| WHAT’S UP WITH THE
STOCK MARKET, AND HOW
CAN WE EARN A FAIR RATE OF RETURN?
BY Mark E. Gibson
Normally I’m fairly optimistic, but these days
I’m having
difficulty maintaining a positive outlook on the stock photography
business—or more specifically, profitability for the stock
photographer. I entered this business in the late 1970’s
and enjoyed annual, double-digit expansion during the 1980’s.
Now, however, I’m
afraid that the pendulum is swinging dramatically in favor stock
agencies at the expense of the photographers, who, ironically,
are the creators of the unique images upon which the agencies depend.
Some
economic indicators of where the stock photography business is
headed are:
Oversupply of images – The number of new stock photos offered
into the marketplace each year is huge, resulting in a serious
glut of images. If market demand does not expand proportionately
to the
growth of the supply, simple economics predict that the value of
each image or sale will decrease. This gives stock agencies unprecedented
bargaining power over their contributing photographers.
The net results are:
- agencies can obtain photos from photographers who agree
to
lower commission percentages (i.e., less income) and more restrictive
contracts,
- the number of photos selected from submissions is steadily
declining,
- charges to photographers for advertising subsidies
are increasing, and
- the quality standard for new images selected
by agencies is ever increasing.
Increase in Royalty-Free images -
The relatively new royalty- free (RF) business model offers the
image buyer fewer restrictions and lower costs than the traditional
rights-controlled (RC) model due to
the lower, one-time commission paid to the photographer.
Stock photographers must struggle with whether to accept
lower RF rates, or optimistically hold on to the principles of
RC. Industry experts state
that the RF market is expanding while the RC market is flat,
or even declining. What this means is that photographers
and agencies dealing exclusively in RC images will be ‘priced
out’ of the market. That
being said, we copyright holders need to be careful about
where this trend is going—
- In the
1980’s, rights for stock photography were tightly
controlled by the photographer
- The 1990’s saw the introduction
of mass marketed RF images with practically unlimited usage
rights
- In the new millennium, we’re seeing
the proliferation of higher-quality RF images gradually displacing
the Rights
Managed business model
- Projecting to 2015, I
see the possibility of photo buyers awash in piles of cheap images.
Even though photographers may hold
onto their copyrights, the
photographs may be relatively worthless.
I think the only way we can slow this dilution
is to tightly hold the image rights and
obtain top dollar for their use,
even though
competitive pressure is making this increasingly difficult
to do so.
Increasing technology component in photography – Digital
technology has increased the photographer’s
costs because now we must become digitally savvy—which
requires a significant time and money investment—in
addition to being proficient in the art of photography.
I estimate that my wife and I combined spend about four
hours a day dealing with the technology aspect of our
business—something we weren’t
required to do five or more years ago—yet our income
hasn’t changed
significantly. The net effect is we are working harder
and longer just to earn the same amount of income.
Crisis in small to medium
agencies – I believe
that small- to medium-sized agencies embraced digital
technology too late to
retain both their clients and market share. As a result,
they are struggling with reduced sales and cash flows,
while two corporate-level
agencies control the lion’s share of global stock
photography sales.
At no time since entering the business
have I had so many agencies that are behind in their
commission payments.
Currently, I have
one agency that owes us more than $20,000, and another
one that is paying
me right now for sales invoiced in 2001. Despite promises
from delinquent agencies, I believe we may never see
some
of our commissions.
Further evidence of this crisis
is the hundreds of sheets of slides returned to us from more
than a dozen
small
to medium
agencies
that have gone under in the last five years.
Despite
the doom and gloom
in the marketplace, our stock sales are as strong
as ever, and I attribute this to a number of factors:
Aggressive shooting and selling -
We produce about 12,000 new photos a year down from 20,000. But,
these days we spend
5% of our time shooting and 95% of our time
selling. (It used to be 20/80).
Building our online image catalog/database
in 2000 - Telemarketing to regular
clients and for new clients used to be essential, now our regular
clients find
their images
on our
web
site, and new
clients find us via search engines. Our site
has 26,000 photos, and we add about 6,000
per year.
We concentrate
on the diversity
of subjects
before we build depth in any one category.
Our film library of 125,000 slides serves
as a huge
reservoir
from which
we can pull
to quickly
add images to the database.
We’ve engineered our site to
ensure that we rank very high in stock photo search results
onsearch engines - we get a couple new clients every week this
way. Also, we now buy very little advertising
or print directory space.
Not wasting time on inefficient workflow
and business activities that are
not cost effective - Our “Ma
and Pa” operation
is a finely tuned machine that usually
purrs along with a continuous stream
of shooting, slide
editing, scanning,
uploading,
marketing,
and office administration. Keeping
things simple and well thought out
allows us to
achieve a 75%
profit margin,
and
our total
combined office time averages about
50 hours a week.
Great client relations
have NEVER been more important than in today’s
stock photo market -
We make absolutely certain to treat
each client with the utmost care
and personal
sincerity. Many of them tell us
they do not enjoy the fully automated
e-commerce stock sources, so we create personal relationships
with and commitments to them. If
they also find the photo they need
in our files, it’s
a win-win situation, and they become
repeat customers.
Some tips for shooters wanting
to enter the stock photo market:
- Find a niche subject/concept
you like and become prolific
and well
known
for this imagery.
Ideally
it will be
an area that
is not already
super-saturated in the
market (like sports, guys in ties,
generic business,
etc.).
*Go digital
now. The
learning curve
for computer
hardware and software requires
time, energy, and money
to ascend. Then
you also have
to learn about
the stock
photo market
and
position yourself to be
very accessible and appealing. The
market is already
there, and it’s moving
ahead, not waiting for
any individual photographer.
- Use
an online database for
your images that you
can continually grow and improve
instead
of a browser
format,
which is
simpler and cheaper,
but too amateurish. For a professional
presentation,
you
can find great examples
at nearly
all of the stock agency’s
web sites. In the long
run, a database structure
is more
efficient
and client-friendly.
- Squeeze
every last bit of potential
value out
of all of your images.
We are selling
20-year-old Kodachromes
that,
as slides,
never would
have sold. Yet after
careful
treatment in Photoshop,
many of them look
like they were
made yesterday.
Breathing
new
life into
old
images is a lot less
expensive than reshooting.
In the future,
the successful
stock photographer
will be digitally savvy,
creative,
and run a business
that minimizes the expenses
of time and
costs while
it
maximizes
profits. Not really
different from what we all are
trying to do today,
just a whole
lot better
by necessity.
The
quality of
the
business
will make the biggest difference, not the quality of the
photography. |
