Index Stock

Posted on 9/17/1997 by Jim Pickerell | Printable Version | Comments (0)



September 17, 1997

Index Stock launched its Photos To Go site on the Web in July with high hopes that it will build new markets for stock photographers.

Bahar Gidwani, CEO of Index says, "We believe Photos To Go will produce revenue equal to or greater than our traditional business within two years." By "traditional" Gidwani is referring to all business that comes from design professionals.

About 150,000 of Index's images are available on PTG. The database can be searched using a Free Text search of their caption and keyword fields.

Clients may license one-year non-exclusive rights for any of the following five types of uses and obtain a 2MB file of the selected image.

Small Business web $15
Small Business print, under 1,000 or 1/4 page 30
Small Business print, under 5,000 or 1/4 page 50
Small Business, electronic presentation 10
Personal 10

Users pay for such licenses with their credit cards. Seventy percent of the traffic on PTG is for business uses, and the average sale is between $20 and $25. It is also pointed out in the web license that for this fee web pages can have "no commercial promotional intent."

Gidwani feels there will be a tremendous market on the internet. He points out that one year ago 5% of the businesses on-line were willing to buy on the web. Today, that number is 30% and he predicts it will be 60% by the end of 1998.

Gidwani believes this strategy will help him capture the low end users who are going to PhotoDisc. "If they only want to use one image we are a lot better deal than buying a whole disc just to get one image."

Four years ago Gidwani placed some images with both Photo-Disc and Corel. Due to contractual agreements he won't be specific about the number of images, the resulting income, or whether he is continuing to place images with these companies. This experience, however, gives him some basis for understanding the "clip disc" market.

Index has also had images on both KPX and PNI. Gidwani indicated that the agency's total proceeds from KPX probably wouldn't buy a decent lunch for two.

The PTG format was first tested on Compuserve where Index has operated a site for several years. They will continue to make images available through Compuserve as well as their main Internet site.

Price Comparisons

One of the concerns is that Index's prices for the PTG print uses are so much lower than "traditional" pricing for these uses. Given the prices of their competitors, there is some question as to whether they need to go quite so low in order to capture this line of business.

The recommended desktop publishing rates on page 207 of the new edition of NSPP are $80 for 1/4 page up to 2,000 copies and $115 for 2,000 to 5,000 copies. PNI's list prices for the same uses are:

Small Business web $ 150
Small Business print, under 1,000 or 1/4 page 125
Small Business print, under 5,000 or 1/4 page 125
Small Business, electronic presentation 75
Personal NA

Gidwani claims that the "traditional" market doesn't license rights for such small print runs, but that certainly has not been Stock Connection's experience. Almost 50% of the 1/4 page brochure uses licensed by Stock Connection are for print runs of 5,000 or under. Our average price over the last three years for these uses has been $306. In my conversations with other stock agents, I believe their experience is much closer to that of Stock Connection than to Index.

It certainly seems possible that Index's strategy could result in fewer "traditional" sales at higher rates because many "traditional" clients are fulfilling their needs at PTG prices.

For Index this could mean that PTG business will equal "traditional" business, because the "traditional" business will experience a marked fall off.

Upgrades From Photos To Go

Index believes that one of the advantages of the PTG site will be that it draws clients to Index at a very basic level. This gives Index the opportunity to upgrade them to a higher level of service. PTG users are told that upgrades in the license are available for more extensive uses "such as incorporating the image in a product for resale, using as software, album or book cover art."

"Every day we get at least one, and often several, requests for information about more extensive uses, or upgrades to our TeleFocus site," said Kathy Mullen.

When I viewed their operations they had 35 simultaneous users on PTG at mid-day. They say this number ranges up to about 100 at any given time.

These higher levels come in several different forms.

  • The first level above PTG is TeleFocus which has over 250,000 images available for review. To view the images on TeleFocus users must have a special browser and agree to certain restrictions which includes higher payments for most usages. They do get free comp use as well as non-commercial in-house use of the digital files. If they need film or a larger digital file they pay standard rates.

    Because this use is controlled, Index can make available a broader selection of images that they wouldn't want to release on PTG. Most catalog images are not available on PTG because Index wants to be able to license restricted use rights to those images. In addition, TeleFocus includes about 30,000 images from several other stock agencies that transferred their digital files to the Index system after KPX folded.

    Photographers are given the choice of whether they want to participate on the PTG site, or not. If they choose not to participate, then their files can only be seen on the higher level and more controlled TeleFocus service.

  • TeleFocus users can also benefit from having Index's in-house researchers assist them in their research. One of Index's goals is to get the researcher or salesperson in voice contact with the client.

    Gidwani believes that one major advantage of TeleFocus is that clients can use it to get an "assisted search." He feels one disadvantage of PNI, as well as many other on-line sites, is that they are designed for the client to do all their own searching. "Just looking on line doesn't do it for most people. They need the backup resources of the agency," he says.

    Gidwani continued, "The principle users of TeleFocus are graphic design firms, not advertising agencies. Graphic designers are often pressed for time and need to find the images they need fast. They will go to PTG or Telefocus and do broad searches to determine if the agency is likely to have what they want. Then, rather than going through each image on-line, they call the agency and have the agency's researchers narrow the search and prepare a custom selection for them."

    Researchers can quickly review the file because they are hard wired to the computer, not operating through a 28.8 modem. In addition the researcher has a greater familiarity with the file.

    After preparing a selection the researcher calls the client and says, "Look at number XXX or number YYY. Is that what you had in mind?" This way the art director spends very little of his or her valuable time and the search is narrowed quickly on-line before anything is shipped.

    Once the researcher has focused on a certain type of imagery they may pull other selections from the general files that have not been scanned. These can be quickly scanned and submitted for client review on-line, or the film can just be shipped with the other images the client selects.

    It should also be noted that this strategy of client contact (without the shipping of film) is one that Corbis has been promoting for several years.

    It is unclear at this point whether most clients using TeleFocus are calling because they have found an image they can use, or whether they just want Index's researchers to go through the duplication found on TeleFocus and narrow down the list of selections to a manageable group.

  • The clients may also be sent a print or CD-ROM catalog if it appears that they might make appropriate use of it. Index has produced 14 print catalogs, nine of which are still in print and they have four CD-ROM catalogs.

    According to Gidwani three years ago about 90% of their gross dollars produced in the U.S. came from catalog sales. That is now down to between 60% to 70% as they generate more sales from the files.

    Internationally, nearly all sales come from catalog images. The only images they send their overseas agents, other than the actual images in the catalogs, are different angles or expressions that support the catalog selection.

Preparing Photographer Submissions

Once a new image is selected for the files it is immediately scanned at a 2MB file size. Then the captions and keywords are entered while viewing the scanned image on the computer screen. The keywords are divided into categories, sub-categories and general keywords. The total list numbers about 4,000 words. From that point, an images can be easily located and viewed by the researchers, or shown to potential clients by either transmitting it on-line or downloading it to a custom disc.

The images are filed in numerical order rather than in category files so film can be easily located at any time.

In some cases Index scans many frames of basically the same situation. As a result when searching users will often pull up three to ten different views of basically the same subject at slightly different angles. If the user is an in-house researcher this may be desirable, but clients may not be so happy with how this slows down their searches compared with other on-line options.

Photographer Reactions

Photographers who have been with Index for a while are impressed with the open lines of communication, the frequent and regular reports they receive from management and the fact that they are given licensing options, rather than a "one strategy fits all" approach. Most also commented that they had a good working relationship with their art director.

Photographers are not happy with the quarterly payment policy and would prefer to be paid monthly. Many can not understand why most of the other major U.S. agencies are able to pay monthly and Index can not.

Index charges $250 for every image placed in the catalog and deducts that from the first sale of that image. If the image does not sell there is no deduction. Compared with other catalog options this seems to be very fair.

One usage that generated many transactions and some interesting comments from photographers is Index's "Homework Helper" service which was developed by Infonautics and is now known as "The Electric Library."

This company delivers CD-ROM's with articles and pictures to schools. Users pay a monthly subscription for the service which entitles the school to unlimited use of the disc. However, the "hits" on particular images are tracked, and reported monthly to Index. The agency divides the photographer share of their commission by the total number of "hits" pays each photographer based on the number of times their images are accessed. This product only allows viewing, not downloading and the file size is only about 20K.Photographers report that they have been receiving payments of $.06, $.09 and $.12 per image for these uses, but that their quarterly reports are loaded with transactions of this type. One photographer said, "Over 95% of the transactions are for these small electronic uses. But, over 95% of the income is from traditional sales." Another photographer said that 60% of the transactions reported are for under $20, and many are way under.

New Investment

A year ago we reported that Index Stock had filed with the SEC for permission to sell 1,000,000 of common stock in an attempt to raise over $7 million in new capital.

As of that report Index's gross sales for 1995 were $2.215 million and they had a net loss for that year of $420,948. Gidwani says sales today are up about 40% over 1996, but would give no specific figures. Based on the 1995 and early 1996 gross sales figures that were published in the public offering, we estimate that gross income for 1997 might reach about $3.8 million.

Index has recently raised $2.375 million in investment capital from new and existing private investors. Gidwani gave up some stock to raise this capital, and is now a slight minority shareholder. However, he retains control of most of the agency's common stock leaving him voting control over the company.

When they filed with the SEC, Index had 39 employees, but since then the number has gone as high as 55. Recently, they laid off eight people who Bahar says "weren't performing up to expectations." Some of those have been replaced and now the staff numbers 50.

With 39 employees their average income per employee was approximately $56,000. With 50 employees at the new estimated level of income their average per employee may be around $76,000. This is still a lot less than the $100,000 per employee that most stock agencies say is needed for a healthy operation.

Based on the reports from photographers, I estimate that currently no more than 5% of their income comes from electronic sales for "non-traditional" uses. That means the consumer or PTG market will produce around $190,000 for Index in 1997. For the revenue from PTG to be "equal or greater than their current traditional business in two years" as Gidwani predicts, PTG's sales will need to be almost 19 times higher than their current level. That is spectacular growth for a new line of business.

Copyright © 1997 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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