.

The small agency probably can not be successful producing one or two discs and

trying to market them itself.


Story 120

FAULKNER SUES GEOGRAPHIC


Douglas Faulkner, Louis Psihoyos and Matrix International as agent for three

other photographers have filed suit for copyright infringement and breach of

contract against National Geographic Interactive, National Geographic Society,

Eastman Kodak Company, Hammacher Schlemmer, Inc. and Mindscape, Inc. in U.S.

District Court in the Southern District of New York.

The action has been brough in connection with the release in September of "108

Years of National Geographic Magazine on CD-ROM."

At least thirty other photographers have retained counsel and are either in

discussions with National Geographic or exploring their options to bring

separate actions. One group has been organized by Jim Pickerell and interested

parties can obtain more information by contacting SELLING STOCK.

Pickerell has identified more than 1,300 photographers who have had one or more

pictures published in the Geographic between between 1986 and 1995. It is

believed that each has a legitimate claim for compensation. It is estimated

that more than 5,000 photographers who are still alive have images on these

discs.


Story 121

SURVEY


This issue contains a survey that will look at photographer attitudes toward the

marketing by stock agencies of royalty free products as well as the general stock

photo income trends of individual photographers.

Please respond to the ten questions printed at the bottom of this story.

One part of the "Royalty Free" issue that has been difficult to frame into a

Yes/No question is how agencies can effectively compete with the RF sellers for

that segment of buyers who are purchasing RF discs. This becomes more critical

as RF sellers begin licensing individual usages on-line.

Many agencies believe that a majority of the buyers purchasing RF discs would be

willing to pay a royalty (after all they are paying for the disc) if the price

for the usage were somewhat lower than traditional prices. But, no one has

clearly defined how much lower that needs to be.

The buzzword for this lower pricing has become "Royalty Lite." (The term

Royalty Lite is a registered trademark worldwide of WestLight. Digital Vision

in the UK has also said they are trying to register this as a trademark.

Consequently, I will use the term "Low Royalty" to refer to this concept in the

future.)

PhotoDisc is already charging a low royalty of $69.95 for unlimited use. I

believe most stock agencies are thinking in terms of a somewhat higher price

point, plus some restrictions on print run. The general thinking is that many

buyers would be willing to pay a slightly higher price (some say as much as

$250, which is the average cost of a CD-ROM disc) if they can get unlimited use

for their particular project.

Since most RF buyers are working on projects with small press runs there are

probably some acceptable limitations for "low royalty" that would enable it to

work in conjunction with traditional pricing formats.

One of the nice things about the LR system is that the usage is known and

limited. Therefore, higher restricted use rights might be sold to someone else

in the future.

This raises the next question. Should the "Low Royalty" files and the

"Traditional" files be kept separate, or is it possible to handle the images as

one file and simply license certain uses at lower rates?

There is no indication that there is any solid agreement among agencies as to

how best to approach this issue. There is a consensus that something needs to

be done to try to recapture clients who have gone to RF. In the near future,

expect to see several agencies begin to define strategies for dealing with this

problem.

In addition to responding to the survey questions we would appreciate any comments

or opinions you might have relative to the avove issue.

STOCK SURVEY

(This survey is designed for photographers and should only be answered by those who

produce images. Stock agents, please do not answer.)

    1 - Are you represented by a stock agency?

    No		Yes, One agency		Yes, More than One Agency

    2 - Do you have any photographs in a print or digital catalog?

    Yes       		No

    3 - Did you get as many images in catalogs in 1997 as you did in 1996, or in

    previous years?

    more than previous years	less than previous years	about the same

    4 - How did your production of new stock images in 1997 compare with previous

    years?

    greater than previous years	less than previous years	about the same

    5 - How did your gross earnings from stock images in 1997 compare with previous

    years?

    greater than previous years	less than previous years	about the same

    6 - In what range was your total income from stock in 1997?

    [  ]  less than $10,000		[  ]  $100,000 to $150,000	

    [ ] $10,000 to $20,000 [ ] $150,000 to $250,000

    [ ] $20,000 to $40,000 [ ] $250,000 to $400,000

    [ ] $40,000 to $70,000 [ ] over $400,000

    [ ] $70,000 to $100,000

    7 - Have you allowed any of your images to be used on Royalty Free Discs?

    Yes    				No

    8 - Would you be willing to put some of your images on a Royalty Free disc if

    you were given the opportunity?

    Yes 				No

    9 - Do you think your stock agency should be involved in producing and marketing

    some type of Royalty Free or Low Royalty product?

    Yes				No

    10 - Are you satisfied with your current agency relationships?

    Yes				No

Please return this survey to:

Jim Pickerell, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, Fax:301-309-0941

Results: The results will be published in the March 1998 issue of Selling Stock


Story 122

NEW PACA MEMBERS


PACA has announced that the following companies have been accepted for

Provisional Membership in the association and that Viewfinders of Portland, OR

has been accepted for Pre-Provisional Membership in the Picture Agency Council

of America.

The provisional members are:

    Allsport Concepts Pacific Palisades, CA

    The Bridgeman Art Library New York, NY

    Digital Stock Corporation Encinitas, CA

    Folio Washington, DC

    Laughing Stock Southboro, MA

    Motion Picture & Television Archive Van Nuys, CA

    Michael Ochs Archive Venice, CA

    Photo Resource Hawaii Kailua, HI

    Reflection Montreal, Quebec

    The Stock Connection Rockville, MD

    The Stock Rep New York, NY

    Weatherstock Tucson, AZ

PACA Members complete an extensive application procedure. It is the desire of

the association to assure contributors and clients alike that PACA membership is

a sign of the members' commitment to ethical business practices and the

protection of intellectual property. In order to do that, we are advising all

contributors of the following information.


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 301-461-7627, 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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