Public Ownership

Posted on 10/2/1996 by Jim Pickerell | Printable Version | Comments (0)


Public Ownership

October 2, 1996

As a result of Getty's successful public offering and Index's proposal to go to
the market for capital some photographers and stock agents have suggested that
increased public ownership of the stock business may not be in the best interest
of photographers.Questions include:

  • As corporate managers take over the running of stock agencies formerly run by
    photographer/owners, will there be more focus on what is in the best interest of
    investors rather than all their photographers?

    Answer - If we look at the large privately-owned stock agencies, we find some
    give every photographer in the agency an equal chance at producing and getting
    all their work seen by all clients while others limit the kind of images certain
    photographers are allowed to include in the collection. The latter strategy
    protects the rights of certain top producers, but may force new photographers
    into production of low demand subject matter if they want to get anything at all
    accepted by the agency.

    Some agencies that have business and financial experts at the top are more even
    handed with all their photographers than others that were founded by
    photographers. There seems to be little correlation between the background of
    the manager (photographer or non-photographer) and how they treat their

    Consequently, whether the company is publicly or privately owned would not seem
    to be a deciding factor as to whether the agency will act in the best interests
    of all photographers, or just the owners.

  • Will the need to maximize profits for investors drive managers to increase
    profits quarterly rather than invest in strategies that might be of greater long
    term benefit to their photographers?

    Answer - It seems to me that most agencies have been forced to focus their
    efforts on immediate returns due to narrow profit margins and a lack of
    investment capital. Photographers, as much as any outside investor, want to see
    steadily increasing royalty checks and are impatient with strategies that might
    delay immediate gratification for the potential of long term growth.

    Agencies need to find a way to simultaneously maximize short term sales growth
    and do research and development of new marketing strategies. Often it takes
    additional capital and additional personnel to be able to focus on both areas at

    Agencies with capital may have a chance to increase market share, but they can
    also blow their advantage by making unwise investments or by trying to do too
    much too fast. I am inclined to think that in the long run photographers are
    more likely to benefit more if their agency has the capital necessary to
    experiment, rather than being forced to wait on the sidelines until others have
    clearly defined the new course.

  • Will publicly-owned stock agencies seek to maximize profits by having an
    in-house staff produce images of those subjects that their sales statistics show
    are in greatest demand? In this way they would increase their profits on these
    sales by eliminating their need to pay royalties.

    Answer - There are certain large privately-owned agencies that have large
    in-house production departments. A large percentage of their sales come from
    wholly-owned material. On the other hand, in 1995 only 6% of TSI's sales came
    from wholly-owned material. There are a number of factors that an agency needs
    to weigh before setting out on a course to produce a larger percentage of
    material in-house in order to avoid paying royalties.

    A - They must pay all the production costs and catalog costs rather than
    requiring the photographers to pay these costs as is the case when the agency
    pays royalties.

    B - If the trend becomes public knowledge they may alienate many of their most
    productive photographers. This could be disastrous in the long term unless the
    agency is prepared to go to full in-house production.

    C - They may limit their source of ideas for new images if they rely entirely
    on their in-house staff to come up with these ideas.

    D - They will probably find it difficult to have as many photographers
    shooting simultaneously if all shooting is done by staff photographers.

    E - Some of the best and most creative photographers may not be willing to
    work as staff photographers.

    F - Some of the best photographers may go elsewhere if they can not get their
    images of high demand subjects shown to clients.

    All things considered, it is not an easy decision to move to full in-house
    production just to avoid paying royalties. Nevertheless, photographers working
    on a royalty basis should be alert to any trend that moves in this direction.

    Monitoring Agency Operations

    It is easier to monitor certain trends when statistics are available, than to
    guess what a private company is doing.

    For example, 6% of Getty sales in 1995 were from wholly-owned images. If this
    percentage starts to go up in coming years it may give photographers cause for
    concern. (Since Getty now wholly owns Hulton Getty the overall Getty
    Communications percentage is likely to go up in 1997, but the percentage sales
    from TSI images may not. Most TSI photographers will probably be unconcerned
    about the sales of images from the Hulton collection because they are
    non-competitive with the type of images TSI photographers produce.)
    However, just because an agency is publicly owned doesn't necessarily mean
    you can get access to the information you need. The Image Bank made a public
    offering in 1990 and was later acquired in 1991 by Eastman Kodak Company.
    Visual Communications Group (Telegraph Colour Library, Colorific, Pix and
    Bavaria) also became a part of United Newspapers in the UK in 1994, a public
    company. In both cases much less financial information is available because
    these companies are divisions of much larger corporations. Detailed statistics
    about division operations are not usually reported to the shareholders.

    Public ownership is not necessarily good or bad. It is just a new factor
    photographers must take into account when establishing an agency relationship.
    If an agency the size of Index is successful in its public offering, expect many
    other agencies to begin to explore the option of direct public financing rather
    than selling out to a larger agency or corporation.

    In the case of a public offering photographers should try to determine the
    degree to which the capital raised will be invested in new technologies and new
    business development, or used to pay off old debt. If the money is used in ways
    that will grow the company, but not necessarily grow sales of the type of images
    the photographer produces, that might be reason for concern.

    See related Index Stock story.

    See related Getty Communications story.

  • Copyright © 1996 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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