Future Of Aggregation Agents

Posted on 10/4/2017 by Jim Pickerell | Printable Version | Comments (0)

Photographers placing images with agents that seek to license uses at higher prices ($100 or more), and generate a lot of their sales via distributors, need to think hard about whether such an approach is in their best economic interest.

Microstock prices are low, but I estimate that at least $850 million of the approximately $1.5 billion of worldwide annual revenue generated from Creative image licensing is made by microstock distributors. (These numbers do not include hard news editorial and footage sales.)

Microstock prices are low and royalty percentages tend to be in the 15% to 30% range. The royalty paid by traditional agencies is often much higher, but the photographer only receives a royalty if a sale is actually made.

It is also important to note that many of the sales made by traditional agencies are made through distributors who take a cut of the gross sale before passing the rest on the primary agency. Virtually all microstock sales are made directly to the end using customer with no additional cuts coming off the top.

Getty, who represent the work of many traditional agencies, has recently cut distributor percentages to 15%. The image creator gets a percentage of that, so if the customer pays $100 to use an image, the primary agent gets $15 and the creator’s 50% share of that is $7.50.

If distributor percentage are that low can the share paid to individual creators contracted directly with Getty be far behind?

It should also be noted that in a recent analysis of sales of some leading producers contracted directly to Getty 68% of their sales were for gross prices of under $20. That’s about what microstock sites are charging. Yes, Getty makes a small percentage of sales at higher prices (in rare instances over $1,000), but are the odds that one of your images will generate one of these high value sales worth the risk? Very few images are selling at Premium prices.

Survival Periods

Another issue is that most traditional distributors want exclusive rights to represent a photographer’s images. Agency contacts tend to require that the images be left with the agency for several years in addition to a “survival” period that extends beyond the date of actual termination by the photographers. It becomes virtually impossible for the photographer to legally place another copy of his/her digital file with someone else if he/she becomes dissatisfied with the agency’s sales record.

Such contracts made some sense in the olden days when photographers were delivering film and agencies had significant costs in managing it. Now, photographers deliver digital files, captions and keywords. The agency has very little cost in preparing the image for marketing, or in removing it from their collection.

When the primary agency happens to license the image to a customer directly, rather than through a distributor the price for the usage and the royalty share can be significantly higher. But for most image suppliers it is very difficult to discover the percentage of primary agency sales that are made directly.

If these traditional agencies want to continue to appeal to photographers who are willing to take the risk of making a few high dollar sales, they need to think about changing their contracts and loosening their desire to hang onto images if their licensing model doesn’t seem to be working for the photographer. The photographer needs to be free to try something else.

Traditional aggregation agents usually don’t put the images they have to offer into the microstock market that generates over half the industry’s gross revenue. (Getty is an exception and licenses some traditional images through iStock.)

Distribution through microstock requires a lot more additional work on the part of the photographer, but it may be the only way the photographer can earn much of anything for the time and work he/she has expended. The revenue that a photographer can earn from microstock may still not be enough to justify the effort expended in producing the image, but the photographer who has tried the traditional market and is dissatisfied should have the freedom to move the images to the other market.

Copyright © 2017 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.  


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