Many Western stock photographers are beginning to wonder if it isn’t time to explore the potentials of the Chinese market. I asked Jerome Lacrosniere, CEO of ImagineChina in Shanghai for some information about the state of the Chinese stock photo industry.
Jerome founded ImagineChina in 2000 and has a thorough understanding of the imagery market in China. He was formerly in the banking industry and has been working in China since 1994.
Jim - How would you characterize the growth in demand for stock photography in China since Getty entered the market in 2005?
Jerome – Commercial photography in China is still a small market compared to Japan or Korea. But, it’s been relatively immune to the recent recession in the rest of the world. Getty owns approximately half of the $30 million commercial market. (All numbers in this article are in US dollars.)
The three companies that generate most of the other half of commercial sales are Corbis, Panorama and Imaginechina (commercial service is
icreative.cn) in that order. Considering the editorial market alone and putting aside Xinhua’s (xinhua.cn) revenue, which is impossible to correctly estimate, Imaginechina (
imaginechina.com, but in China the editorial service is known as Eastern IC or ipress.cn) is the leader. If we combine our revenue from commercial and editorial sales Imaginechina is second behind Getty.
Keep in mind that at Imaginechina we classify sales made to trade publications as editorial, not commercial. These sales represent a large volume of business and the rates for such usages are between editorial and commercial.
(Editor note: Three years ago I was told the Chinese market generated $20 million in sales in 2006 and some agency officials estimated that it would reach $50 million soon. Jerome believes that three years ago the size of the market was overstated with unreasonable growth expectations, but he believes the $30 million figure is accurate today.)
Jim – I believe your editorial sales are largely based on subscription arrangements that allow subscribers a certain level of use for a monthly fee. When images are used for commercial or advertising purposes are customers normally invoiced for the usage after the fact, as is the case in the Western world, rather than being required to pay upfront?
Jerome - Commercial usages are not allowed with editorial subscriptions. The editing, sales and payments for the commercial and editorial operations are clearly separated. Commercial clients are contractually bound to pay 30 days after the end of the month. In reality 60/90 days is the average term in China. Defaults are below 2%.
Jim – Please give me some examples of the average fees paid for various types of uses.
Jerome - The average fee for a non-exclusive news/entertainment/business image used in a major magazine is between $25 and $50. Purely local and regional magazines are 30% cheaper, but there are big volumes with these secondary publications. (Editors note: Readers should keep in mind that there are over 100 cities in China with populations of over 1,000,000.)
High end production, exclusive portraits requiring clearance sell for between $150 for ¼ page to $350 for a full page in local editions of foreign titles such as Vogue, Bazaar, Elle, etc.
(Editor note: Clearance photos are those editorial productions for which rights must be cleared prior to usages with the agencies or publicists before any specific usage. This is the way Corbis/Outline works.)
Corporate users pay between $200 and $300 for use of an image in a brochure. Magazine ad usages are usually part of larger marketing campaigns. There have been strong pricing pressure in this area. Customers used to pay between $3,000 and $5,000 for one year, unlimited, multi insertions. Today, the prices for these usages tend to one-half to one-third of what they were previously.
Jim – Are Chinese agencies interested in direct submissions from Western photographers, or is it really necessary for foreign photographers to work through a Western agency that can provide the Chinese agency with a larger volume of work?
Jerome –When it comes to accepting images for marketing from foreign suppliers the major problem for Chinese agencies is that very few of the members of their staffs speak English. Putting Getty and Corbis aside, Chinese agencies have built distribution systems that serve one territory. It is much easier for Chinese agencies to deal with an agency that will consolidate the work of many photographers rather than trying to deal with each photographer individually.
We also need editors to review, validate and organize content. Not all images from foreign sources are satisfactory for our market. Direct contribution from foreign photographers would require that we put in place additional editing resources. And we are already awfully busy with Chinese photographers.
To train and keep staff is another key issue in a young market like China. It is very difficult to find people with commercial photo experience. We must train them, but turnover is high as advertisers, publishers and competitors regularly go after our people.
We are considering opening our service in the future to a few highly productive foreign photographers, but we want to be sure our operation is ready and the market offers enough to justify everybody’s work.
Jim – Is there a problem in transferring royalty payments out of China?
Jerome - Remitting royalties is a manageable process when such payments can be consolidated to foreign agencies, but individual payments are complex to handle. All contracts involving forex payment need to be thoroughly cleared administratively. Payments are controlled, banking fees are high, international payment tracking is not smooth and there are low monthly limits. This represents a high entry barrier for foreign photographers willing to sell in China.
Jim - Would it be possible to transfer photographer and agency royalty payments via e-commerce (PayPal)?
Jerome - Paypal is present in China. But “International Paypal” and Chinese Paypal are two separate systems that don’t link with each other. International Paypal doesn’t accept Chinese currency, while Chinese Paypal only accepts Chinese currency. RMB is still not freely convertible. Paypal China is limited to China only.
Jim – Is there much of a demand for microstock in China?
Jerome – No microstock agency has made a significant breakthrough into the Chinese market in the past two years. There are too many constraints with the Chinese environment which range from thorough re-editing to having a Chinese search engine (a real one, not simply automated translation) and the lack of local content. There are also important technical requirements involved in setting up very strong local server architecture. All these factors require heavy investment while still facing a questionable market. While e-commerce payments are certainly possible, the average photo buyer in China currently has very little interest in purchasing photos or video online.
Jim – Isn’t online search and delivery used? Don’t Chinese buyers find most of the images they need by using online search and getting online delivery?
Jerome - I have occasionally seen some staff in some of the 4As searching on Microstock sites, but this is limited to the very few people who speak English. In smaller local agencies or design firms, nobody speaks English. As for automated translation systems, researches are slow and results are often not pertinent to the customer’s needs. Potential customers search once, seldom twice.
Jim – When the Chinese license rights to translate a U.S. or UK textbook into Chinese how many copies do they usually print and distribute?
Jerome - This is a very fragmented market. You would be surprised by the number of regional publishing firms. A lot of books are translated and published, but circulations can be quite limited. Controling circulation and reprints of major publications is a big difficulty.
Jim – How big a concern is copyright infringement in China? Is there a different standard of morality than in the Western world?
Jerome - I don’t think infringements are higher in China than anywhere else. This is not an issue of a different standard of morality. Intellectual property is still deeply misunderstood by many local courts. What differs here is that litigation is a costly and lengthy process with random results. Even after a successful court decision. there is the difficulty, length of time and cost of enforcing the ruling
Jim – I understand that it is hard to sell non-Chinese (even other Asians) pictures in China unless they are news related. Thus, is their any point in photographers who specialize in producing people and lifestyle imagery trying to sell pictures of Westerners in China?
Jerome - The strongest development since the Beijing Olympics is the increased demand for locally produced content. Despite a dramatic increase in Chinese production, at present the local production is still unable to match the quality and quantity of the imagery from outside. Thus, there has also been a temporary increase in demand for content produced in Korea and Japan. However, as local production expands it seems likely that the demand for foreign production will decrease. At best, foreign produced imagery represents a small portion of the total market.
Jim – I’ve heard that there are big stock and advertising production facilities in China similar to the Amana operation in Tokyo. Is a lot of the imagery produced in this manner being exported, or is it the kind of thing that would only be of interest to the domestic market?
Jerome - There are indeed impressive facilities, all geared at supplying the local ad industry. However, the stock production of these studios is a marginal activity. We ourselves set up our own studio 15 months ago, a skylight facility which we integrated with our office. We are overbooked with productions for stock, advertising, smaller marketing campaigns, e-commerce and digital needs. We are looking to build a second and larger production unit.
Jim - When you say you’re overbooked for e-commerce uses does that mean you are doing productions that will be licensed as microstock?
Jerome - No, but this is an interesting point and a different production model. These are e-commerce sites with models between ebay or amazon. Rather than simply producing generic shots, productions are getting contextualized with environment and model. This is not far from a stock production which would involve a commercial objects (cloth, decoration products, jewelry, cosmetics,..). The creative and shooting resources you put in place for such productions can be leveraged for creating stock images.