Picture Perfect In Arrears

Posted on 1/19/1999 by Jim Pickerell | Printable Version | Comments (0)



January 19, 1999

Picture Perfect and Todtri Productions, Inc. are seriously delinquent in their

payments to stock agencies and photographers. Both organizations are owned by

Robert Tod and based in New York City.

Todtri Productions is a publisher of picture books and has obtained pictures from

a number of U.S. and foreign stock agencies. The first public indication of

trouble came in mid 1998 when Art Resources reported to PACA (Picture Agency

Council of America) members that Todtri had failed to pay them for many pictures

used in a number of Todtri books. The books in question had been released and

distributed a year, or more, earlier.

At one point the total usage fees owed to Art Resources was about $80,000. Early in

1998 Todtri made a few small payments after repeated requests by Art Resources.

By mid-1998 those payments stopped and Todtri would no longer respond to

telephone calls. They still owe Art Resource about $42,000.

At that time Robert Tod told Selling Stock that he was having some cash flow

problems because book distributors were delaying payments to him for some of the

books they had purchased. He also explained that distributors were returning

many more unsold books than had originally been anticipated. It is a practice in

the industry that book stores can return unsold books for full credit. Tod

assured Selling Stock at that time that all payments would be caught up soon.

Meanwhile in late 1997 and early 1998 Picture Perfect released its PP12 catalog

containing about 2100 images. Over 900 of these images were supplied by Nawrocki

Stock Photo Inc. Zepher Pictures, and a number of foreign agencies also supplied

images for this catalog.

A few photographers supplied images direct to Picture Perfect rather than going

through another agency. We have been unable to locate a single photographer or stock

agency who has received any payment for images licensed through this catalog.

Picture Perfect handles all sales in the U.S., and has distributed catalogs

through between 20 and 30 agencies outside the U.S. In most cases, the foreign

agencies are required to remit 60% of the gross sales to Picture Perfect in New


We believe that about 100,000 catalogs have been distributed around the world

with 30,000 to 40,000 of them being distributed to U.S. buyers.

Not only have image producing agencies and photographers not received payment,

but as of the beginning of 1999 only one had received any type of sales report. Even

when photographers would see their image used by major advertisers

Picture Perfect refused to supply any information as to the fee charged for the


Photographer Andy Goodwin had a picture of his two sons used in a major ad

campaign by Kellogg foods. Given the number of places that photo has appeared

one would expect that the fee would have been at least $20,000 but as of the

beginning of 1999 Picture Perfect would not tell Goodwin, or his agent Nawrocki

Stock Photos, what they billed for the usage.

We know that some foreign agencies have made sales and have submitted quarterly

payments to Picture Perfect according to the terms of their contracts. We also

know that some foreign agencies are withholding the fees collected because Robert

Tod owes them much more for sales he has made on other projects than they owe

Picture Perfect and Todtri.

Based on certain information we have obtained relative to early sales in the

U.S. we estimate that gross sales from the Picture Perfect 12 catalog through

the end of 1998 were between $700,000 and $1,000,000. Based on industry averages

we estimate that sales outside the U.S. should have been about equal to, or

slightly greater, than U.S. sales,

This means that the average gross sale per catalog image in the first twelve months was

between $333 and $476. The average photographer share of these sales would

probably have been between $80 and $114 per image.

Robert Tod is traveling in the Far East until the end of January. Selling Stock

submitted written questions, but neither Mr. Tod, nor his second in command, Mr.

Fred Harris, were available for comment. The questions are attached at the bottom

of this story

Capstone Financing

In the last few days some claimants have received an offer to settle claims for

monies owed through November 30, 1998. Tod has made arrangements for financing

through Capstone & Company,

515 Madison Avenue, 21st Floor, New York, NY 10022. Mr. Joseph Ingrassia is the

investment partner handling the arrangements. The explanation they are providing

to trade creditors is as follows:

    "Todtri Productions, Ltd. ("Todtri") has been, and still is engaged in the book publishing

    business on an international acale. In 1997, because of the difficult environment

    affecting the industry, a major account went bankrupt and several others were so

    adversely affected that their payments became extremely overdue. In addition, Todtri's

    largest account changed the manner in which they did business and is no longer a

    customer. In 1998, the international monetary crisis further negatively impacted on

    Todtri's finances. While Todtri has continued in business and has replaced the accounts,

    the process was painful and prolonged. As a result, Todtri has incurred diverse debts that

    is unable to either pay in full or in all cash.

    "Because Todtri's basic ongoing business is sound, it has received a commitment for a

    significant new financing which will enable Todtri to begin paying back debts and to

    continue in business stronger than ever. The lender has required, however, as a

    condition of making the financing, that Todtri's existing debts be restructured in an

    Agreement of Composition with its trade creditors.

    "Todtri has engaged Capstone & Company, LLC to organize that Agreement of Composition.

    The purpose ot this letter is to describe the terms and conditions under which your

    trade payable due from Todtri will be paid. We ask that you return this document in the

    enclosed self-addressed stamped envelope. We are seeing to close the financing for

    Todtri at the end of January, 1999, provided the requisite number of trade creditors

    join in the Agreement of Composition. It is anticipated that the first payment

    would be made in February, 1999. To accomplish this, we need your cooperation in

    sending back your signed document as soon as possible, but no later than January 15, 1999."

In this agreement Todtri is offering to pay creditors 100% of what is owed, but the payment

periods are stretched out over long periods and vary from creditor to creditor. We know of at

least one creditor whose debt is scheduled to be paid off in six months and others where the

payments are stretched out over two years.

Other unique features of this agreement are:

  • In order to particpate in this payment plan they were required to return the document by

    January 15th. Many didn't receive the document until the 14th and some have still not

    received a settlement offer.

  • Some who have received the offer indicate that their are conditions which are unacceptable

    and this could result in a delay or cancellation of the offer.

  • An amount has been stipulated as to what each creditor is owed, but if the creditors

    wants to be paid he has to stipulate that this is "payment in full" and give up his right

    to audit the books. In some cases there are legitimate questions as to whether the amounts

    stipulated really cover all sales.

  • It is clear that Todtri has used the photographer share of monies collected in the past

    year to pay off debts in other lines of business in which the company engages. Now, they are

    proposing to stretch out payments to photographers so they can pay other trade creditors in

    a more timely manner. There is no obligation to the photographer until the company has

    actually been paid by a client. Therefore, the argument they make that some of their book

    publishing clients didn't pay their bills should have no relation whatsoever to why the

    photographers are not being paid.

    Many stock agencies put receipts from licensing in a separate account, and do not pay anything into their

    operating account until the photographer's percentage has been paid. This is the way a

    stock agent should operate. Obviously, Todtri does not operate that way.

    Moreover, it is

    clear from the agreement creditors are being asked to sign that all future income

    will be used to pay off any and all debts. The debts to the photographer for the

    licensing of their work will have no greater priority that a debt to a printer, a stationay

    store or for office rent. There is no sense that a portion of the monies collected in a usage

    fee do not belong to Todtri, but are a direct obligation to the photographer or agent who

    provided the product for licensing.

  • Income Breakdowns

    The situation at Picture Perfect has given us a chance to explore the current

    economics of catalog marketing, for the sellers, catalog producers and

    photographers. The following numbers are hypothetical, but based on interviews

    with a number of people involved. We believe these numbers are realistic and probably

    close to the actual earnings in this situation.

    For purposes of this analysis we assume that sales break down 50% U.S. and 50%

    foreign, although it is possible that the foreign share may be a higher


    We also assume that half the images were supplied to Picture Perfect by an Image

    Supplying Agent. We know that somewhat more than half the images in the catalog

    were provided by secondary agents, but we are unsure as to exactly how

    many of the catalog images were supplied directly to Picture Perfect by


    Sales Level   


    $1 million   














    Gross Sales   








    Selling Agent Share (40%)   








    Catalog Producer (40%)   

    Selling Agent in U.S.   




    Selling Agent in U.S.   









    Amount Left For Split



    Image Suppling Agent Share



    Photographer Share



    Costs Breakdowns

    Above is how the income should have been divided had everyone been paid according

    to contract. Now, lets look at the probable costs of each participant in this marketing


    Foreign Selling Agents - Foreign agents purchased and distributed between 40,000

    and 70,000 books from Tod. We believe they paid about $3.00 for each book

    received which would make the total paid to Tod in early 1998 somewhere between $120,000

    and $210,000. It

    appears that some dupes were included in this $3.00 price, although certainly

    some agencies would have wanted extra sets of dupes. The dupes were 6x9cm and

    these may have cost $2.00 each to produce, given the volume.

    On top of this, agencies had postage costs to distribute the books. It would

    probably have cost at least $3.00 per book to ship these books. In some

    countries shipping heavy print catalogs is even more expensive so we think $3.00

    per book is a minimum for distribution costs.

    Thus with purchasing the books and mailing, the agencies had a combined estimated

    outlay in early 1998 of somewhere between $240,000 and $420,000. As we can see

    from our chart above their 40% share for this catalog was at best $200,000. This

    does not include any of their staff and overhead costs in actually making the


    Image Supplying Agents - We know that in excess of 50% of the images in the

    catalog were supplied by other agents. These agents will receive 60% of what

    Picture Perfect receives from each sale and split that with their photographers.

    If Picture Perfect makes the sale in the U.S. the ISA gets 60% of the gross fee

    paid. If the sale was made by a foreign country the ISA get 36% of the gross

    fee. The income that should have been paid to these ISA's would have been

    between $336,000 and $480,000.

    As of 1 January 1999 they had received no payments. If and when these agents get

    paid they will keep half of this income, or between $168,000 and $240,000, and

    must remit the rest to the various photographers who actually produced the


    The agent had costs of collecting the images from the photographer and editing.

    In some cases the agent may also have been required to pay something up front to

    Picture Perfect to help offset the initial production costs of the catalog. In

    this case the ISA's have also had legal expenses to try to enforce their

    contracts and collect the funds owed them by Picture Perfect. In addition the

    credibility of the ISA's with their photographers has been severely damaged as a

    result of the actions taken by Picture Perfect.

    Photographers - They owe $150 per image to help offset the costs of producing the

    catalog. This amount is to be paid to the catalog producer out of the first

    dollars owed to the photographer. This would be a total of $270,000. Since the

    most that is believed to be owed the photographers for 1998 is $240,000, on

    average the photographers are probably not owed much money for 1998 sales.

    Of course, some photographers will do much better than the averages and others

    will earn little or nothing.

    Picture Perfect - We estimate that printing, design and separations cost them

    something in the range of $300,000; that postage, mailing lists, and mailing

    house fulfillment cost were at least another $45,000 and that the production of

    large format dupes added another $100,000 in costs for a total of $445,000.

    This is minimum cost of catalog production and distribution.

    Picture Perfect has received between $120,000 and $210,000 from the foreign

    selling agents. Their legitimate share of sales would have been $224,000 to

    $320,000. In addition, it is believed that some of the Image Supplying Agents

    made some up front payments to help offset the production of the

    catalog. This gives Picture Perfect an income in the first year of between

    $344,000 and $530,000.

    Given the cost that Selling Agents, Image Supplying Agents and Photographers are

    likely to have had -- even if they were paid what they are owed -- nobody would

    be doing very well after the first twelve months of sales.

    Given the number of catalogs currently being produced, many in the industry

    believe the average useful life of current print catalogs is not much more than

    18 months. If that is the case it will be hard for anyone involved in this

    project to end up making money.

    Granted, a few of the major catalog producers are getting much better returns per

    image than this, but they accomplish their market penetration through

    overwhelming presence and huge expenses in supplementary advertising. The fact

    remains that there are too many pictures chasing too few buyers.

    If these statistics are at all representative, those who are not market leaders

    and who want to compete are going to have to find a more cost effective way to

    show their images to clients.


    The following are some of the witten questions we sent to Robert Tod and Fred

    Harris in an effort to get their side of the story. They failed to respond by

    our publication deadline.

    1 - I understand you distributed about 100,000 copies of the Picture Perfect 12

    catalog. Is that correct?

    2 - How many different catalogs has Picture Perfect produced in the past?

    3 - For how many catalogs, produced by other agencies, has Picture Perfect or

    Todtri acted as distributer?

    4 - I understand that agents in 26 countries are handling sales for your PP12

    catalog. Is that correct?

    5 - I understand that no agency or photographer who participated in PP12 has

    received any payment for sales of the images in this catalog. Is that true?

    6 - If someone has received payment will you please give me one or two names so

    I can confirm that fact.

    7 - I understand that Nawrocki Stock Photo Inc. has terminated their contract

    with Picture Perfect as of December 31, 1998 due to non-payment. Is that true?

    8 - It is my understanding that in the letter of termination Nawrocki agreed to

    allow you to continue to market their images through PP12, provided there is

    prompt payment for 1998 monies owed. Is that true?

    9 - It is my understanding that you are required by the termination clause in

    your contracts with stock agencies to return original images once the contract

    has been terminated. Is that true?

    10 - Do you agree that you have voided your contracts with stock agencies by

    refusing to pay according to the terms outlined in those contracts?

    11 - Why are you unwilling to place the original images from PP12 in escrow with

    a third party as has been requested by some agencies so the photographers will

    have some assurance that they can eventually recover their images, if not

    payment of usage fees? Wouldn't this demonstrate some evidence of good faith?

    12 - Do you believe you have the right to continue to market all images in PP12

    despite the fact that agencies have given you written notice of their

    termination of their contract with Picture Perfect based on the fact that you

    have made no payment to them?

    13 - Given that you have withheld sales reports for so long, how can agencies be

    assured when they finally do receive sales reports that what you claim as sales

    are really all the sales that were made?


    After this story appeared Robert Tod sent us a letter with his comments. You can read

    these comments in Story 195.

    Copyright © 1999 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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