Declining Distributor Sales

Posted on 4/18/2018 by Jim Pickerell | Printable Version | Comments (0)

Back in the 1990s and early 2000s stock photo agencies began placing more and more copies of the images they represented with distributors around the world. Initially, this resulted in significant increases in revenue for the image creators and the primary agencies.

At that time most agencies had a strong presence in their local market and very little way to reach customers in other markets, particularly those where the customers spoke a different language. Working with a local distributor in a variety of markets made a lot of sense.

The Internet and agency consolidation has changed all that, particularly for the image creator. Now, in many cases the distributor system has simply become a way to siphon off a bigger portion of the gross fee paid by the customer to middlemen before the image creator gets his share.

This is mostly a problem for creators who place their images with traditional RM and RF seller and not so much for Microstock, although some Microstock sellers also use distributors to some degree.

Here’s How It Works

The prime or parent agency collects images from image creators. They usually agree to pay the creator 20% to 50% or the “money they receive” from the licensing of the images. That’s a percentage of what the parent agency receives, not necessarily of what the customer pays.

The parent agency will often provide a number of services including editing, keywording and guiding the photographer as to what to shoot as well as sending the images to distributors. In theory, they may also make some sales directly to customers, but increasingly their main job is to send the images directly to distributors who will do the actual selling to the end user. There have been a growth in photographer production companies who make little if any attempt to deal directly with the end-using customers and rely entirely on distributors to make the sales.

At one point I was told that some prime agencies had as many as 200 distributors around the world. Of course, it would be a huge job for a photographer to try place his images with so many distributors. Consequently, photographers were happy to let someone else handle that work for them.

But, here are some questions that photographers should now be asking.
    1 – What percentage of their prime agency’s annual revenue comes from direct sales to customers?

    2 – What percentage of the prime agency’s gross annual revenue comes from the top 5 distributors?

    3 – How many total distributors are currently representing the work of the agency’s photographers?
The agencies will probably tell photographers that this is proprietary information, and refuse to share it. But photographers should demand answers before they sign a contract or submit additional images to their prime agency.

Here’s Why

It is very likely that the top 5 distributors represent 50% or more of the agency’s revenue. If Getty is one of those top 5 it is very likely that the percentage for the top 5 will be even higher. If the prime agency is earning very little from direct sales and if the photographer is not trying to get his images represented to 50 or 100, but only the top few, maybe it is better to go to the top few and cut out the middleman percentage.

If a small or medium size agency is not receiving much of its annual revenue from distributors they you need to be very suspicious about how much revenue they are actually generating – and are likely to generate for you – and probably not make an exclusive agreement with them to represent. Look for a additional agencies to represent your work.

As a few agencies have become more powerful, have huge collections, spend more and more on advertising and promotion and offer the images in their collection at lower and lower prices there becomes less and less reason for customers to go to anyone, but the few big agencies for the images they need.

Thus, if the images are going to be sold for low prices anyway, the only way the photographer has a chance of succeeding is to cut out the middleman and get as large a share as possible of the gross license fee paid by the customer.

Let’s Look At Some Numbers

Suppose the customer pays the distributor $100. The distributors would probably keep 50% of that fee before paying the remainder to the prime agency. In rare cases the distributor will keep less than 50%, but in some cases the distributor keeps as much as 80%. In a few cases the distributor will be farming out the images it receives to other distributors and there is a double cut before the prime agency receives its share.

So suppose the prime agency receives 50% of the $100 fee or $50. Or it may receive 20% or $20. According to the photographer’s contract with the prime agency the photographer may receive 50% of what the agency receives, but more likely it will be 20% to 30%. So from a $100 sale the photographer might get $4 to $6.

The photographer might be much better off to do a deal with one of the larger agencies that is making most of the sales directly to customers, even if he has to accept a lower percentage than the smaller prime agencies would be willing to pay him.  

Staying Alive

The other thing that is happening as the bigger agencies take a larger and larger share of the market and charge lower and lower prices is that the overall revenue paid to the medium and small prime agencies is falling.

In addition, a huge percentage of the smaller distributors are not able to make as many sales as they used to. Even if these small distributor gross sales are staying about the same they have been adding a huge number of images from more and more sources so on average they have less money to pay to each of their individual prime agency suppliers.

However, these distributors still have staff costs, marketing costs and other overhead costs that they must pay. When it comes time to pay out royalties it turns out that they don’t have enough cash left to pay everything they owe so they delay payment until next month or next quarter hoping things will get better. They may be able to cut some costs, but there comes a point where they have to maintain a certain level or staff and marketing to survive. Their first priority is surviving because they feel more loyalty to their staff than to suppliers and nobody wins if they just stop selling.

Meanwhile, the prime agency is now getting less from the distributor and often there is more and more of a delay in any payment they do receive. They have the same problems as the distributor. They have staff costs and overhead that need to be paid first. They can only cut costs so much. They have few options to try to collect from their distributor who are often in other countries. They can stop sending them new images but that just reduces the possibility of future sales. They usually can’t bring any kind of legal action because the amounts owed are too small and such an action would simply force the distributor into bankruptcy. It is unlikely that there would be enough revenue recovery to offset the legal costs.

All the creator can do is wait and stop producing and supplying new work to the prime agency.

At the very least creators should start asking the questions above and trying to get a better understanding of what is happening at the agencies that represent their work.

Copyright © 2018 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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