Random Thoughts 57

Posted on 12/18/2002 by Jim Pickerell | Printable Version | Comments (0)



December 18, 2002

National Geographic Image Collection Goes Online

The National Geographic Image Collection has launched an online site at
with an initial offering of 10,000 images from its archive of 10 million images. It expects
to add about 3,000 to 4,000 new images per year to the online collection.

Since 1995 Geographic has been selling images commercially, but their marketing has been
done the old-fashioned way, through glossy print catalogs -- and, of course, the monthly
magazine which is where many buyers find the images they want. By going online they hope
to make more sales to ad agencies, magazines, corporation,
textbook firms, etc. Their goal is to triple revenues in the next three to five years.

The Image Collection, operated by Maura Mulvihill, handles the work of 140 full-time
freelance photographers who work for National Geographic and it currently sells between 600
and 1,500 images per month. Photographers get a royalty of between 40% and 60% of the gross
fee received by Geographic for the licensing of the images based on their volume of sales.
(As the volume increases the royalty percentage increases.) According to Mulvihill,
"photographers with lots of images in the collection earn $60,000 to $80,000 per year, and
some even a little more while newcomers might earn $7,000 to $15,000."

Geographic Image Collection Collaborates With Panoramic Images

Following their recent launching of their web site (above) National Geographic has
announced that Panoramic Images will also be marketing images through their site. They
expect Panoramic to start with about 2,000 images and the first ones should
available on the www.ngsimages.com site early in 2003.

Bill Perry said, "We were looking for a quality company to help us leverage our site.
Panoramic Images has imagery that is compatible, but not competitive, with what we currently offer.
They have a niche like we do, and provide top quality within that niche."

Panoramic Images will be responsible for selecting the images that it places on the site.
It will provide the scans, keywords and all necessary model and property releases. It is
expected that Panoramic will supply JPEGs that are approximately 25 MB in size for use in
servicing National Geographic's customers. In the event that a customer needs a larger file
Geographic will go back to Panoramic Images to obtain it on a case by case basis.

Geographic retains the right to reject any image for quality, or if they feel it is
too competitive with the work of their own photographers. Geographic will be responsible
for all negotiations and licensing and will
retain an undisclosed percentage of the fee for their services.

Perry says that they have an "open mind" about doing similar deals with other images
suppliers, but they intend to move slowly in that regard. They want to see how the
Panoramic Images collaboration develops before considering other suppliers. "We probably
wouldn't add images from a nature and wildlife agency because we already have such a strong
file of that type of material," he said.

Doug Segal of Panoramic Images says, "We are proud and pleased to be associated with
National Geographic."

Ad Industry Projections

According to the Wall Street Journal forecasters are saying that the Ad industry is
beginning to rebound, but they do not expect a significant recovery for at least another

Most of the improvement is in the broadcast business.
Forecasters point out that media outlets, including magazines, are not experiencing the
growth that is now helping the TV and Radio industry.

Robert Coen, director of forecasting for Interpublic Group's Universal McCann expects
world-wide ad spending to jump 4.9% to $470 billion in 2003. Coen is usually more bullish
than other forecasters. John Perriss of ZenithOptimedia, a rival media-services company,
expects world-wide ad spending on major media to only rise 2.9% in 2003 and Aegis Group
puts the rise at only 2.3%. Perriss said, "We still remain cautious about 2003, but are
more hopeful for 2004 and 2005."

Most of the hope of all these professional forecasters is based on growth in broadcast
sales, not magazine and other media sales which are so critical to the stock photo

Image Source and Zefa -- Again

When is an exclusive agreement, exclusive? It seems I still haven't got it right. The
following is another clarification from Image Source relative to my original story in
Random Thoughts 55 .

All Image Source contracts are on a non-exclusive basis. However, imageshop and the
vmi-Group will only offer Image Source products and no other RF product beside their own
within their RF offering. This agreement is valid for all vmi offices and their own
network, besides zefa Benelux Press which will continue representing other RF products.

Managing International Agent Relationships

It used to be that all foreign agents demanded exclusive rights to represent images in
their territories. It now appears that some agencies are willing to represent images on a
non-exclusive basis.

This opens up the possibility of negotiating an arrangement with a local agency to
represent images even if the same images are available on a portal that might sell to
someone in that territory. Not all foreign agencies will agree to this type of arrangement,
but it is no longer wise to assume that because one won't agree, none will.

Global Printing Industry Sales

According to a TrendWatch Graphic Arts report the global printing industry ships $427
billion in product per year from in excess of 198,000 creative establishments. Commercial
printers account for 61% of the product shipped, newspapers 29%, trade shops 5%
and in-plant printers 5%. By country the United States has the largest industry
($170 billion) followed by Japan ($53 billion) and Germany ($31 billion).

The amount paid for the photography included in these products is a very small percentage
of the total printing costs. Nevertheless, the producers of printed products continue
to press creatives to lower the costs of their services. The $427 billion is not the
retail price that the consumer pays for the product. Rather, in most cases, it is the
price the publishers pays for the printed piece that is later either sold to the consumer
(as with a magazine or newspaper) or given away as advertising (as with direct mail).

Does RF Really Benefit The Small User?

One feature of the RF model is that everyone in the world pays the same price to use an
image regardless of whether the user is a small service operation in India, or American
Express sending a brochure with their bills to all their card holders. While the price may
be reasonable for the small user it is a huge give away for the big guys.

If you are a believer in the social philosophy that more and more of the world's
wealth should be consolidated in the hands of the rich and less and less should be
distributed to the poor then this pricing strategy fits right in. RF pricing is structured
so small users end up subsidizing big users.

The pricing of RM images, on the other hand, has always been based on the amount of usage
being made of an image and the relative state of the economy in a particular market (prices
for similar uses tend to be less in developing countries than in the U.S.).

Most buyers in the U.S. consider RF the cheaper option, no matter who the user, although
the big users get a much greater break than small users. However, in many countries, RF
is the expensive option (given its fixed worldwide pricing). In countries where usages are
small RM is often the cheaper option.

Now that RF is experiencing slower growth due to a maturing market and competition from
other producers many in the RF industry are considering across the board price increases to
help offset their increased costs. Such increases may make it even harder for the small
users to afford the product and for RF to penetrate certain markets.

Percentage Of RF Penetration In The Market

At the recent PACA conference it was pointed out that as little as two years ago 40% of the
images used were RF and 60% were RM. Those percentages have now more than reversed with
Getty reporting in the 3rd Quarter 2002 that approximately 69% of uses were RF and only 31%
were RM. RF is on a steady march to total domination.

Massachusetts Court Decision Supports Unauthorized Use Multiplier

We recently heard of the case of Douglas M. Bruce vs. Weekly World News that was tried in
Massachusetts District Court in 2001. In this case the court upheld the principle of a five
(5) times multiplier for unauthorized use of a photograph.

The World News had contracted with Bruce to make certain specified uses of his photograph
of then-presidential-candidate William S. Clinton and paid him for these initial uses.
However, after the first uses, the World News continued to make several additional
unauthorized uses of the image including other editorial uses, putting the image on
promotional T-shirts and the internet. Bruce sued the World News for copyright

In a bench trial the World News acknowledged its infringement. Normally, in such a
situation the court would issue a ruling for a specified amount of damages. However, in
this case the court spelled out in its decision the process it went through to determine damages.
The court determined that the normal fees for the infringing uses would have been $2,300, had the
seller been given an opportunity to negotiate a fee before the use. The court then used a 5 times
"multiplier for unauthorized use" to determine the actual damages of $11,500.

There were other components to the damage award, but the most interesting part of this case
for others in the stock photo industry is that we now have a court decision that upholds
the concept of a five times multiplier for unauthorized use. The case number in the United
States District Court of Massachusetts is CIV.A.98-11044-RGS and the decision was entered
on July 13, 2001.

Robert Harding Represents PhotoAlto

Most agencies that have specialized in RM imagery are now trying to offer their customers
an RF option as well. Robert Harding World Imagery is the latest to join this trend with
the introduction of PhotoAlto's products on its site.

Robert Harding, CEO of Robert Harding World Imagery said, "We are delighted to be handling
this exceptional Royalty Free imagery. This combined with our other RF products make us the
UK's leading source of Royalty Free and Rights Managed Imagery. Any way we can offer our
clients more choice combined with quality has to be good."

Inspirarte Imagenes Goes Online In Spain

In Spain Inspirarte Imagenes offers over 100,000 RM and RF images online at
www.inspirarteonline.com .
They have images, video and typography. When images are displayed
they carry information concerning the license, price, format and in which collection they
are to be found. The video section contains more than 1,500 RF 10 second video clips which
can be viewed online and are supplied on CD's.

Inspirarte Imagenes has recently added more than 10,000 RF images from Creatas and
ThinkStock as well as the "Vie" catalog from Digital Vision and "Horizons" from PhotoAlto.


Punch Stock will be expanding its operations and opening a London office in March 2003.

Media Bakery

Another site has entered the market to sell RF images. This one is
www.mediabakery.com , (I
guess they are baking images, not cookies and cakes), and like many of the rest they
represent virtually all the RF distributors.

Included among those collections they represent are: Adobe, Alienskin Software, Artbeats
Film Library, Artville, Bitstream, Brand X Pictures, Cakewalk, Corbis, Dosch Design,
Eyewire, Eyeland Studio, GraphicScene, ImageDJ, Image 100, ImageState, killersound, The
Music Bakery, Photo Disc, Royalty Free Music, Rubberball Productions, Sound Ideas,
Stockbyte, Triangle Images, Videometry and dozens of other content publishers and
suppliers. They say they are adding several new publishers every week.

Focusing Your Marketing Dollar

According to Alf Nucifora, featured speaker at the recent PACA International Conference in
Miami, money spent on marketing to an existing customers produces 5 times more revenue than
in spending the same amount of money to try to reach new customers.

For more of Mr. Nucifora's wisdom on advertising and marketing you can subscribe to his
free report at www.nucifora.com .

Copyright © 2002 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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