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MODIFY YOUR BUSINESS
January 3, 2002
A New Business Model For Stock Agents
It's time for stock agencies to consider a new business model as an
alternative, or add-on line-of-business to the traditional agency model.
To explain this model it is important to dissect the stock agency business and examine eleven
different activities in which a stock agent normally engages. They are:
1 -- Recruiting photographers and image suppliers
2 -- Initial editing of the collection
3 -- Storing images
4 -- Editing and Research for customers
5 -- Marketing
6 -- Produce catalogs and dupes for distribution
7 -- Negotiating
8 -- Delivering
9 -- Refiling
10 -- Collecting
11 -- Paying Photographers
In the new business model the costs of items 2, 3, 6, 9 are totally eliminated and taken over by the
Photographer and the Technology Service Provider (TSP). The costs of item 1 and 8 are drastically
reduced.
The costs of item 5 are likely to be drastically reduced as some of these costs are borne by the TSP
and the Photographer. However, it is not clear what the final balance of shared costs will be once
this new model is fully functional.
The main work of the Agency in this new model is then focused on doing Editing and Research for the
customers, Negotiating, Collecting and Paying the photographer (Items 4, 7, 10 and 11).
Photographers Seeking New Models
Many photographers are seeing dramatic drops in their stock income. The old agency model is failing
them. They are looking for new solutions that allow them to exercise more control over how their work
is marketed and sold. They want to insure that their work is where it can be found by customers. They
want to be able to better track image availability, and when sales are licensed. And, they are
becoming much more conscious of the percentages various segments of the supply chain extract before
the royalty is paid to the photographer. At the same time TSP's are emerging to assist photographers
with some of these tasks.
Photographers are willing to accept responsibility for putting images into an online database, making
sure the image is properly keyworded, and paying all the fees for maintaining the image in the
database. A certain level of promotion of the database is usually a part of the relationship with the
TSP.
However, TSP's tend to be weak in providing Editing and Research for the customers, Negotiating, and
Collecting. Traditional agencies have a tremendous wealth of knowledge and experience in these areas.
They have relationships with the customers and understand the customers needs. By shedding some of
the more costly aspects of the old agency model and streamlining their operations many agencies
should be able to operate more profitably on a smaller percentage of the gross sale.
Photographers are looking for agents who are willing to handle negotiations and collections for the
usage rights to images they have posted online. In most cases, for providing this service the agent
may retain 20% of the fee collected before paying the TSP their rightful share and submitting the
balance to the photographer. (In some agreements the total would be paid to the TSP and the TSP would
pay the photographer.)
If the Selling Agent only receives 20%, the photographer must have available online, for immediate
download, a file large enough to satisfy the needs of the customer. If it is necessary for the agent
to go back to the photographer to obtain a larger file, or to deliver film, the Selling Agent is
entitled to keep an additional 15% of the fee collected.
When a customer finds a photographer's image he or she inputs their location and the contact
information of the Selling Agent authorized to "negotiate" the sale in that territory is provided.
The TSP does much of the marketing that brings the customers to the negotiator.
The arrangements between photographer and agent would be non-exclusive. Since the agent has no costs
of maintaining files the photographer would be allowed to terminate the arrangement for cause at any
time. Termination would take place when the photographer notifies the agent and changes the
information that appears on the web site. The agent would remain responsible to pay royalties for any
transactions in process at the time of termination.
As part of the agreement the agent would report information relative to each specific license as soon
as the license is negotiated. The form of this information will be specified by the Technology
Service Provider. The agent is also required to provide information as to when the fee is actually
collected and when payment has been made to the photographer. The agent will not be required to pay
any portion of the royalty until the fee has been collected.
Promotion of such a database, would be a separate issue. If the Selling Agent promotes the database
then the agent might receive an additional percentage of the fees from the licensing of the images.
This would be a matter of negotiation between the Photographer, TSP and the Selling Agent.
Getting Started
Selling Stock is developing a list of companies interested to working with photographers and
representing them on a basis similiar to that described above. U.S. photographers, in particular,
need to find companies outside the U.S. that would be willing to represent them. All companies
interested in receiving more information about this business model are invited to contact Jim
Pickerell at Selling Stock by sending an e-mail to jim@chd.com.
Small companies, as well as large, can serve in this role. The principle requirements are that
someone with the company have experience in negotiating stock photo usages, that there is someone
available to assist customers and negotiate during normal business hours, and that the company have a
reputation for honesty.
The major need is for people who have a good working relationship with the customers in their
territory.
Specialists agencies that have relationships with customers in a niche market of the photo industry,
and knowledge of the needs of that group of customers can particularly benefit from this type of
relationship. The TSP's give them access to a broader collection of work at no additional cost. This
should help them better satisfy the needs of their customers.