Stock Photography - A Two-Sided Market

Posted on 3/16/2015 by Jim Pickerell | Printable Version | Comments (2)

Stock photography is a two-sided market. For the most part image producers need a distributor to make potential customers aware of their work. Image buyers need distributors to make it easier for them to find what they need when they need it. The distributor needs to cover its cost of providing the service and make a profit. But the distributor must also manage the delicate balance between what customers are willing to pay and generating enough royalty for contributors to encourage them to continue to produce.

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Selling Stock is an on-line newsletter that reports on developing trends in the stock photo industry. It is updated at least twice a month. On-line subscribers receive e-mail notification whenever new stories are posted. Archives containing stories going back to late 1995 are fully available to subscribers.

Copyright © 2015 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 301-251-0720, 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:  


  • Morgan David de lossy Posted Mar 18, 2015
    Very interesting history of stock! I wonder how the quality of next years images will be affected by what you say in your conclusion (whom I share). Are we at an end of a cycle? Will this mean an auto-adjustment of supply and demand, and after a while new opportunities for the remaining contributors able to generate quality?

    Or are we at the edge of a brand new model "Netflix-style" where the only way to generate quality will be for the distributors to become content producers too?

  • Tom Zimberoff Posted Mar 22, 2015

    I enjoyed reading your erudite account of the Stock Photo marketplace. But I think it’s missing a hugely important if subtle historical perspective: how Corbis and Getty Images engaged in a competitive bacchanalia of acquisition that led to the abandonment of an agency model, representing the best interests of photographers, and to the prevalence of a distribution model predicated on the economic exploitation of a commodity and a perversion of the two-tier marketplace.

    Every marketplace is two-sided by definition. And no marketplace exists spontaneously. They’re actually created by middlemen to connect sellers with buyers (a point particularly germane to online marketplaces). When they work they help both sides solve each other’s problems, and the middleman is rewarded too. If that’s not the case, middleman is a misnomer; leech is more like it. Incidentally, it’s not the job of a middleman to “manage” what customers are willing to pay. That’s not possible to do anyway.

    Both sides of the Stock Photo marketplace in particular must be treated equally as customers to be economically sustainable over time. Photographers are not “suppliers” per se because the middleman is not purchasing goods from them. In fact photographers pay the middleman to participate in the market, just as publishers pay for publication rights. Furthermore, the idea of “royalties” in a Stock Photo marketplace is ill applied because the incumbent middlemen, the distributors, are not themselves licensees, or end-users. It’s more than semantics. In a healthy market licensees (e.g., publishers) pay royalties to licensors (i.e. photographers), and the licensors pay commissions to middlemen to facilitate transactions between the parties at both ends of the marketplace. I’ll concede that the concept of paying royalties works better in a commodity market. But only a certain flavor of photograph can rightly be considered a commodity. The distinction is more objective than subjective, yet might not be immediately apparent. But there is indeed a difference beyond the abstract. And therein lies the crux of the problem. Distributors have conflated two disparate market segments (i.e., Business-to-Business and Business-to-Consumer) within one revenue channel, confounding economic growth, which has remained stagnant for a decade.

    Historically, photographers engaged in Stock were represented by agents. Their interests were aligned as a matter of mutual economic sustainability. Agents always tried to get the highest price they could on behalf of photographers in accord with providing good service for buyers, building relationships with both sides of the marketplace. On the other hand, the distributors of a commodity care little about the economic sustainability of suppliers and rely, instead, on quantity and low prices over quality and service. Ergo, they’re serving customers who don’t care about quality and service but underserving many other customers who shop for quality, not price.

    In the early 90s, looking down from the 80,000 ft. perspective of investment bankers, Jonathan Klein and Mark Getty (Getty Images), simultaneously with Bill Gates (Corbis), saw a bunch of fragmented mom-and-pop photo agencies and realized that they could be consolidated into one massive money stream. It was an economic ploy that had only a tangential relationship to an interest in photography. So it was that Corbis and Getty bought their way into photography with no hands-on experience, no organic growth. Moreover, unlike buying, say, a record label that comes with the rights to a music library or a movie studio that comes with a treasury of films, the intellectual property associated with a stock photo agency—the actual photographs and the rights to publish them—are owned by the photographers, not the agency. So when Getty and Corbis came knocking on the door with suitcases full of cash, most photographers ran for the doors as fast as they could and took their pictures with them. That’s what I did.

    For sure, these distributors bought agency brand names along with some historically invaluable image archives that will continue to earn revenue indefinitely. But contemporaneous photography, like food, has a shelf life. It’s perishable and must continually be replenished. (Need I explain why?) When more than 80% of the 100,000 or so pro shooters working worldwide told them to go to hell, Getty and Corbis had no alternative but to seek out other photographers who were less independent, whom they could hire as outright employees to shoot libraries of images on film. It was a successful ploy. Distributors anticipated what photo buyers’ demands would be and sent their photographers out to “pre-shoot” without a buyer in place. Eventually, that became too costly and too time-consuming, especially shooting on film. Moreover, the subject matter and style of those archives soon got stale. Getty and Corbis began to buy the archives of individual photographers who had deep coverage in a given subject matter. Then suddenly, we all entered the twenty-first century: digital imaging. To make a long story short, the distributors came to rely on crowdsourcing.

    Before crowdsourcing Corbis and Getty had already made deliberate decisions to exclude photographers from the value chain and, instead, serve an emerging customer base consisting of shopkeepers, freelancers, bloggers, and designers all looking for cheap pictures to fill up these newfangled Web sites proliferating all over the Internet. The incumbents succeeded stupendously with buyers of all stripes. But sophisticated and high-paying buyers were soon disappointed, the ones who rely on professionally competent, visual problem-solvers to provide unique, high-quality images. They were ignored in deference to the new market for cheap photos, which was, and remains, huge. Its customers know little and care less about matters of intellectual property and copyright. So be it. The publication rights they demand are relatively marginal. But giving traditional marketers and publishers an economic windfall—albeit ephemeral—by charging them consumer prices in a B2B marketplace was neither asked for nor necessary. It gave away the store. It was shortsighted and unfair to creators. That gambit has come back to bite not only buyers but the distributors too.

    Corbis and Getty didn’t know how else to react when they were shunned by the best photographers in the world for what they did. They just continued to burn bridges behind them. For that reason, they have no relationship with the tens of thousands of freelance photographers who shoot Photo Assignments (with the exception of a few dozens of outliers). The work of the most talented photographers in the world is virtually invisible to buyers online. The incumbents have no means to aggregate these professionals and connect them with their existing clients, thereby, allowing them to capture transactions between them and use those data to accurately price usage rights in a modern marketplace. (That technology is what my start-up company, Pixterity, is working on.) Once a tipping point is reached (it’s close), when advertising revenue from online publication finally eclipses print, that’s the day compensation for photographers will shift, becoming adequate and fair. That’s what the people who actually pay photographers are saying.

    Here’s the problem: Marketers and publishers HATE crowdsourced pictures. They have to stand out from the crowd(sourced) to communicate with their own customers. That’s why Ad agencies, Corporate marketers, Editorial media, and Small businesses (I call them the 4ACES) spend $6.5 billion each year to hire professionals to shoot Photo Assignments. That’s more than the $4.5 billion spent mostly by consumers on Stock. Incidentally, that $6.5B is unequally fragmented amongst all 100,000 freelance pro photographers who decline to participate in the Stock Photo segment altogether for reasons you, Jim, have already alluded to in your essay.

    Consider this: throughout the entire world there are roughly 7.6 million photo enthusiasts, 2.5 million aspiring professionals, and 1.4 million part-time pros “contributing” to stock photo collections. That’s 11½ million wannabes who keep only $40 million out of that $4.5 BILLION the distributors earn from rank consumers. 82% of the pictures they sell are redundant online across multiple distribution sites. It’s no wonder that if a good image does get discovered, multiple buyers soon pounce on it, leaving the idea of exclusivity an impossibility for buyers who would be willing to pay more for it. Economically, these “contributors” suffer a death by a thousand cuts due to sub-agents. (Rhetorical question: Why are there sub-agents in a digital world? Does Uber need sub-agents to distribute rides?)

    How could there be any other result than a stagnation of revenue growth over the past decade? Since the emergence of Shutterstock, they and Getty have been swapping revenue back and forth with each other like squeezing air in a balloon. They can’t raise prices because the quality of their content is so poor; and they can’t increase quality because their prices are too low to attract better photographers and their pictures. Did you know that even Corbis is now syndicating its collections through Getty? WTF?

    The 4ACES will always opt for quality over price. They will thrive, online or in print for the time being, and so will the photographers who create Stock Photos, once an adroit agent uses technology to balance the cost of creating intellectual property (i.e., photos) with their actual commercial value to the end-user in real time, transaction by transaction. That’s the future of the photography business. That’s what Pixterity is working on.

    Today, ALL PHOTO ASSIGNMENTS ARE OFFLINE; they’re done on paper, over the phone—very 1985. The middleman, or agent if you will, who can use technology to connect photographers with their existing clients (for Photo Assignments) online will also consolidate Assignment & Stock Photo revenue on a single platform. Buyers will quickly recognize that the best source for Stock Photos is the same platform, or marketplace, they already use to to work with pros they trust to shoot Photo Assignments.

    You bet, the two-sided Stock Photo marketplace is out of whack. The future looks bright.

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