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TRENDS TO WATCH
October 28, 2005
Looking ahead to 2006 it appears to me that there may be some significant shifts in the way images are acquired. At the moment, I'm only seeing tentative moves in these new directions. But, it seems entirely possible that these changes could become more wide spread and have a profound impact on the way image producers structure their businesses.
Distributors seem to moving in two directions - to acquire more imagery that they will wholly-own and to put more emphasis on working with production companies rather than individual contributors.
Acquiring Images
There are indications that the big distributors are aggressively looking for wholly-owned collections to acquire. In the last couple of months Getty has acquired ownership of almost 50,000 images from Medio Images and Rubberball (See Story
767). Corbis purchased Image100 (See Story 758). And going back a few months a significant percentage of the images that were part of Getty's purchase of Digital Vision were wholly-owned (See Story 720). Of course JupiterImages has been aggressively purchasing companies for some time, and has made it clear that they are interested in owning as many images as possible (See Stories 732 and 737).
In his 3rd Quarter call to investment analysts CEO Jonathan Klein said Getty Images is buying collections from individual photographers as well as from companies. Other distributors, as well as Getty, have contacted several photographers with large individual collections to determine if the photographers are interested in selling a portion of their collection.
Buyers would prefer images that are already digital and keyworded, but they are also buying film and taking on the scanning and keywording responsibilities themselves. While there have always been occasional buyers of collections it seems to me that there is a lot more of this activity at the moment than I can remember in the past.
Buyers are particularly interested in niche collections that will expand the choice in areas where their file is currently under represented. Photographers with strong collections of particular subjects might want to begin checking the current offerings of some of the major distributors, and contact those distributors if the photographer believes he/she can supplement that collection substantially.
It seems that there are also cases where the distributor already has a good offering on a particular subject in their RM collection, and yet is still interested in buying images of the subject in order to improve its RF and Subscription offerings and to retain more of the gross revenue on future sales.
The push to expand subscription licensing is one of the things driving this trend. In the subscription model the fee-per-image downloaded is so small that most sellers prefer to wholly-own rather than developing a system to pay out royalties.
Photographers also recognize that as the royalty percentage goes down and down, due not only to the lowering of the basic percentage, but to additional distributor cuts, it may be more practical to take an upfront fee and move on rather than hoping that the royalties down the road will ever amount to much. On the other hand those who are prepared to buy images are not stupid. They believe they will be able to generate much more in the years to come from images they own than they must pay now to acquire them.
Given the general trends in the market, the photographer who has an opportunity to get significant cash now needs to carefully consider whether it is better to bet on earning more in royalties down the road and hold onto ownership, or to let a large distributor with lots of cash take the risk, and not be upset if the distributor eventually earns more from the images than the photographer might have earned in royalties.
Shooting Images
Buying existing images is not the only way to get wholly-owned images. Many of the bigger companies with cash are talking to some of their most experienced and productive photographers about doing production shoots as "work-for-hire". This year Getty has increased the size of its dedicated team that is focused on producing wholly-owned images for the company. Klein told the analysts, "We are only getting started on a big ramp up of shooting our own imagery." (See Story 767.) When Klein says something like this all of his competitors are likely to quickly follow -- if they haven't already tried to get ahead of him on this initiative.
At the recent Photo Plus in New York there were rumors that Getty is lining up 50 to 60 of its most productive shooters to do wholly-owned productions in an effort to expand the content of the Iconica brand it recently acquired.
I'm hearing that some photographers are being offered significant six figure contracts for a certain amount of production during a year. Such offers are hard to turn down and there are indications that several photographers who in the past have been fairly adamant about never selling their copyright are accepting these deals.
Those who are hiring photographers to do wholly-owned productions are definitely aiming to work with experienced shooters who have a track record for volume production. While they talk about improving quality that only works if the shooter can also produce 25 to 30 different situations a day. While none of the distributors will admit it quantity and variety trumps quality. If you're the kind of guy who labors for an hour getting one shot just right, stock photography today is not for you.
Not all the images being purchased will be licensed as Subscription. Some will be offered as regular single image RF and others as RM. Once a company owns an image it has much more flexibility and control over how to offer it. It can move the image from one marketing channel to another as seems most appropriate.
Production Companies
The other trend is to place more emphasis on acquiring images from production companies rather than individual photographers. The big distributors prefer to get their images as color corrected digital files with keywords and it is a lot easier for them to deal with production companies who will supply them with thousands of images a year rather than individual photographers who will only submit a few hundred or less.
This does not necessarily mean that any of them will totally abandon working with individual photographers, but the production companies will get priority and the percentage of wholly-owned and production company produced images offered by the various sites will steadily increase relative to images supplied directly by individual photographers.
What Does All This Mean For The Photographer?
First, the obvious difficulty is that there is another cut in the percentage. The production company is only getting a percentage of the total fee paid to the distributor by the customer. The photographer's payment is based on the Net the production company receives.
To make it even more complex, often the prime distributor (Getty Images or Corbis for example) works through another distributor (selling agent) who takes another cut. Putting some numbers to this, here's how it can work. The selling agent makes a sale to a customer for $200.00. The selling agent keeps 40% and pays the prime distributor $120. The prime distributors percentages vary quite a bit, but in some cases they keep 70% and if this were the case then the production company would get a Net of $36. The production company then pays the photographer's royalty and if there agreement is 50/50 then the photographer will get $18 or 9% of the gross sale. This is not an unusual situation and in some cases it will be worse. In some cases the photographer only gets 25% or 30% from the production company.
The other thing that makes trying to figure the actual percentage of gross sale the photographer will receive very difficult is that due to contract terms between the production company and the distributor the production company may not be allowed to reveal the percentage the distributor is taking. Consequently, it's really of very little value to worry about the percentages anymore.
If you must focus on percentage at least look at that number in relation to volume. That may be almost impossible to do without actually testing your images in a particular situation, but percentage has very little relevance unless it is considered in relation to volume. Why accept 50% when you could get 100% by selling the image directly. The obvious answer is that you'll sell many fewer images if you wait for the buyers to find you. And the theory is that if you accept a lesser percentage the image will be licensed more times to more buyers. In some cases you can earn a lot more by accepting a lower percentage because of the volume. The important thing is the size of the check each month, or as Jack Hollingsworth says, "It's all about the Benjamins." (The $100 bill with Franklin's picture on it.)
It's great if you can get in through the main door to a major distributor, but that's going to become harder and harder. For most photographers the only way you'll get your images seen at all is to offer them through some type of production company.
As you start thinking about production companies recognize that many of the smaller traditional agencies will effectively become production companies. Even if they are not currently a provider to one of the major portals, they may become a provider in the future. They will take in relatively small numbers of images from many photographers; edit what is offered, prepare the selected ones to meet the standards of the large distributor and make it easy for the distributor to ingest the images. In some cases these traditional agencies will make some direct sales, but a significant percentage of the revenue they generate will come to them through distributors.
So What Should Photographers Do?
- Try to get accepted by Getty, Corbis or JupiterImages, but don't be discouraged if you are rejected. If you are accepted give them what they will take on an image-exclusive basis. Then look for other outlets for the rest of your work.
- Try to get accepted by one of the third party providers who are placing images on one of these three portals. This may get you on the portal through a back door even though you have to give up an extra percentage.
- If you have a significant collection consider selling part of it. It's hard to tell how long this interest in purchasing collections will last, but my bet is that the buyers will get their fill, or run out of cash, fairly quickly. (On the other hand Getty has more than $450 million in cash sitting there waiting for some way to be spent.)
- Recognize that as these distributors get more wholly-owned images they will surely push these images to higher positions in the search results. The distributors are also likely to give images from production companies that are shooting to briefs they supply better search engine positions. That means that if you come into the portal by another route or your images have been there for a while they are likely to be pushed further down in the search results, and thus much less likely to be seen.
Given the high volume of production coming out of the production companies, and the rapidly increasing number of images on most search engines, the odds of any individual photographer's images selling become less and less.
- Try to work as an assistant to one of the major photographers represented by a major production company. This not only teaches you shooting and production techniques, but will give you a thorough understanding of how the business works. Many who have assisted for a period of time have gone on to become successful producers in their own right. Being a successful producer requires a thorough knowledge of the business plus capital.
- Most volume shooters need several people with solid technology skills to support their production. Become an expert with Photoshop. This is a good way to break in.
- If you're shooting RF check out IPN Relay (http://www.ipnstock.com/ipn-relay-info.shtml) as a way to get into Adobe. They will accept RF images from individual photographers as well as from production companies.
- It will become harder and harder to get film looked at. If you intend to be shooting stock a year from now; go digital. If you have an archive of film, work very hard to get as much of it as possible where it will be digitized. There will be very little demand for film images in the very near future.
Recently, I made some comments about "Another Paradigm Shift" (See Story 765.) and ended with "Complaining about this trend will probably do no more to stop it than complaining about RF did to stop it." After I wrote this pessimistic piece photographer Richard Gardette wrote, "Jim, why don't you just tell us that as photographer/producers we are already dead?"
I hope this piece will better explain my thinking. Yes, there are some very difficult times ahead with many challenges. But, there are also opportunities. Opportunities for those who recognize the trends, and move with them. We're not dead unless we insist on living in the past as the rest of the world moves on.