In light of pricing declines for textbook use and publisher attempts to avoid paying for future electronic uses, some image producers ask: “Why don’t all the sellers just say ‘no’? Shouldn’t the producer be setting product prices?”
Industry consolidation—both stock photo and publishing—has hurt all content creators and image suppliers. In the 1980s and 1990s there were lots of small independent publishers. No one had a huge share of the market, and rates tended to follow the guidelines of the American Society of Media Photographers. If a seller could not reach an agreement with a publisher, there were usually enough others, and the inability to sell to one did not have a major impact on a seller’s overall business. Sellers had more leverage and could hold out for decent prices.
Conversely, publishers did not have much leverage because a significant portion of sellers were willing to say no rather than make their images available at unreasonably low prices. And besides, the prices publishers were being asked to pay were not all that unreasonable, considering what they would earn from selling the books.
Then consolidation in the publishing industry began to winnow down the number of textbook publishers to a few major groups—Pearson, Houghton Mifflin Harcourt and McGraw-Hill, with perhaps the addition of Scholastic and Cengage—that produce a high percentage of all U.S. textbooks. These new publishing companies are now in a better position to dictate pricing.
At about the same time, a consolidation occurred in the stock photo industry. Large portals that combined the work found in a hundred or more different collections came into existence. Customers began to search these portals for their imagery needs. Volume was a much more important factor to the portal operators than maintaining prices.
A couple of decades ago, picture researchers had to go to dozens of small specialized stock agencies and individual photographers to ensure seeing most of the available options on a particular subject. When Getty Images, Corbis and Alamy became dominant, however, they represented work of their own photographers and, through image partner programs, a large portion of all the images created by the world’s smaller image suppliers. It soon became possible for picture researchers to see a huge percentage of all the images available for commercial licensing by visiting just three sites. Today, all researchers would have to do to see virtually all the professionally licensable images at any price point is add a couple of the top four microstock sites to their list of places to search.
Major publishers began signing “preferred provider” agreements with stock agencies and portals. Picture researchers that worked for these publishers were then told to go to preferred providers first when looking for images and were only allowed to look elsewhere in cases where they could not find anything on the preferred provider sites.
Sales fell off for all those who were not preferred providers, so everyone wanted the same deal. By skillfully playing one provider against others, publishers have been able to force prices down over time.
The publishing bean-counters, who are always looking for ways to save a buck, are in control. Their job is to cut costs now. They are not concerned with quality or the availability of product in the future. The more they cut costs, the greater the company’s profit. Image providers are perfect targets. Paper companies know what it costs to produce a ton of paper; they must maintain a certain price level—or they are out of business. Stock agencies know their operating costs and what they have to earn to stay in business. If earnings get tight, profits fall, and when agencies cannot increase volume, they cut staff or reduce image supplier royalties.
On the other hand, the image producer—the low man on the totem poll—has no idea what is required to turn a profit until all sales are in. He may know that it costs $50,000 a year to produce a certain number of images, but until the year is over, he has no idea how many of those images will sell or at what price point.
Given these conditions, producing images for the publishing market becomes a terrible business model. Publishers will continue to cut prices until stock agencies are out of business. By that time, any photographer who is dependent to any great extent on textbook sales will also be out of business.
The Picture Archive Council of America has recently written a letter to publishers requesting “to serve as the center of an open dialogue among textbook publishers and stock photography professionals and is asking the publishing industry to join in [PACA’s] goal of fostering a healthy business community.” Trying to open a dialogue is laudable, but I do not think the publishers’ money people want dialogue. They are in control and they intend to stay that way.
Image suppliers have little or no control. They can stop selling now and give up textbook revenue, or they can take what little they can get for as long as possible, until it finally becomes uneconomic to operate such a business. To produce new work aimed at this market is a losing proposition.