Royalty Free at Comstock

77

July 8, 1997

Comstock has become the first major stock agency to offer a line of CD-ROM discs with royalty free images. Their initial offering, called "Comstock Klips", will include five subject-specific discs on: Business, Technology, Lifestyles, Medicine and Suns, Skies and Clouds (backgrounds).

The discs are MAC and PC compatible, contain 104 images and sell for $499 each. Discounts are available if the art director purchases more than one title. The purchase price includes rights for unlimited usage of all the photos on the disc for most purposes. The photos may not be used on items for resale or for any defamatory use.

The file sizes are a 500K thumbnail and a 28MB full size image (compressed to something in the range of 4.5MB).

Comstock has 30 more discs in production and scheduled for release in September. "Within 18 months we will have over 100 discs available in the market," says Comstock chairman Henry Scanlon. Individual images will also be down-loadable via the Web, (presumably at standard rates.)

Future is Combination of Traditional and Royalty Free

Comstock believes the future of stock photography is a combination of "traditional" and "royalty-free."

According to Scanlon, "We've done a very careful study and come up with a conclusion that we're betting on: In a huge number of situations, the best solution for the art director is a combination of 'traditional' and 'royalty-free.' Anybody who's been in this business for awhile knows that there is an ineffable, creatively-charged and absolutely vital relationship between the people who produce photography and the people who then use it to great effect. That essential dynamic isn't changing--it's just broadening."

Comstock to Embark on an Education Process

According to Scanlon a massive education process that needs to take place, and, to a large extent, Comstock's foray into royalty-free is the beginning of that process.

Scanlon warns that there is a great deal of misinformation floating around from both the rights-controlled "traditional" side and the "royalty-free" side. "The traditional agencies have been making the biggest mistake in the book by allowing themselves to be defined by the opposition. Royalty-free providers insist there is never a good reason for art directors to pay for traditional stock--that it is anachronistic price-gouging. Meanwhile, the only thing traditional agencies can think of to do is to try to convince art directors never to use royalty-free and photographers never to produce it. They're both wrong. Each side has advantages and each has disadvantages."

Scanlon refused to provide me with examples of what those arguments might be saying that as soon as he explains it to photographers and stock agencies he will have a "4 millisecond window" to put his ideas into practice before everyone else starts copying him.

Scanlon also pointed out that all the images that appear on the "royalty free" discs will be from new shoots, not culled from the existing files. "We believe the 'royalty-free' user needs a different type of imagery than the 'traditional' user," he said.

He continued, "The art directors are well aware that on most discs they get a few usable images and for the most part a bunch of junk. The product has to be higher quality to keep them interested."

He refused to be more specific relative to the types of images needed by either user type, or to explain how Comstock will make the editing decisions as to which shoot will go to clip and which will go to the traditional files. It seems clear that this will be the critical key as to whether they can build a "royalty-free" aspect to their business and still maintain current levels of sales for their traditional file.

Scanlon says, "Anyone who says 'royalty free' has not had a huge impact on the industry is either asleep-at-the- wheel, or has some other reasons for putting out false information."

Comstock Advantages

One advantage that Comstock seems to have, and clearly intends to exploit, is the trust of their current customer base. Last year Comstock sold pictures to over 40,000 customers. Until now, photo buyers could not trust their suppliers to be honest with them about the relative merits of "traditional" rights or "royalty-free" for any given situation. Since Comstock can offer either option they can afford to be more frank and honest with their customers and they believe the customers will respond positively to such openness.

According to Scanlon, "Many designers have no idea of the pitfalls of royalty-free--and the current royalty-free providers aren't going to point them out...and warn art directors about the huge manholes they can walk into by using royalty-free."

"We have no hesitation telling art directors not only why they should use our royalty free--but why, in many cases, they shouldn't (ours or anyone else's)--because we have five million traditional, rights-controlled solutions when the situation calls for it."

Klips" To Augment, Not Replace, Traditional File

Comstock will continue to aggressively grow and market its traditional, rights-controlled collection offered through their New York headquarters and wholly-owned subsidiaries in London, Paris, Berlin and Toronto. Simultaneous with its initial "Klips" royalty-free offering, Comstock is distributing its latest catalog of traditional, rights-controlled stock images to over 250,000 art directors worldwide.

According to Scanlon, "Let no one think we are making this move into royalty-free from a position of weakness in our main-line traditional business. We are in our strongest position ever with our traditional, rights-controlled collection. Under [Comstock partner] Tom Grill's direction we have been producing a truly extraordinary body of work -- very high-end, incredibly unique and creative images that will be the sum and substance of the 'traditional' side of the business. I'm not spending millions of dollars on our latest catalog with a view towards putting it out of business with royalty-free."

Comstock draws on decades of experience and leadership in the stock industry as it extend its line into royalty-free. Scanlon points out, "We pioneered printed stock catalogs 20 years ago; we were the first agency to distribute our images on CD-ROM; last year over 40,000 art directors gave us the chance to help solve their creative challenges. We consider them not just customers--but friends as well, and if royalty-free has an appropriate place in the overall relationship between photographers and designers--and we believe it does--we intend to be there with a product we can be proud of and that makes sense for the industry."

Web Positioning

Scanlon believes that the Web is the future and is clearly positioning himself for that eventuality. When most users make most of their uses from digital files and their selections from on-line catalogs, Scanlon will be in a position to offer a two tier pricing structure.

Some images from his database will be licensed for unlimited rights and some will be licensed for one-time rights. When that time comes Comstock (and other traditional agencies) should have a major advantage over the clip-photo producers because of their strong traditional file base.

Says Scanlon, "The companies currently selling royalty-free have come into the industry from left field, and don't have a very good understanding of how art directors operate, what they need, and what constitutes a high-quality, professional image. Frankly, they've been dishing up crap. We don't believe the difference between traditional stock and royalty-free should be the quality of the imagery.

"They are intent on accomplishing as big a land-grab as they can, going directly after the traditional market and competing on price and price alone.

"Our goal is to wrest a certain amount of control over the direction of royalty-free from the companies that are currently tilling that soil. We believe we can do that. We believe that in so doing we can be instrumental in creating for our industry a go-forward stock photography vessel that will allow us to navigate these rocky shoals to safe harbor.

"It's our job to make the proper tools available to the marketplace at prices that make sense, and to provide guidance where necessary and appropriate. We've been doing that for 20 years in partnership with designers and photographers throughout the world, and we don't intend to stop now."

Who Are They Targeting

One question raised by some photographers is which market Comstock will be targeting. It is implied by the question that if Comstock were targeting home users, or desktop publishers it might be alright. When asked, Scanlon made it clear that, "We are targeting traditional users which is exactly who all the other royalty free producers are targeting. The other producers are in absolute, full scale attack on this market."

Bahar Gidwani, CEO of Index Stock points out that Scanlon may have some real distribution challenges with this strategy. Index has produced some clip photo discs and also supplies medium resolution files to on-line users at lower prices. As a result he is intimately aware of many of the problems.

Bahar says, "many of the 'royalty free' customers are people that stock agencies don't normally talk to on a daily basis. Henry will have the challenge of building a new distribution network which will not necessarily be the same as his current network. In addition, solicitation of existing clients may not have a revenue positive effect."

It is clear that Scanlon has now legitimized a course of action that other agencies have been discussing. Many would like to head in the same direction, but don't own the majority of their images as Comstock does. It is estimated that 80% of Comstock's images have been produced by Tom Grill or Comstock staff photographers. Other agencies will have a much bigger problem convincing their photographers to supply images for royalty free purposes.