112
JANUARY 1998 SELLING STOCK
Volume 8, Number 3
©1998 Jim Pickerell - SELLING STOCK is written and published by Jim Pickerell six
times a year. The annual subscription rate is $50.00. subscriptions may be
obtained by writing Jim Pickerell, 110 Frederick Avenue, Suite A, Rockville, MD
20850, phone 301-251-0720, fax 301-309-0941, e-mail: jim@chd.com. All rights
are reserved and no information contained herein may be reporduced in any manner
whatsoever without written permission of the editor. Jim Pickerell is also
co-owner of Stock Connection, a stock agency. In addition, he is co-author with
Cheryl Pickerell of Negotiating Stock Photo Prices , a guide to pricing
stock photo usages.
Story 113
NAFP LOSES FIRST ROUND TO ASSOCIATED PRESS
In early December the National Association of Freelance Photographers lost the
first round in their suit against Associated Press.
NAFP members claim they own the copyright to images which they produced on
freelance assignments for Associated Press. They are seeking a share of the
payments for secondary usages of their images when rights are licensed to
non-members of the AP. AP normally charges a per image fee for such uses.
U.S. District Judge Denise L. Cote dismissed five of six counts in NAFP's claim
against AP, but indicated that copyright ownership claims could still be brought
by specific plaintiffs.
The primary complaint was that AP required the photographers, as a condition of
sale, to surrender copyright and future earnings from the resale of their
pictures.
The fundamental issue in the case was whether AP's legend on the face of every
check transfers the copyright when the photographer endorses the check for
payment.
The legend in question reads: "In consideration of the transfer of any and all
copyrighted ownership in the news materials described above. Endorsement
signifies consent."
Judge Cote dismissed NAFP claims on the grounds that NAFP does not meet the
requirements of legal standing. Given that there will be slightly different
considerations in each plaintiffs claim she concluded NAFP would be unable to
testify as to these agreements and understandings. She held that individual
plaintiff's need to be named in order to provide actual facts on a case-by-case
basis.
"We are disappointed in the ruling," said Kevin Larkin, president of NAFP, "but
we're encouraged to see that the judge does see merit in our claims." The judge
indicated that AP's check legend might not be sufficient to transfer copyright
depending on the understanding of the photographer through all other related
communication..
"The fact that the NAFP does not have legal standing to represent our members
simply means that we will have to re-file some of our charges naming individual
plaintiffs rather than the organization as plaintiff," Larkin continued.
According to Judge Cote's 32-page decision, AP claimed, and the plaintiffs
conceded, that the use of "a legend on a check, may be effective to
transfer copyright under the proper circumstances." This point was
substantiated by case law cited in the decision.
Thus, the key issue in future cases will be the circumstances of check
endorsement as well as any agreements or understandings that were made prior to
receiving the check.
[This case brings to light the fact that there are some instances where a
check endorsement can actually transfer copyright. To the best of my knowledge
the general understanding among non-lawyers in the industry has been that check
legends were not sufficient to transfer copyright. This decision indicates the
opposite may be true.
Therefore, photographers should take care to scratch out all such legends before
endorsing and depositing any checks. Future cases may provide a clearer
understanding of what is and isn't permissible.]
"Although the ruling appears to be a preliminary victory for the AP, we are
confident that freelance photographers who oppose transfer of their copyright to
AP will ultimately prevail on this basic issue now that the court has indicated
individual photographers can prevail on the merits when they demonstrate there
was no intent to transfer copyright to AP," said Paul Hurschmann, NAFP executive
vice-president and a plaintiff in the suit.
Judge Cote also dismissed charges of antitrust, monopoly and restraint of trade
stating in effect that plaintiffs' allegations would establish that AP's conduct
could be detrimental to competitors (i.e. freelance photographers) but not to
competition itself, which is a prerequisite under the law.
A charge of copyright infringement by plaintiff Paul Hurschmann remains under
consideration. A similar charge of copyright infringement by plaintiff Kevin J.
Larkin was erroneously dismissed (AP did not ask for its dismissal and conceded
that it was properly brought).
Larkin's had applied for a copyright registration certificate, but had not
received the certificate prior to the court action.
Judge Cote said that a copyright infringement occurs only if the individual had
acquired a certificate of registration in advance from the U.S. Copyright
Office, and thus dismissed his application.
New charges are likely to be brought by several more individual plaintiffs
seeking a declaratory judgment on copyright ownership under guidelines outlined
in the decision, whereby individual plaintiffs could prevail on the merits of
individual claims.
"It is unfortunate that we must prolong our legal efforts, but we believe that
the law is on our side and we simply need to refocus our charges and our claims
as to what our entitlement to relief should be. This battle is by no means over.
The ultimate ownership of copyright to the images remains to be decided."
For more information and the full text of the decision see the NAFP web site at:
www.worldpics.com/nafp
Story 114
SELLING INDIVIDUAL RF IMAGES
Photographers supplying images to Royalty Free companies, and receiving a
percentage of sales rather than a flat buyout of their images, should examine
their contracts to determine what they will be paid when rights to individual
images are licensed.
This is important because the RF companies are moving very rapidly toward
licensing rights on-line rather than selling CD-ROM's. It may be a few years
before more images are individually licensed than discs sold, but this trend can
drastically change the economics for the photographer.
The current trend is to pay the photographer 20% of the gross sale of the
product irrespective of whether it is a disc, or an individual image. (In fact,
some photographers who have been with some of these companies for several years
will get less than 10%.)
The RF producers claim that at the $70 per image price for unlimited use that
they have to charge, they can only afford to pay 20%. I would argue that they
might be able to charge $100, or more for that on-line use since the competition
- traditional stock - is still priced much higher. They don't seem to think so.
If they charged $100 and paid the creator 30% they would still be making more
per unit sale than when they get 20% of $70. Their argument would be that their
unit sales will go down if they raise the price. I can't quite see why that is
going to happen because the clients still need the images and there is no
cheaper alternative, but that is what their financial projections show.
The interesting thing is that if they do figure out how to raise the price it is
highly unlikely that they will voluntarily rasie the percentage they pay the
photographers.
On the other hand, if they begin cutting the price below $70 to try to increase
market share they are going to want to cut the photographer's royalty even lower
so they can maintain their profit margins at the lower price.
Story 115
SUBJECTS THAT SELL
The principle demand for images that will be used in advertising revolves around
Business and Family Life situations. Concepts that illustrate Business and
Lifestyle principles are also in high demand.
Our agency, Stock Connection, focuses our marketing and promotion toward the
advertising community. Our sales by image type over the past three years are
the following percent of total dollar volume. (In general, these figures may
hold true for many agencies that sell primarily to the advertising market.
Agencies that concentrate on selling to the editorial market will have a much
different experience.)
Business 8.80%
Communications 1.70%
Housing 3.13%
Industry 2.19%
Medical 1.82%
Money & Banking 1.86%
People w/Computers 1.47%
Technology 3.57%
Transportation, roads 7.91%
Cities, skylines 2.14%
34.59
Concepts 6.54%
flags 3.18%
Abstracts & backgrounds 5.09%
14.81
Lifestyles 12.33%
Children 3.30%
Recreation, sports 8.63%
Travel 5.61%
29.87
Animals 4.65%
Water 3.45%
Sunsets 1.37%
Mountains,trees,desert 1.90%
Landscapes, other 3.19%
Nature 2.78%
17.34
Agriculture 1.29%
Disasters .51%
Editorial .17%
Education .67%
Other
(bridges,architecture, etc.) .90%
If we add to the concepts category: water, sunsets, deserts, clouds, fireworks,
roads, money, as well as still lifes in other business categories, we find that
better than 35% of our sales are for concept illustrations without people.
Images that illustrate the following concepts are always in demand: caring,
change, communication, elated, elderly, endurance, fast start, fresh,
futuristic, good life, graceful, happiness, healthy, joy, love, new technology,
power, risk, romance, security, simplicity, speed, strength, success, teamwork,
time, wealth, working together.
If you would like a free list of 200 concepts that are often used in advertising
send a self addressed stamped envelope to: Jim Pickerell, 110 Frederick Avenue,
Suite A, Rockville, MD 20850.
Story 116
SALES BY CATEGORY
Alfonso Gutierrez of A.G.E. Fotostock in Spain points out that worldwide there
are 10 big market segments and he defines them as: (1) Publishing, (2)
Decorative uses, (3) Advertising, (4) Packaging, (5) Calendars/Prints/Posters,
(6) Travel brochures, (7) Toys/Games/Puzzles, (8) Editorial, (9)
Music/Multimedia and (10) Miscellaneous as a final container for all other
unclassifiable uses.
Some of these market segments tend to get most of their images from catalogs and
others tend to rely on classic file searches. Certain of these categories are
more likely to use Royalty Free than others.
One of the things that interests me about this is that I believe our "segments"
here in the U.S. are much different from those in Europe. For the sake of
argument I would define the U.S. segments and their relative economic importance
in terms of gross sales in dollars as follows:
Print Advertising 20%
Brochures and catalogs of all types 35%
Non-publication Advertising
packaging, billboards, posters, POP 10%
Books - Textbooks & tradebooks 10%
Consumer Editorial Content in Magazines 15%
Corporate Editorial and other internal uses
Desktop Publishing, PR, a lot of
Internet use 5%
Calendars, Prints, Posters, Toys, Games
Puzzles 3%
Miscellaneous 2%
Different agencies are going to have different experiences depending on the make
up their files. Some agencies focus on selling to certain segments of the
market and pay less attention to others.
My guess is that the numbers for the market in Europe are totally different from
the U.S. percentages I have outlined above. The percentage in dollar volume for
Consumer Editorial is probably much higher and for Brochure use much less.
Calendars, Prints, Posters, Toys, Games, Puzzles, Music and Multimedia combined
represent a very small segment of the U.S. market while Alfonso has list them as
three of his ten segments.
I would be interested in comments from anyone in the U.S. or overseas who has
statistics that might prove or disprove my theories.
Accurate data would help everyone if we could find some ways to get accurate
comparisons between the relative economic importance of the Editorial market,
the Advertising/Brochure market and all the rest in various countries or parts
of the world.
In choosing an agency it is important for a photographer to understand the areas
where the agency tends to concentrate their marketing efforts, and to make sure
that this fits with the kind of material the photographer plans to produce.
The way we edit for the file, the way we handle requests and the way we
advertise and promote are very different for the Advertising and Editorial
markets. While most stock sellers make some sales in both markets, they also
tend to concentrate on one area or the other. I believe it is important to
allocate costs to each market area, and measure those costs against the returns
from that particular market.
Story 117
NEW ASMP HANDBOOK
ASMP has produced a new handbook called, "ASMP, Professional Business Practices
In Photography," that will be useful to every professional photographer, and
particularly
stock photographers.
This 400 page book has 124 pages that deal specifically with stock photography
issues under the heading of "The Business of Stock Photography."
ASMP has pulled together information from a number of industry leaders
including: Craig Aurness, David Barnes, James Cook, Jon Feingersh, Paul Henning,
Barbara Roberts, Richard Steedman, Vince Streano, and Susan Turnau. This book
is available through Alworth Press in New York at 212-777-8395 for $24.95 plus
P&H.
The sub-headings such as: Getting Into Stock, What Makes a Good Stock Photo,
Subjects that Sell, Choosing a Stock Agency and the articles by the various
experts are not well indexed so it takes a little digging to get to the meat of
what this book has to offer stock photographers. Nevertheless, it is worth the
trouble and the price.
Story 118
TIME-LIFE SYNDICATION
Time/Life is making an attempt to formalize the syndication arrangements with
their photographers by asking them to sign a letter of agreement concerning
re-use rights.
According to Debra Cohen, manager of Time/Life Syndication, the purpose is to
determine which photographers would like to be represented by Time/Life and
which have other representation arrangements. Agreement to use the Time/Life
Syndication service is not a condition for getting future assignments from any
of the Time/Life publications.
One phrase in the agreement has confused some photographers. It says
photographers will receive a 50% net split of the income from a sale (after
payment of all applicable direct expenses of the sale including commissions.)
Ms. Cohen says the language in the parenthesis is only meant to refer to
situations where foreign agents negotiate the sale. In such cases the foreign
agent would take a normal selling agent percentage (40% of gross) and the
remainder would be split 50/50 between Time/Life and the photographer.
This is similar to the arrangements most stock agents have with their
sub-agents, but photographers might want to negotiate a clarifying sentence
before signing the agreement.
Given the recent tendency of foreign sub-agents to insist on 50% of the gross
sale, rather than the customary 40%, photographers might want to write in a
clause that says, "under no condition will the photographer receive less than
30% of the gross fee paid by the client for the usage."
We discussed this percentage split issue under "Photographer's Contracts" on
page 5 of the September issue of Selling Stock.
Story 119
RIGHTS CONTROL AND RF
Paul Light had some questions after reading Henry Scanlon's major piece on
Royalty Free photography. This article first appeared in PDN and the full text
is available on Selling Stock Online Story #106 in the
Archive. Other photographers may be confused by the same issues.
PL - What is a rights-control database? I understand the basic idea, but
would like to know more about this?
JP - As I understand the way this term is used by Scanlon a
"rights-control database" would be any image database where rights to use images
found in the database are licensed through a fee structure based on usage. This
is the opposite of the "royalty free" philosophy where a one-time (usually low)
payment gets the purchaser unlimited use of the image, forever.
Prime examples of "rights-control database" are Stock Workbook Online
(www.workbook.com) or Stock Market's database at (www.stockmarketimages.com).
Users can locate images by using the database, but to license rights they must
call the stock agency representing the image and negotiate a fee based on usage.
Rights control is any database where there are limits on usage (see Survey
story).
PL - Should we all be thinking about taking some of our less than the
best stock images and marketing them as RF images?
JP - There are two questions here. Yes, we all should be thinking about
marketing some of our images as RF. But, it is probably not worthwhile to try
to put your "less than the best stock images" on such discs. More and more it
is becoming clear that the quality of images that are selling as RF is the same
as the quality of those appearing in print catalogs. RF producers are not
interested in less than your best.
If you find a disc producer who will put your "seconds" on his disc, the discs
probably won't sell well. If you are being paid a royalty the only way it pays
off is if the disc becomes a good seller. The whole idea that was originally
expounded that clip discs were a way to sell some of your lesser quality images
has never proven true.
When Getty and PhotoDisc merged (see article 105 online) we learned that
PhotoDisc's average earnings per image on their discs in 1997 will be about
$800. If you can get 20% of that figure and you are only averaging $1.00 per
image in the general file of any agency it may be worthwhile putting a good
image on a royalty free disc to try to get $160 per year. But also keep in mind
that we know of several PhotoDisc photographers who are not achieving this
average.
On the other hand, the average figures from the images of TSI's Master Dupe
Collection a year ago were $1,340 per image with the photographers getting 38.5%
or $511 per image, per year.
If there is any chance of getting select image from a general file in a major
catalog, or a major master dupe collection, it is probably better to keep it out
of RF.
Yes, you should be thinking about it, but the decisions are not easy.
PL - Can small agencies and individual photographers even be players in
the RF portion of the market?
JP - Index Stock put some images on RF discs for some of their
photographers four years ago. As far as we know they may still be doing it. We
have no idea what the return has been. West Stock was a small agency when they
started putting images for their photographers on the early PhotoDisc products.
They are certainly a much larger agency now, and many of their photographers
have done very well.
To be successful in Royalty Free it takes huge marketing expenditures. So far
the only companies that have shown much success are those that distribute a line
of discs rather than one or two.
The small agency probably can not be successful producing one or two discs and
trying to market them itself.
Story 120
FAULKNER SUES GEOGRAPHIC
Douglas Faulkner, Louis Psihoyos and Matrix International as agent for three
other photographers have filed suit for copyright infringement and breach of
contract against National Geographic Interactive, National Geographic Society,
Eastman Kodak Company, Hammacher Schlemmer, Inc. and Mindscape, Inc. in U.S.
District Court in the Southern District of New York.
The action has been brough in connection with the release in September of "108
Years of National Geographic Magazine on CD-ROM."
At least thirty other photographers have retained counsel and are either in
discussions with National Geographic or exploring their options to bring
separate actions. One group has been organized by Jim Pickerell and interested
parties can obtain more information by contacting SELLING STOCK.
Pickerell has identified more than 1,300 photographers who have had one or more
pictures published in the Geographic between between 1986 and 1995. It is
believed that each has a legitimate claim for compensation. It is estimated
that more than 5,000 photographers who are still alive have images on these
discs.
Story 121
SURVEY
This issue contains a survey that will look at photographer attitudes toward the
marketing by stock agencies of royalty free products as well as the general stock
photo income trends of individual photographers.
Please respond to the ten questions printed at the bottom of this story.
One part of the "Royalty Free" issue that has been difficult to frame into a
Yes/No question is how agencies can effectively compete with the RF sellers for
that segment of buyers who are purchasing RF discs. This becomes more critical
as RF sellers begin licensing individual usages on-line.
Many agencies believe that a majority of the buyers purchasing RF discs would be
willing to pay a royalty (after all they are paying for the disc) if the price
for the usage were somewhat lower than traditional prices. But, no one has
clearly defined how much lower that needs to be.
The buzzword for this lower pricing has become "Royalty Lite." (The term
Royalty Lite is a registered trademark worldwide of WestLight. Digital Vision
in the UK has also said they are trying to register this as a trademark.
Consequently, I will use the term "Low Royalty" to refer to this concept in the
future.)
PhotoDisc is already charging a low royalty of $69.95 for unlimited use. I
believe most stock agencies are thinking in terms of a somewhat higher price
point, plus some restrictions on print run. The general thinking is that many
buyers would be willing to pay a slightly higher price (some say as much as
$250, which is the average cost of a CD-ROM disc) if they can get unlimited use
for their particular project.
Since most RF buyers are working on projects with small press runs there are
probably some acceptable limitations for "low royalty" that would enable it to
work in conjunction with traditional pricing formats.
One of the nice things about the LR system is that the usage is known and
limited. Therefore, higher restricted use rights might be sold to someone else
in the future.
This raises the next question. Should the "Low Royalty" files and the
"Traditional" files be kept separate, or is it possible to handle the images as
one file and simply license certain uses at lower rates?
There is no indication that there is any solid agreement among agencies as to
how best to approach this issue. There is a consensus that something needs to
be done to try to recapture clients who have gone to RF. In the near future,
expect to see several agencies begin to define strategies for dealing with this
problem.
In addition to responding to the survey questions we would appreciate any comments
or opinions you might have relative to the avove issue.
STOCK SURVEY
(This survey is designed for photographers and should only be answered by those who
produce images. Stock agents, please do not answer.)
1 - Are you represented by a stock agency?
No Yes, One agency Yes, More than One Agency
2 - Do you have any photographs in a print or digital catalog?
Yes No
3 - Did you get as many images in catalogs in 1997 as you did in 1996, or in
previous years?
more than previous years less than previous years about the same
4 - How did your production of new stock images in 1997 compare with previous
years?
greater than previous years less than previous years about the same
5 - How did your gross earnings from stock images in 1997 compare with previous
years?
greater than previous years less than previous years about the same
6 - In what range was your total income from stock in 1997?
[ ] less than $10,000 [ ] $100,000 to $150,000
[ ] $10,000 to $20,000 [ ] $150,000 to $250,000
[ ] $20,000 to $40,000 [ ] $250,000 to $400,000
[ ] $40,000 to $70,000 [ ] over $400,000
[ ] $70,000 to $100,000
7 - Have you allowed any of your images to be used on Royalty Free Discs?
Yes No
8 - Would you be willing to put some of your images on a Royalty Free disc if
you were given the opportunity?
Yes No
9 - Do you think your stock agency should be involved in producing and marketing
some type of Royalty Free or Low Royalty product?
Yes No
10 - Are you satisfied with your current agency relationships?
Yes No
Please return this survey to:
Jim Pickerell, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, Fax:301-309-0941
Results: The results will be published in the March 1998 issue of Selling Stock
Story 122
NEW PACA MEMBERS
PACA has announced that the following companies have been accepted for
Provisional Membership in the association and that Viewfinders of Portland, OR
has been accepted for Pre-Provisional Membership in the Picture Agency Council
of America.
The provisional members are:
Allsport Concepts Pacific Palisades, CA
The Bridgeman Art Library New York, NY
Digital Stock Corporation Encinitas, CA
Folio Washington, DC
Laughing Stock Southboro, MA
Motion Picture & Television Archive Van Nuys, CA
Michael Ochs Archive Venice, CA
Photo Resource Hawaii Kailua, HI
Reflection Montreal, Quebec
The Stock Connection Rockville, MD
The Stock Rep New York, NY
Weatherstock Tucson, AZ
PACA Members complete an extensive application procedure. It is the desire of
the association to assure contributors and clients alike that PACA membership is
a sign of the members' commitment to ethical business practices and the
protection of intellectual property. In order to do that, we are advising all
contributors of the following information.