Broken Business Model

Posted on 11/13/2012 by Jim Pickerell | Printable Version | Comments (0)

One of the programs at the recent PACA International Conference asked five industry visionaries to explore emerging trends and predict what the stock photo business will be like in 2022.

The panel included: Kevin Schaff of T3Media, Allen Murabayashi of PhotoShelter, Patrick Lor or Fotolia and Offir Gutelzon of PicScout (recently purchased by Getty Images). Paul Melcher of Stipple moderated the discussion.

There was general agreement that the current business model of licensing based on usage is broken and that in a few years (probably a lot less than 10) it will be necessary to develop a completely different approach to licensing.

Patrick Lor made the point that, “licensing based on the size the image will be used and the number of copies printed is completely irrelevant.” At Fotolia it is possible to purchase a low res for $1 and a high res for $10. “But in the future more than half the views are going to be on mobile” that will only need low res Lor continued. That means volume has got to increase by a factor of 10 or more to make the same revenue.

It was pointed out that as the world moves more toward the Internet and mobile devices for the information it needs it will be possible to actually track views and user involvement rather than being forced to estimate usage upfront. Instead of prepaying for an estimated amount of use post pay systems will be developed that allocate revenue based on actual traffic.

Payments may be in fractions of a penny per view. Instead of refusing to let your work be seen unless someone is willing to pay a premium price, the new goal will be to post your work in as many places as possible and encourage sharing. Payments will be based on such things as the number of times the image is shared, liked or actually viewed. It is those figures that will determine how much advertisers are willing to pay to have their advertising appear near your photographs. The amount the contributor receives will be based on the advertising revenue generated.

For this to happen systems will need to be developed that can transparently track and measure views. Some of the necessary tools are already in place. Using image fingerprint technology PicScout has developed a system to track image use on the web and mobile devices. Check out these two stories here and here.
The next step will be to convince platform developers that they should share some of the advertising revenue with the content creators. The developers must recognize and acknowledge that the only reason advertisers are willing to pay to place ads on their platforms is because people go there to view content.

Assuming the developers become willing to pay something, algorithms will need to be developed to determine how to divide the revenue among all those whose content is available for viewing, or actually viewed. Many in the audience at the PACA Conference were skeptical that platform developers would ever voluntarily share revenue unless there they are legally forced to do so.

However, it was pointed out that YouTube has already established systems to share a portion of its $3.6 billion in annual advertising revenue with music creators. It is unclear how much they are actually paying out, or what individual creators are receiving. For more on how such a system might work see here.

So why wouldn’t platform developers simply refuse to share revenue generated. The Digital Millennium Copyright Act (DMCA) already allows copyright holders to demand that their work be removed from a platform if it has been posted without permission. The platform operator can comply with the law by simply removing the work, but the overhead cost of doing this, particularly if a significant number of requests are received, might be enough to encourage platform operators to share some revenue in order to reduce the number of take down notices they receive. For more about the DMCA check out these three stories here, here and here.

While post pay systems seem inevitable, it is not at all clear that the revenue they will generate will be enough to cover the costs of professional photographers.
Will this change the way we shoot?

As we move ahead it appears that people will get more of their information from looking at pictures, and videos rather than reading text. That’s good news. It will undoubtedly mean more demand for pictures and could mean more demand for sequences of pictures that tell stories rather than single illustrations. Check out the Time Inc. Lightbox for examples of such stories.

On the other hand there may be a lot of competition from free sources. When hurricane Sandy hit ten new photos were being posted every second on Instagram. The total eventually reached 800,000. The vast majority of these images were produced by amateurs with no expectations of being compensated for their work. See this story.

A high percentage of the images on the Internet are posted with no restriction on their use. My guess is that less than 1% of the images that can be found on the Internet require some type of licensing. Will consumers really miss the professionally produced images if they can get so much for free? Many images are already offered with a Creative Commons license. These images are free to use in many ways. All that is required is that they be properly credited.

Today, professionals tend to shoot images designed to be single illustrations. They concentrate on subjects that have been in high demand in the past. With so many images out there, it seems unlikely that slightly different views of something everyone has already seen will be of much value in the future – even if the image slightly updates anything seen previously. The things that go viral – and could potentially earn substantial revenue on a per view basis -- tend to be something that is very unusual. Often, such images are very amateurish and lack the technical skills of a professional.  

More footage will be used, but will it be clips, or fully produced short stories? Kevin Schaff pointed out that there are already over 300 billion footage pieces available online, but only 150 million are available for licensing. One solution is to convince the 99% they should also be licensing their work.

Christie Silver of McGraw-Hill educational publishing said that the company recently completed a project that includes 1,378 videos. While many of videos used were stock in 27% of the cases McGraw-Hill was forced to shoot assignments because they couldn’t find what they needed in the stock files. One problem was believability. The people in many of the available clips looked like models, not real people. In many cases the available clips were too short as the videographers tried to get several clips out of a single shoot. McGraw-Hill would like to see the whole shoot as one piece so they could take what they want. They also need live audio with the video.

The business is changing. In the stock photo business there is normally many months, if not years, between the time the image is created and when it is has generated enough revenue to cover costs and return a profit. With this in mind it is not too early for photographers to begin to evaluate where demand will be a few years down the road and how they will be compensated for their efforts.

Copyright © 2012 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, 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:  


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