Jonathan Klein Interview

Posted on 9/4/1998 by Jim Pickerell | Printable Version | Comments (0)




September 4, 1998

In early August Tony Stone Images distributed a new contract to over

1000 of the photographers they represent in an effort to revise their

current contracts with specific considerations for on-line marketing.

One of the key contract issues that concerns photographers is the

reduction of the photographer's percentage from 50% to 40% on sales

within the photographers home territory. However, there are many other

issues in this ll page contract plus attachments that have also been

the subject of widespread concern among TSI photographers. Jonathan

Klein, Chief Executive Officer of Getty Images, the parent of TSI deals

with a number of these issues in this long interview.

This contract is important to every photographer because it is likely

to set industry precedents. Other major agencies are likely to follow

TSI's lead.

The following are my questions and his answers.

Pickerell - In the last sentence in your letter to photographers

and in your press release you say, "We have worked closely with the

Photographer Advisory Groups in North America and Europe, (consultative

photographer panels), to develop your new contract. We are pleased

that both PAG's have endorsed the contract." Many photographer

interpreted this to mean that the PAG members had signed and thought

this was a good agreement. In fact some PAG members have still not

signed the agreement, and appear to have serious reservations about

certain clauses in it. What does "endorsed" mean to you?

Klein - By "endorsed" we mean that the majority of PAG members

have given their approval to the contract and agree that its terms are

sufficiently favourable to warrant sending it out to the TSI

photographers. It is worth stressing that the press releases which

accompanied the distribution of the contract were approved by all the

PAG members prior to being distributed.

You state that some have not signed and "appear to have serious

reservations". This is hardly surprising with any contract. It is

inevitable that not everyone is going to be completely satisfied with

every provision of the agreement. We feel that we have presented a

fair deal and whilst it is not all that the PAG members wanted, it is

also not everything that we would have wanted. The purpose of the

consultation with the PAG was to get to an agreement that, overall, was

fair and reasonable to both parties and, thus, would be acceptable to

the vast majority of TSI photographers. We have achieved our

objective, as have the PAGs.

Pickerell - In the second sentence of the press release it says:

"...the new Tony Stone Images' contract also guarantees a reduction in

payment lead time to photographers as well as a commitment by the

agency to assume bad debt risk." Clause 3.8 of the contract says you

will deduct amounts equal to those previously paid to the contributors

for bad debts. That doesn't seem to me that you are assuming any bad

debt risk. Will you please explain?

Klein - Section 3.8 deals with extraordinary losses, as opposed

to average or normal bad debt. TSI will absorb the bad debt that

occurs when a licensee fails to pay in the ordinary course of business.

The key language is at the beginning of Section 3.2 where we state

that "...TSI will pay the amount due with respect to licenses invoiced

or otherwise charged by the TSI Group..." (emphasis added). Under this

Section, we are saying that we aren't going to wait to be paid by our

licensee before we pay our photographer. If a licensee fails to pay TSI

in the end, we will absorb that cost - there is no language in Sections

3.2(a) or (b) which allows us to deduct ordinary bad debt. There is no

other company in the industry who has adopted this approach: an

approach which is clearly more beneficial to photographers than the

existing arrangements with TSI and far more beneficial to photographers

than those of any other agency.

However, we alone cannot bear a larger loss such as would occur if a

licensee went bankrupt and failed to pay TSI for numerous licenses. In

other words a major default by a licensee outside the ordinary course

of business.

It is worth noting that if we invoked Section 3.8, the photographer is

in no worse a position than s/he would have been under the old

agreement. And, as under the old agreement, we continue to withhold no

more than 50% of the payment that the photographer would have been due

for any particular period. This ensures that the photographer will not

at any time be paid nothing for a particular payment period.

Additionally, most non-North American photographers did not have this

50% provision in their previous agreement, so this is a new benefit to


It strikes me as very odd that we are making significant improvements

to the arrangements in relation to bad debt "entirely to the benefit

of the photographer and unprecedented in our industry" yet you suggest

that we are not "assuming any bad debt risk". I trust that this

clarifies the situation.

Pickerell - There seems to be a lot of confusion around the

issue of "Image Exclusive" contracts which are dealt with in Clause 2.4

of the main contract and Exhibit 2.4. You require that photographers

submit all images to TSI before they can submit them to anyone else,

but at the same time you tell photographers that you want them to edit

tightly and not submit all images. Which is it?

Some art director are telling photographer not to worry about that

clause and edit tightly, but then the photographer would be in

violation of the contract.

Some AD's have said that the only thing you are really worried about

are the shoots where the art director comes up with an idea for the

photographer. If that's the case why is that not spelled out in the


Adjusting the Exhibit 2.4 clause alone won't really solve the problem

because the main 2.4 clause in the body of the contract would override

it for anyone seeing an image exclusive contract.

The main question is, for those photographers who currently have image

exclusive contracts and wish to maintain image exclusive contracts

would you accept the following language, or a variation of it? If not,

will you please explain why it is not acceptable?


    The term "exclusive license" used in

    Subsection 2.1 (Grant of License) means that beginning on the

    Commencement Date and continuing for the period determined in Section 7

    (Duration and Termination), Contributor agrees not to supply any images

    shown to TSI (or their similars, including copies and duplicates) to

    any other stock agency, prior to rejection of the image by TSI.

    Contributor will retain the right to show images to potential customers

    for personal promotional purposes where no use rights are granted even

    if these images have been previously shown to or accepted for marketing

    by TSI.


    Exhibit 2.4 Provisions Relating To Exclusivity


    In addition to the covenants in Subsection 2.4 (Meaning of Exclusive)

    of this Agreement, Contributor agrees that, TSI will have first refusal

    rights of all images (including similars, copies and duplicates)

    submitted to it.

    The photographer is free to submit images rejected by TSI to other

    agencies, so long as no "similars" were selected by TSI. In light of

    the fact that the photographer is required to tightly edit submissions

    for TSI and not submit every image created for TSI's consideration, the

    photographer is free, at any time, to submit images not shown to TSI to

    other stock agencies, so long as they are not "similars" to images

    selected by TSI.

    Images that are created as a result of a TSI art director initiating an

    idea and presenting it to the contributor may not be submitted to other

    agencies, even if the execution of the idea is eventually rejected for

    marketing by TSI. However, if the contributor brings an idea for an

    images to the art director, and the AD works with the contributor to

    refine the idea, but TSI chooses not to market the image the

    contributor is then free to attempt to market the image through another


    TSI agrees that any accepted image must be aggressively marketed and

    that an image will not be "accepted" for the primary purpose of keeping

    it out of the hands of a competitor.

Klein - I cannot negotiate an agreement in public nor can I

comment on proposed changes to the contract in public.

While we made every effort to anticipate the areas where photographers

may see the agreement as being unclear, it is impossible that we could

identify every such area. The exclusivity provision has been

identified as an area in which a small number of photographers feel

additional clarification is needed. To address their concerns, we have

drafted a letter which explains our intent in more detail and the

response to this solution thus far has been favourable. In order to

assist in this regard, I am happy to provide you with the text of the


    "We understand that you have concerns regarding the scope of the

    exclusivity provision, "Image Exclusive Version - TSI Priority", stated

    in Exhibit 2.4 of the new Tony Stone Images Contributor Agreement. We

    hope that this letter will serve to clarify our intent but if you have

    further questions or concerns please feel free to contact us.

    "The provision in Exhibit 2.4 is designed to enable TSI to protect its

    investment in you as a photographer. As you know, the Creative

    Department will often supply you with confidential information based on

    such items as: market research, statistical information, sales

    analysis and general art direction and guidance. We supply this sort

    of information to enable you as our photographer to provide us with the

    most relevant and profitable imagery possible, so that we may both

    benefit from our collective efforts.

    "In order for TSI to benefit from supplying you with the above sorts of

    information and guidance, we need to be the first agency to have the

    opportunity to select the images which were created from that

    information and guidance. Should you work with other agencies and

    receive similar information and guidance from them, we do not expect

    that you would then give TSI the first look at those images. We are

    only concerned about the images you create with the benefit of TSI


    "Additionally, the provision in Exhibit 2.4 is not intended to govern

    anything except analog or digital still imagery or inhibit the

    development of your business. We only intend to protect the investment

    TSI makes in you as a photographer by supplying you with information

    and guidance.

    "We hope that the above clarifies this issue."

Pickerell - Clause 2.4 in the main contract defines "exclusive"

as "beginning on the commencement date and continuing for the period

determined in Section 7, Contributor agrees not to supply any

Contributor any third party on any basis whatsoever..." This

makes the contract a photographer exclusive contract irrespective of

what is said in Exhibit 2.4. Will you change that provision?

Klein - This is not correct as Section 2.4 works in conjunction

with Exhibit 2.4. The Section does not override the Exhibit in any

manner, but rather is limited by the terms of the Exhibit.

Pickerell - Is there a charge to the photographer for putting

images on-line? If not, why is there nothing in the contract that says

contributors will not be charged fees on top of giving up 10% of sales?

Klein - Section 3.6 states that the photographer will not be

charged for any costs of putting the images online. ("Publishing Costs

will not include the costs of maintaining or creating any Online

System, including any Online catalog or database..."). In other words,

the contract makes clear that there is no charge for putting the images

online. As you are aware, there is also no charge by TSI for duping.

Other agencies charge for both duping and for scanning, storage of the

digital files etc. Yet another situation where TSI contributors are

being given a more favourable deal than photographers get from many of

TSI's competitors.

Pickerell - Approximately, how many photographers have been

offered contracts? We know that there were 800 different photographers

in the Twist catalog and the America! disc alone. We know of a lot of

others that didn't make either product. I would estimate that there

are at least 1000 photographers with images in current products.

Klein - Your estimate is correct.

Pickerell - Were all photographers with images in current

products offered contracts?

Klein - Most. If photographers have not submitted in a long

period of time and don't have any pictures in DMC or core collection

and haven't had for some period of time we figured this was a good

opportunity for us to focus resources on productive photographers

rather than offering contracts to inactive photographers.

Pickerell - How many images do you expect to have on-line in


Klein - The entire Dupe Master Collection (core collection) of

Tony Stone Images will soon be online. The exact number that will be

online in October will obviously depend on how many contracts are

returned prior to launch on October 1.

Pickerell - In what percentage of the sales is TSI's share of

the gross sale 70%. I estimate that you get 50% on about 45% of the

sales, 70% on another 40% of the sales through your wholly owned

offices, and in no more than 15% of the sales do you only get 30%. Are

these figures in the ballpark?

Klein - There is a great deal of public information on the sales

of TSI due to the fact that it is a major subsidiary of a publicly

traded company. You are, therefore, aware that the majority of TSIoes

sales are from wholly owned offices. We have also publicly stated that

we are currently paying about 38% of TSI sales to photographers and

this is based on the analogue deal of 50% for an in-territory sale and

30% for an out of territory sale. This deal for analogue sales remains


Pickerell - The way I calculate it, when there is a substantial

shift from film delivery to on-line delivery-and if gross sales were to

stay flat-at 40% instead of 50% TSI would have a $3 million plus

windfall as their additional share of gross receipt. The

photographer's share of gross receipts will drop from 38% or 39% to

around 34%.

TSI is getting this extra share in spite of the fact that you will save

money on duping costs and print catalog costs. What's the


Klein - Firstly, your numbers completely exclude the negative

impact on TSI of assuming the bad debt risk in the future and also the

impact of the lump sum payment to photographers who sign by September

15. The numbers are substantial, especially in relation to the latter

item which effectively pays for historic sales now, irrespective of

whether we have received the money from the customer. These numbers

need to be factored into any "benefit".

Secondly, you conveniently forget the cost of web-commerce enabling TSI

oe capital investment, marketing, sales support teams, technical support

teams, training of existing employees etc. These costs are huge and

need to be taken into account in any "benefit calculation"

Thirdly, we won't necessarily save money on duping costs since we plan

to continue to be aggressive in developing the analogue business as it

will be many years before even the majority of our business is digital.

So, we need to continue to invest in both the analogue and the digital

model. In other words, we are "double investing" for some time.

Fourthly, why should print catalogue costs reduce? Catalogues will

remain a key driver for the digital business. PhotoDisc oe an entirely

digital business, also owned by Getty oe invests at least as much in

printed marketing material as Tony Stone Images.

Fifthly, we will still incur substantial costs in maintaining and

improving the website through its design and the hardware and software

necessary to keep it at the forefront of digital technology.

Pickerell - What percentage of on-line sales do you anticipate

will be made from a fixed schedule where no negotiating intervention

will be required, and what percentage will require negotiation?

Klein - I do not know. Ask me again in six monthsoe time;

although I may not wish to share this information with the competition.

Pickerell - As I understand clause 5.2 in the contract, if a

contributor gets a model release and delivers it to TSI, and TSI later

licenses rights to some user in such a way that it violates the

release, or the law is changed or interpreted in some way that makes

the release inadequate the contributor is responsible for 50% of any

settlement TSI makes.

Since the contributor had zero control over how this sale was made

shouldn't TSI be solely responsible for who they license an image to.

Isn't that part or what the contributor is paying the agency to do on

his or her behalf?

Klein - Section 5.2 does not address the issue of TSI licensing

an image in a way that violates the terms of a release that complies

with the TSI release guidelines and has been disclosed to TSI. If TSI

licenses an image in that way, that is not the photographer's

responsibility - TSI will bear any ramifications alone since the

photographer did not breach any representation or warranty. I hope that

this clarifies the position in relation to 5.2

The second matter relates to a change in the law. If the law changes

and makes a previously valid release invalid, we feel it is only fair

that TSI and the photographer bear the loss equally since neither party

could have foreseen such a development.

Pickerell - The same thing is true even if the photographer

marks "no release" on the image and TSI licenses it as if the image

were "released." Why is the photographer responsible for TSI's error?

Klein - It is TSI's view that both parties should bear the

responsibility for providing an unreleased image to the marketplace.

If a photographer sends it in knowing it isn't released, they should

bear the risk equally with TSI. If a photographer doesn't want to be

liable for unreleased images, they should send in only released

imagery. It is entirely up to the photographer to decide whether to

submit unreleased imagery; if he/she is not comfortable with the

sharing of the potential liability, the image should not be submitted

and thus the issue does not arise. It is worth stressing that this

continues current practice where both parties assess the risk of

licensing unreleased imagery. If either party concurs that the risk is

too high then the image is rejected.

Pickerell - It is my understanding that the new model release

clause would be operative for all existing images in the file, not just

ones created after the signing of this contract. Thus, if any of those

old "No Release" images are used in the future in a way that requires a

release the photographer is 50% liable. Is that true?

Klein - I really don't know. That is a question which our legal

department would be better able to answer than myself.

Pickerell - Clause 5.1 - "If contributor breaches any

representation, warranty or covenant in this Agreement and, as a

result, a TSI Group member withdraws from circulation as Duplicates, or

is otherwise precluded from licensing, any Contributor image, TSI will

be entitled to deduct from sums due to Contributor the resulting costs

and loss profits suffered by the TSI Group in an amount not to exceed

US$6,000 per Contributor image." Where did this number come from? Why

such a high number? Can you give me an example, a specific situation,

where this rule would come into play?

Klein - Under the old agreement, TSI could have deducted any and

all sums it suffered as a loss or damages due to the photographer's

breach of a warranty and TSI's having to subsequently remove an image

from circulation. There was no cap on this amount. As a result, once

again , the new agreement is more favourable to the photographer. In

the new agreement, we are not specifying an additional way that we can

obtain money from a photographer, rather we are placing a cap on the

amount which can be retrieved in this particular situation.

You have asked for an example - where an image was submitted with a

release, but the release turned out to be that for a completely

different image and thus the image in question was not released. The

model could sue and force TSI to retrieve all the dupes of the image

from around the world. TSI would incur costs in doing so.

Additionally, if the image was featured in a catalogue, TSI would lose

money due to the space in the catalogue being taken by an unlicensable

image. We could determine the amount of profits lost and be reimbursed

by the photographer.

Pickerell - Under 2.3 - License Limitations. You have included

two different limitations. In one, no TSI office can not offer RF

licensing without prior consent of the contributor. In the second it

looks like Getty Images could license images for RF purposes without

prior written consent of the contributor. This says TSI can give

licensing rights to Getty Images without the contributors consent and

does not define or place any limits on Getty Images use of the images

so received. Is this true?

Klein - No. No "TSI Group" member, the definition of which

includes Getty as the parent of TSI (see Section 10), will license via

the royalty free method without the photographer's permission. This

could not be clearer.

Pickerell - To me this clause doesn't seem to deal with

promotional use, but the lawyers for some photographers have

interpreted it in that way. Can the language be clarified if you

receive specific requests from photographers?

Klein - No photographer to date has stated any confusion

regarding this Section therefore it has been unnecessary for TSI to

determine whether clarification should be given. If photographers

raise the issue directly with us, we will, of course, be only to

pleased to provide clarification.

Pickerell - Clause 2.5 - This gives TSI the right to set any

terms it wants for images it gives to Getty Images. It lets TSI give

the right of licensing your images to Getty Images. It does not define

under what terms, how much TSI gets back, or for how long?

Klein - The intent of this Section is to allow TSI, as opposed

to the photographer, to set the licensing rates. This freedom is

needed in order to stay competitive in the ever-changing stock

photography industry. The Section is not intended to provide a

loophole for low-cost licensing directly to Getty.

Pickerell - Under return of originals,(clause 7.6) it appears

that TSI can claim that any number were lost of damaged (clause 6.1)

and thus not be liable in any way for their return, or to compensate

the photographer in any way for their loss. Is this true?

Klein - We have no intent of claiming images were lost or

damaged if that is not the case. As you know, no matter how careful an

agency is, some small number of images may not be accounted for when,

years after submitting them, a photographer requests that they be


As it is economically impractical for TSI (or any agency) to insure the

millions of images in its collection, we have provided the photographer

with an affordable means of obtaining their own insurance which will

cover lost images (as well as a host of other occurrences which are

common in the photography field). See Exhibit 6.1.

Pickerell - Clause 8.1 - The confidentiality clause is defined

too broadly. It would be illegal for contributors to discuss their

experiences with one another, or to advise other photographers who are

considering affiliation with TSI. Will you consider adjusting this if

requested by a particular Contributor?

Klein - We will deal with this directly with the individual

photographer if requested to do so.

Pickerell - Many photographers seem to be taking their time

about getting the facts and reviewing the details of the contract.

They seem to be in no rush to meet the 15th deadline. They figure that

whenever they work out a contract that suits them, then their images

will go up on line and if they miss a few months it is no big deal.

Does that attitude concern you?

Klein - It doesn't particularly concern me. I can't understand

the logic for it because there are two incentives for them to settle

their contractual arrangement by the 15th of September. First

incentive is, that when we launch the web site at the beginning of

October we will be doing it with something of a splash. We will be

spending money. We will be taking out ads. We will be sending out

leaflets and flyers. We have a new advertising agency in North America

to assist us with that campaign, and we think that in the first few

weeks there will be a lot of visits to that site and that is going to

be a great showcase for their images. So the first reason to settle by

the 15th is to get their images up there at the time of the launch.

The second incentive is that we are making a lump sum payment of

outstanding amounts for those photographers who sign by the 15th of

September. Now that lump sum payment covers all their sales advices

since the beginning of 1996 under which they still have not been paid.

That for some of the biggest shooters is a significant amount of money.

That deal applies to those who sign before the 15th and we are under

no legal obligation to give that deal to anybody beyond that time and

therefore we will be withdrawing it after the 15th.

I see two very strong incentives for people to sign by September 15th.

If they choose not to that is entirely up to them. I would say that

given those incentives it makes sense for them, if they are going to

sign at all, to sign by September 15th.

Pickerell - If they don't sign at all and decide to live with

their existing contract for the life of the contract will that contract

be honored for as long as it is in force?

Klein - The contract will, of course, be honored for its life.

However, the contract does not require us to provide on-line

distribution and there are no arrangements in the existing contract for

on-line distribution or the split of revenue on on-line distribution

and therefore we will continue to market those people's products under

the terms of that contract in an analog environment. But those

people's imagery will not be on the web site. They will be depriving

themselves, for those images, as well as images submitted thereafter,

of an on-line market.

Pickerell - We've talked to some of the photographer who have

signed that didn't even bother to read the contract. They trusted

that if all the PAG members liked it, it was good for them. They have

no idea what is in it. But, they are going to continue to operate

based on their understanding of their old contracts because they don't

realize that there is much change. Does that concern you?

Klein - I like to think that people who enter into contractual

arrangements are aware of what their arrangements entail. Through

discussions over the last six months with the PAG in both Europe and

North America it has become quite clear that there are a number of

misconceptions around the old contract. The best example of that is

that there are still photographers, not just with Tony Stone, but with

other agencies as well, who think that they get 50% of the sale. The

fact that they get 50% of what their agency receives as opposed to 50%

of what the customer actually pays has been in their old contacts for

30 years. Not withstanding that there has been and still remains a

belief that they get 50% full stop. I think the reality of the

situation is what really matters, not the perception, and the reality

is that those who have signed new contracts are bound by those

contracts, as are we irrespective of whether they spent two minutes on

the contract or spent six months with lawyers reviewing the contract.

Pickerell - Have you considered what happens if photographers

sign simply to protect their existing file, but stop producing because

they feel now that the percentages are such that they feel it is no

longer economic for them to produce?

Klein - We have considered that, and we believe that the vast

majority of our photographers, both in number, and in the percentage of

revenues of Tony Stone will both sign and continue to produce

enthusiastically. There will be some who will not sign and there will

be some in the category that your question covers. There will also be

some who will sign, but not produce as much as they have in the past.

We are prepared for those eventualities, but we don't see it as a

significant risk.

We also believe that as a result of this contract, other agencies who

bring their business on-line will need to think very carefully about

what sort of deals they offer to their photographer, not just in terms

of commission, but in terms of all aspects of the relationship in an

on-line environment. It will be very interesting to see over the next

year of so what becomes the industry norm for relationships in an

on-line environment.

Also, we need to bear in mind that there are going to be very few

companies who will have a full web commerce capability for their

photographers. That is also a consideration in terms of what these

photographers will do, or who they will submit their images to and with

what enthusiasm.

Pickerell - If photographers want to propose contractual

changes, or have other legal questions should they go through their

editors or is there someone else that they should be sending such

proposed revisions to?

Klein - All the legal issues go first to the director of

photography in the office to which the photographer is contracted and

then the director of photography refers it to the legal department and

gets out of the loop. We have four in-house lawyers working full time

who are dealing with this issue.

Suggested Strategy For Photographers

After talking to a number of TSI photographers, spending time analyzing

the contract and this interview I have the following suggestions for

Tony Stone Images photographers.

1 - Do not sign the contract without having a lawyer review it.

2- If you can't afford to hire your own lawyer, join one of the groups

of TSI photographers that has hired legal counsel to represent them in

negotiations with TSI.

3 - Put the changes you want in writing and submit them to the director

of photography at the office to which you are contracted. Your

comments will be referred to the TSI legal department. Don't waste

your time trying to negotiate with your editor.

4 - Don't worry about the September 15th deadline. Take your time, if

necessary, and get an agreement you can live with.

5 - But, if you can have your suggested changes in by September 15th

you will probably be in a stronger negotiating position.

6 - The 40% is not the worst clause in the contract. There are many

other clauses that could potentially do more damage to your ability to

earn future income from stock.

7 - Sign up for the TSI photographers forum and review the messages

being posted there. To get a password send an e-mail to:

8 - Pass this information on to your friends who are TSI photographers.

Copyright © 1998 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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Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
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