70% of Nothing

Posted on 9/16/2008 by Jim Pickerell | Printable Version | Comments (2)

One thing PhotoShelter's demise teaches us is that 70% of nothing is still nothing. Percentage alone is not the critical issue for photographers. Nevertheless, too many focus on that issue, because it is the only absolute in a relationship where someone else is licensing rights to your photography.

If a photographer is interested in earning part of his living from stock photography, he should be more concerned with average monthly earnings and the costs, in resources and time, needed to earn that money. These numbers are very hard to determine without putting some images into play. As a result, most photographers don’t even try to consider them.

Once the photographer has invested some time and money producing images, he may discover that, regardless of whether he gets 20% or 70% of gross license fees, he could earn more working part-time at McDonald’s. At that point, the stock photographer must decide whether he is producing images because it’s a fun hobby, because he’s trying to build his photographic skills, or because his main business is graphic design and supporting a cheap source of imagery enables him to get cheap images when he needs them for his own designs, thus earning more from his graphic design work. If it’s for any of these reasons, then the money earned is not the issue, and it makes little difference whether the royalty is 70%, 20% or 1%. On the other hand, if the photographer needs more revenue than his stock is generating, he better turn to assignment work or some other career, rather than looking for a distributor that offers a higher percentage.

Given the number of people entering the business at all levels—even microstock—and the growing number of images in all collections, the average return per image in a collection will continue to go down. In addition, given the increased costs for distributors to effectively market their collections, the percentages of gross revenue paid to image producers will probably decline. The only ways for image producers to grow profits will be to cut production costs and make their images available through a greater number of distributors, using a variety of marketing models.

Some producers look at the volume of sales at fees of $2 or $3 and think, “If the distributor would just raise the price or give us a better percentage, I could make it in this business.” The problem is that as the price goes up, the volume goes down. (Despite this, I believe microstock prices could be raised significantly, with little or no loss in volume.)

The difference between 20% and 70% is only significant if volume and price remain the same—and they never will. Thus, insisting on a higher percentage may not be in the photographer’s best interest. At the very least, the photographer who hopes to earn significant revenue from stock production should diversify and experiment with a variety of licensing models and marketing options. Don’t pick a distributor or agent solely on the percentage offered or how “photographer-friendly” they are.

Copyright © 2008 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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