Why Don’t Big Distributors Get Better Prices For Your Work?

Posted on 10/11/2011 by Jim Pickerell | Printable Version | Comments (4)

Many photographers believe they will make more sales for the best prices if their images are represented by the biggest distributors. They may make more sales, but definitely not for the best prices. For years the biggest distributors have been seriously undercutting price – at least in the education field. There is a big question whether increased volume at low, dramatically discounted prices results in increased revenue overall for creators. Here’s how and why.

The big agencies constantly give on price in two ways. First, while their posted prices may seem reasonable they constantly discount prices to the major publishers in an effort to take market share away from each other. The major publishers – Pearson, Houghton Mifflin Harcourt, McGraw Hill Education and Scholastic – control a huge portion of the demand for educational content. The big photo distributors – Getty, Corbis and Alamy - are fearful of losing market share. In addition, they are always trying to take share away from their competitors. As a result they easily succumb to publisher requests for even greater discounts. And the prices they charge go steadily down.

It is not surprising that publishers would constantly pressure for better prices in an effort to increase their profits. But, the Big Distributors have no incentive to hold the line. They get the imagery they represent for free. All they have to do is cover their marketing costs with their share of the gross fee collected. They do everything they can to increase volume. If that means lower unit prices, so be it. If total revenue drops below a certain point they adjust the royalties they pay to creators so they can still keep enough to cover their costs and profits.

These distributors may still charge their posted rates to smaller users because they don’t generate enough volume to justify a discount, but these customers represent a very small percentage of the total market.

The second issue is that even the posted rates of the big distributors are totally unrealistic when it comes certain factors like circulation and the length of the license. Let me illustrate.

Recently I was asked to quote a price for a quarter page use in Glencoe Biology SE. The rights requested were:
    1 - Non-exclusive World Wide distribution
    2 - English and Spanish language
    3 - Use in multiple formats and all media including but not limited to print, CD-ROM, DVD, online (password protected), mobile media
    4 - Use in program components including custom versions, derivatives, alternative versions and minor revisions (defined as 25% or less change in photo content from original product)

    5 - “Unique user” is defined as a discrete individual who receives access to the same component through any number of multiple media. For example, if a user receives a print and CD-ROM version of the same component and also receives access to the same component via a closed website, that is calculated as one unique user.
    6 - Right to crop and digitally manipulate images
    7 - Right to allow educational institutions to upload our digital product (in whole) to their secure servers
    8 - Use in products for distribution to up to 2 Million unique users
    9 - Includes use in accessible versions for students with disabilities, including NIMAS format versions. Use in such accessible versions is unlimited and is not included in the unique user calculations.
    10 - Terms are for the life of the product
Language similar to this is pretty standard with all publishers.

McGraw Hill also asked for:
    11 - Use of the image in the context in which it originally appears as reproduced (in whole or in part) in advertising and/or marketing materials in any media format. Use in such marketing materials is unlimited and marketing materials are not considered components to be included in the unique user calculation.
While it is their standard practice to ask for this use on every price request, when anyone points out to them that this clause will dramatically increase the asking price they will usually ask for two separate quotes – one with and one without the clause. In addition, they will usually accept the lower price unless the licensor asks for very little extra for this additional use.  

Quoting The Price

Keep in mind that the standard license a decade ago was for 40,000 circulation, English language only in North America. For everything else the publisher paid extra. The add-ons would include: 25% for a second language (Spanish); 25% for supplemental materials (Item 4); 50% for electronic usage and 100% for world rights. In addition, if the request was a re-use (which this one was) there would normally be a 25% discount off the base price.

The price was also based on the size of the usage (1/4 page, full page, etc.). Getty and Corbis have given up charging anything extra for larger sizes of use. Alamy still factors size of use into its prices even though the vast majority of uses are quarter page.

Problem Areas

I believe the base price for the above usage should be about $220. That’s what it was ten years ago. Since book prices have gone up dramatically in the last decade there is no reason why the amount paid creators for use of their images in books should be any less – except for greed on the part of the publishers and their investors. But, even the factors we used a few years ago and no longer sufficient for establishing educational prices, given the way educational materials are distributed today.

Items 8 and 10 have introduced dramatic changes in license requests that have been almost totally ignored by the Big Distributors in their rush to give the publishers anything they want. Publishers have steadily pushed up over the last few years both the circulations they intend to publish and the term of the license.

Compared to the price for 40,000 circulation Corbis adds about 100% for 1 million copies. Getty doesn’t charge any additional no matter what the circulation. This is a product we’re talking about, not a brochure or a mailer that won’t necessarily generate any revenue. Glencoe Biology on Amazon costs $105.99 per copy. The gross revenue generated from a 40,000 circulation would be $4,240,000. If they sell 2 million copies the gross revenue will be $212 million. Image creators ought to get more if 8one million copies are sold than double what they get for 40,000. Corbis, Getty and Alamy are giving away your work.

I would charge 10 times my 40,000 price for 2 million circulation. That is still a tremendous deal for the publishers considering the revenue they will receive from selling 50 times as many books. Some will pay 10 times to individual creators if they want the image and they certainly will pay more than twice the base price.

Photographers also need to clearly recognize what “life of the product” really means. Other publishers will ask for a 15, 20 or even 50 year licenses. This is really “life or the product.” A course like “Biology” will be taught forever. The way the agreement is written any “derivative, alternative version or minor revision” can be interpreted as part of the same course. Electronic uses are also allowed so when the publisher stops distributing printed textbooks (which many think will happen in a few years) they can continue using your image in the electronic versions of Biology texts. Whatever you get for this use will be the last fee you ever get from this customer for the use of that image

One of the good things about this request is that every use – electronic or print is counted equally as part of the 2 million. In some of the agreements from other publisher the electronic rights are often “unlimited.” In such a case, if the agreement also contains a term of “life or the product” then that publisher can use the image forever.

What’s The Solution?

Unfortunately, there are not a lot of options. Photographers can complain to the Big Distributors, but they will not change their ways.

If you have exclusive material that publishers really need it is better to deal with the publishers directly rather than through the major distributors. The publishers will pay a lot more to individual photographers, or small specialist agencies when the image is something they really need. However, often they are very reluctant to look at anything that doesn’t come from an ageny. If they can find an image that solves their need equally well, from a distributyor that gives them a huge discount they will always use the cheaper image.

You need to think about how willing you are to be exploited. If you can’t deal directly with the publishers then you may want to consider whether there is something else you can do with your time that will be more productive than producing images for educational use.

Copyright © 2011 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.  


  • John Harris Posted Oct 12, 2011
    Pearson Education UK recently asked for a reuse with all those rights for 10 years -they offered £15. Presumably they are hoping that in 10 years time we will have gone bust, got Alzheimer's or both.

  • Steve Lake Posted Oct 12, 2011
    Is it not the case that many of these 'catch-all' license agreements are intended to streamline publisher admin by having a standard agreement that applies to all books and all suppliers (hence the very broad terms) rather than be used to secure unlimited usage of images? While technically the publisher can now use an image in an educational book with a 2 million print run that will be published all over the world in every language for ever and ever, that's not actually going to happen is it? These things aren't going to start selling like Dan Brown just because the publisher has a license that allows them to.

    Prices and print runs may be going up but are publishers actually selling more copies then they were when the old pricing structures applied? I work more with travel titles than educational and in that market there are fewer people buying guide books than there were 5 or 10 years ago. They may be buying them across a multitude of print and digital platforms. But they aren't buying more of them.

    And although many travel publishers now ask for 10 years or life of the product we both know that a new edition with new images will be coming out well before then in most instances. The publisher wants 5 or 10 years because a handful of titles may turn round that slowly and they don't want to have separate agreements for each title; but the majority will change within a year or two.

    Prices have indeed dropped for the reasons you outline and that makes it tough to compete. But in order to compete you need to be realistic about what you're charging based on how the image will be used and the type of product it will be used in. The days of charging a high initial fee and then loading it with add-ons for new languages and digital editions are long gone. But that doesn't mean you have to charge rock-bottom supermarket prices either.

  • Jim Pickerell Posted Oct 12, 2011
    Steve: The "catch-all" license agreements are certainly intended to streamline publisher admin, but they are also intended to grab all the future rights they can get. If they want those rights, fine, but they should be willing to pay a reasonable fee for them. On my other site (Selling-Stock.com) a UK photographer commented that Pearson just asked for the same rights for another project and they were only willing to pay 15 pounds for use of the image.

    In fact it has been documented in several court cases that the major publisher have printed well over a million copies of several of their major texts and they are still revising and updating them. Check out Photographers vs. Publishers (http://www.photolicensingoptions.com/ViewArticle.aspx?code=JHP2166) and the Changing Textbook Industry (http://www.photolicensingoptions.com/ViewArticle.aspx?code=JHP2167) on this site.

    I'm not sure how many travel books companies are printing, but it is certainly something to look into. On a recent trip to Turkey, I found a book that was being sold aggressively in many shops that had pictures in it that were at least 10 years out of day, given changes in Turkish laws that made some of the things shown in the book impossible to see or do now. Of course there was no publication date on the book. I don't think you can assume that the publishers will be putting together new editions with new pictures when they can make more money continuing to sell the old editions.

  • Roger Ressmeyer Posted Oct 12, 2011
    Nice Post. It's absurd what's happened, considering that the late Steve Jobs, taking the opposite approach, set the price of personal use of one song at ~$1.26, per individual.

    The big distributors might stop staring at each other and mirroring each other out of fear, and just put in prices that make sense. $250/per image/per use was the lowest price I ever charged from 1985-1995.

    You are right that the budgets are such a tiny fraction of the whole, that "just say no" to publisher's demands makes total sense.

    When distributors so closely mirror each others prices', and jump the same direction so closely, isn't that defacto price fixing? Rhetorical question.

    And some pictures are sooooo much more valuable and unique than others. My agency, Science Faction, represents some images that cost $100,000 or more to produce. I could never understand why the big agencies couldn't create a boutique of iconic images at prices that are several times higher, thereby maintaining knowledge among buyers that images are not commodities like TP.

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