Business Planning for the Future: Issues to Consider, Part I

Posted on 8/17/2009 by Jim Pickerell | Printable Version | Comments (5)

In addition to the major industry trends, regular examination of smaller-scope developments related to common business issues—such as demand for images, cost of production, legal changes and technological advancements—is helpful in determining if and when to adjust stock production strategy in order to keep it profitable. But beware. As you track these developments, it is entirely possible you may decide to place less emphasis on stock production and more on something else.

1. Growth in demand


Among the issues on which industry professionals hold widely differing opinions is whether or not there will be further growth in demand for images. It seems clear from figures we have been able to collect from Getty Images, Alamy and others who sell to traditional customers that there has been little, if any, growth in demand in this area of the market over the past few years. We estimate that in 2008, Getty Images licensed rights to between 1.5 and 2 million images and those numbers, while relatively stable for a number of years, may be beginning to decline.



However, there has been big growth in demand from small businesses and consumers. In 2005, 2006 and 2007, iStockphoto licensed rights to an estimated 4 million, 10 million and 17.55 million images, respectively. In 2008, iStock licensed rights to approximately 25 million downloads. The same year’s sales of all the other microstock companies combined were likely about equal to iStock’s. However, there are some indications that iStock sales have reached a plateau.

What can we conclude from all this? Traditional customers do not seem to have any growth potential. Growth in demand at low prices might have reached its natural level. Still, many in the microstock industry think the growth will go on forever; they cite the continued growth in Web sites and believe site owners will want more and more pictures.

2. State of the economy




The economy will eventually get better and probably result in higher demand for photos. However, neither the volume of traditional sales nor prices are likely to ever return to 2007 levels. Factors insular to the stock industry will have much greater effects on future trends than any changes the economy will bring about. Many photographers’ expectations for economic recovery are unrealistic.

3. Copyright


The Internet has made it very easy for image users to steal what they need. This is particularly true for consumers, and to some extent small businesses that have budgetary constraints. These users have little understanding or appreciation of the copyright laws, combined with a belief that the likelihood of being caught and punished is very slim. Stronger copyright laws might help, but the trend seems to be toward weakening these laws rather than strengthening them.



4. Useful life of images


With more and more images illustrating every conceivable concept now available, and new ones being created every day, it seems likely that the useful life of any given image will become shorter and shorter. In theory, if the subject matter happens to be something that few people shoot (unique), and something certain customers might need to use years in the future, the images may have a longer useful life.

In practice, last month, 15 of my images—of many different and unrelated subjects and all created more than 20 years ago—were licensed for various unrelated uses. Other photographers have hundreds of more recent images of very similar subjects available in files around the world, and yet mine were chosen.

In sum, there is no way to accurately anticipate which specific images future customers will want to use. However, it is possible, in general terms, to estimate the earning potential of a collection of images, once that collection has some track record.

5. Search-return order


Search-return order is an important issue over which photographers have no control. If an image is within the first 100 to appear when a customer searches for a particular keyword, it has a much better chance of selling than if it is the thousandth, regardless of how technically appropriate it might be for the customer’s planned use.

If the image is at the 10,000th spot, it has almost no chance of selling, no matter how great it is. Technological advances may result in changes in how images are slotted in the search-return order, but such advances will not necessarily benefit all photographers and could actually make things worse for some.

6. Cost of production


It seems likely that cost of production will increase. Equipment costs may decline, but they are only a minor share of the total costs of productions. There are costs for models, sets and getting to locations that must be considered; the pre-production planning and the post-production work on the computer should also be factored in. The photographer may be required to do more in preparing images for distribution. Photographers who expect to profit in any way from producing stock images must constantly look for ways to cut costs without sacrificing quality.


Copyright © 2009 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.  

Comments

  • Tim Mcguire Posted Aug 17, 2009
    Hi Jim,

    You left out the biggest cost for photographers... the giant invisible elephant in the room that no one seems to notice, agency representation or cost of marketing and distribution. This costs photographers 60-90% of the revenues derived from their images.

    I'm starting a Virtual Agency on Photoshelter technology for those visual artists who'd like to cut this cost and take back control of their images, careers, and businesses. Evostock.com.

    Could there be a better way forward for independent stock artists without the inefficiencies /costs of the big agency system? I think there is.

    Tim McGuire

  • Leslie Hughes Posted Aug 17, 2009
    HI JIm,
    I hate to nit pick but the use of images is rising. In fact, I don't think that anyone could argue that the use of visual imagery isn't growing = it as strong as ever, every where. It is the type of sale or business model that is changing and the revenue stream that is challenged. So what has to change is how we as producers or distributors think about how we MAKE money. That is the challenge. And sadly it is a challenge for many if not most these days. But even your numbers prove out that the use of images is growing. You talk about "traditional sales" from Getty and Corbis, versus those of microstock so I assume you are talking about rights managed sales that often sell for higher prices even today versus the low price points in the sales of the basically RF licenses from microstock companies like istockphoto and fotolio, or the free images of photoxpress. But they are all images. It is a shift in the kind of license but it is an image that is being used.

    So that is the GOOD news. It would be far worse, if we worked in an industry where the product was becoming obsolete. And I hate to say this (it won't be popular), but people need to become more focused on how to create value in what we do and offer the market (clients) rather than lamenting this situation. Strategically speaking there are lots of people doing some very cool things out there but in new and exciting ways. We have to think differently. Product on the internet is moving increasingly to a low priced and free sale. In all sorts of places. Free conferences calls, free phone calls, I even read about a company considering free air travel. Do you think they will do this out of the kindness of their hearts? No. They are rethinking how they will make money. It happens in reverse too. Like when someone started to sell bottled water. We bought the convenience of something we used to get for free. But when we create something and the price goes down, it feels bad and it is scary. But people can and will make money from it. It felt bad when RF started. Those that adapted in many cases made a lot of money. And I am not talking just about those that went in to RF. There were many that refocused on what they did in RM - some expanded product offerings, some refocused and became niche.. Now is the time to listen, learn and adapt to a new internet economy. Whether you are a producer of content or a distributor, the first thing you need to think about is who is your client and how do you bring them value. Even if you are creating images.. Or providing access to content.. There is money to be made and made upstream and downstream - yes, even from free. A lot of money has been made from creating content and will continue to be for those who understand who they are selling to, position themselves appropriately, don't just listen to their distributor but find a network that fits for what they do, and perhaps even rethinks a bit what they do.. I know this won't go over big but yes, money can even be made from free. Look at Google.. Frankly, while I have respect for Getty and Corbis, I don't see either doing anything particularly innovative. We will see but I would look for those who are innovators and keep watch over those that are more in sync with what is happening in the marketplace rather than in what is happening in the "industry."

  • Peter Bisset Posted Aug 17, 2009
    Very good comment by Leslie Hughes. Perhaps some form of 3D imagery may come along for example and make all the present images redundant, as well as other never thought about trends in the future. Peter Bisset. 17 Aug 2009 @ 6.00pm

  • Jagdish Agarwal Posted Aug 18, 2009
    Great positive comments from Leslie Hughes. Makes me feel nice and ready to take on the world of stock photography once again.

  • Michael McCloy Posted May 6, 2014


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