How do you monitor usage to make sure the client isn't making more use than they paid
for?
Clearly, photographers are going to need help if they want to maximize the sale of their
work overseas. At the moment there are basically two options -- Getty and Corbis -- with an
infrastructure in place capable of effectively marketing worldwide. On the other hand there
are well known disadvantages to dealing with Getty and Corbis that I won't take time to
enumerate here.
Will there be a third, fourth or more choice, and when? There are PictureQuest and Workbook
in the U.S. with sites that consolidate the work of many agencies, but so far neither of
these companies have much reach outside the U.S. There are foreign agencies with sites, but
most of them don't sell much in the U.S. There are lots of options in the planning stages,
or the early stages of development. Before the end of 2001 photographers will have many more
choices.
What U.S. photographers need is strong representation in the U.S. and some type of
affiliation program that will allow their work to be agressively marketed and licensed in
other parts of the world. One solution is for photographers to make their own separate
arrangements with many different agencies throughout the world. The other solution is for
the photographer's U.S. agency to make such arrangements on the photographer's behalf.
It is highly unlikely that the perfect solution is going to present itself and be obvious to
everyone. Most photographers will need to simultaneously test various options for a period
of time in order to settle on what works best for them. This probably means that
photographers need to be more agressive in seeking image-exclusive, or non-exclusive
relationships as they move ahead.
Online Sales And Nothing Else
Don't lock up your images so they can only be sold on-line. Some on-line operations want
the photographer to give them image-exclusive (with similars) which means the image can't be
made available for sale in any other way, but on-line. This is probably not in the
photographer's best interest at this time.
After the first two quarters, Getty Images is on a growth track to have about $170 million
in sales in the year 2000 that resulted from on-line search. For the most part, on-line
delivery was also supplied with these sales. This should represent about 36% of Getty's
total sales for the year. Add in the sales made by Corbis, PictureQuest, the agencies
represented on Workbook and individual agency sites around the world, and I estimate that
the gross sales worldwide in 2000 that result from on-line search will be in the
neighborhood of $250 million, or 18% to 20% of the worldwide sales.
Every stock photographer ought to be involved in devising ways to market their images
on-line. But at the same time there is still a huge demand for analog material and most
people in the industry believe that is likely to continue. Photographers need to position
themselves so their work can be available in both the digital and analog environments -- at
least for a while.
Certain types of users -- textbooks for examples -- may rely on analog files, and their
depth, much longer than hard news users who have greater need for speed, and for whom image
resolution is not as big an issue. Unfortunately, many of the current digital options focus
exclusively on digital at the expense of analog.
Why Photographers Need Foreign Agents (Sub-Agents)
The material above provides a general summary of why photographers will need agents to
handle marketing and sales of images in on-line catalogs when these sales are being made
outside the photographer's local area. The following will explore, in more detail, many of
the reasons for this continuing need. It should also make clear that foreign sub-agents are
legitimately entitled to a significant share of the usage fee they generate.
Language and Time. Probably the most important service the foreign agent provides is
having someone available for the customer to talk to in their own language and their own
time zone. Particularly during the early adoption phase of on-line usage there needs to be a
lot of customer education. They will need help in learning to navigate the site and use its
various features effectively. With constant software upgrades this is likely to be a
continuing need. Customers may also need larger scans, next day delivery of film, or other
special services.
Frequent buyers may need less support as time goes on. Infrequent users are likely to need
help every time they enter the system. Even large publishers who buy lots of images may
have staff turnovers that require continued training and support for new users. The
customer wants to be able to talk to someone when they have a problem. Preferably it is
someone local and someone they know.
Consider the problems an English speaking seller will have in trying to make a sale in
another country; where another language is spoken; where there are different business
traditions; and where there are different attitudes toward copyright.
Research. Many buyers will want someone to help them with research and e-mail
thumbnail catalogs of selects. This will be particulary true when the image was originally
keyworded in English and the customer's native language is different. Yes, it will be
possible to use other languages for searching, but not every language.
In certain specialty areas, having researchers with expertise in the field is of great
value. This is the kind of support niche agencies have always provided. A few examples of
subject matter where special expertise is invaluable are: automobiles, aviation, food, fine
art, history, medicine, biology, education, wildlife, underwater, travel location, religion,
theater and dance, sports, dogs, cats, horses, science, etc. Many buyers need more
information than captions provide. The chance that a sales person in a large impersonal call
center is going to have this knowledge, or have any idea how to get it, is slim.
Keywording. English keywords may not translate conveniently. If you think the
Internet is going to easily solve this problem then you ought to read "Hello World" in the
May 2000 issue of Wired Magazine. This article is available on-line (in English, of course)
at http://www.wired.com/wired/archive/8.05/tpintro.html. This in depth study is must reading
for anyone who thinks translation of keywords into other languages will be a snap.
Basically, the more images in a database, the more complex the keywording must be. The more
likely there will be a communication breakdown in translation. Good keywording is
necessary. But there will be users who need aid in the search process, particularly when the
language of the searcher is different from that of the keyworder.
The sales and marketing system that doesn't take this problem into account in its basic
structural design is likely to eventually fail -- even if it makes a fast start.
Marketing. Foreign agents know the local buyers. They have the best lists of
potential customers. They also understand what marketing strategies work with their
customers. These strategies tend to be different in every country, and among various user
groups. It is important to understand these distinctions if you want to reach a large user
base. It is important to adjust your marketing to local conditions. U.S. photographers, and
for the most part U.S. agents, will need to develop marketing relationships with local
foreign agents, rather than trying to market in other parts of the world themselves.
Catalog marketing is changing. Getty Images is producing catalogs that are physically
smaller and often on specialized topics. They mail more frequently rather than just mailing
one major catalog a year. Catalogs may become more positioning pieces designed to draw
buyers to the Web, rather than to sell specific images in the catalog.
Other means of advertising and promotion may become as important, or more important than the
print catalog. If possible, photographers should participate in and test several different
marketing strategies in this transition period for the industry.
Negotiation. Most U.S. buyers use Royalty Free images for many purposes. This is
likely to be true worldwide in the not too distant future. Thus, with fewer opportunities to
negotiate, each negotiation takes on greater importance. It is critical for the seller to
speak the buyer's language, understand local customs and laws, including the local
understanding of copyright and to have experience in licensing rights.
This is particularly true when it comes to complex advertising sales where the picture will
be used in a variety of magazine ads and collateral uses.
Restricted Use. Some customers are willing to pay large fees to restrict competitors
from using an image during the duration of their license. Such uses need to be carefully
negotiated and monitored.
Defining Terms For The Customer. It is becoming more and more important to carefully
define terms with the customers before delivering images. The existence of royalty free is
causing many customers to believe that any time they pay a fee, no matter how small, they
have unlimited rights to use that image forever. Those who are licensing specific usage
rights need to get that understanding in writing before they allow customers to download
their full size image files.
With fax machines this is relatively easy. You get the client to sign off on the terms
before you make the delivery. But, the discussions and the writings must be in the buyers
native language. If these kinds of details are taken care of in the "negotiating phase"
there are often a lot fewer problems in the "collection phase" of the sale. I will discuss
collection problems a little later.
Large Users. Certain large users, like book publishers, prefer to deal with agencies
that can supply them with a broad cross section of the imagery they need. This can reduce
the publisher's administrative costs. Often the publisher is able to negotiate per image
discounts based on the quantity of images they are buying. Smaller agencies and individual
photographers are usually locked out of the chance to make sales of this type.
This method of selling has advantages and disadvantages for the photographer. Photographers
should try to understand how the agency's pricing and discount strategies work, and
carefully weigh the benefits of participation. There is a potential for volume sales but at
lower prices. It is not always clear that the individual photographer benefits enough from
the volume to justify making the images available at lower prices. On the other hand,
holding out for higher prices and giving up the opportunity to participate in this market
can be frustrating.
Usually, the agency has a particular strategy and photographers are only given one choice.
The only option open to the photographer is to move to a different agency. However, in the
Internet environment it is technically possible for each agency to offer photographers
greater flexibility and to allow each photographer to make certain images available to the
Large User (Bulk Sale) market and restrict others to the high end market only. It will be
interesting to see if some agencies offer such options as Internet marketing develops.
Model Releases. Customers may need to check releases to determine if they adequately
cover the use. In some countries laws vary as to when releases are needed to publish
pictures of public buildings or private homes. France has new laws that protect the privacy
of individuals photographed in news situations and photographs used in news publications.
Going by U.S. law because you produced the picture in the U.S., or are selling the picture
from the U.S. may get you in trouble. Various professional organizations are trying to find
ways to identify divergent rules and harmonize the rules internationally, but it may be
quite some time before such "harmonizing" becomes a reality.
Collecting. If all payments are not made by credit card at the time of the sale
(unlikely) someone needs to collect funds in the local currency. Collections in the stock
photo industry can be difficult in the best of situations. They often become impossible if
there is no one locally to provide systematic follow up. The goal is not just to get images
used. The goal is to get paid for the use of images.
As part of this process it is important to establish the credit worthiness of a client
before the image is delivered. Get a faxed signature on a delivery memo before supplying the
high resoultion file. It is important to also recognize that you are not even safe when you
are paid by credit card. While stolen credit cards are used in only 1.2% of all Internet
sales, e-tailers are ten times more likely to be ripped off by credit card buyers than
bricks-and-mortar stores who are able to get signatures from their customers and check ID's.
Stolen cards are much more likely to be used to purchase consumers products than for
business-to-business transactions. Nevertheless, Deborah Williams of Meridien Research told
USA Today that as much as 26% of on-line sales made by some sporting goods and clothing
e-tailers are fraudulent. Other vulnerable web sectors are computer hardware and software,
electronics, music and games.
In the U.S. there are on-line sellers in the stock photo industry who have as much as 20% of
the sales they invoiced six to twelve months ago still unpaid. Much of this is likely to
turn into bad debt. Part of the solution to this problem is more attention to detail in the
negotiating phase of the sale and persistent follow up.
Why might this problem be more prevalent on-line than in the traditional system of personal
negotiation? First, in the personal negotiation process you build a relationship with the
client and you work out a clear understanding of the rights your licensing for a particular
price, before the image is delivered. With on-line there may be too much pressure to say yes
to everything and quickly close the deal. Every image is different, every use unique and
there can be endless variations. It takes time to negotiate a sale properly. Often the
people assigned to buy images are clerks, not experienced art directors. They often need a
lot of education (through the negotiating process) as to why we are asking for a particular
price, and what the industry standards for such transactions are.
If a little more time is spent during initial negotiations nailing down certain details, a
lot of aggravation in collection can be saved later. Assuming that foreign buyers are no
more or less honest than those in the U.S., photographers can benefit greatly from having
local representation.
Some Internet marketing systems are designed to eliminate communication as much as possible;
to make it easy for the buyer to get something he or she wants; and then collect, if
possible. The more automatic the sales process becomes the more likely photographers will
be giving away uses for no fee through bad debt.
Monitor. It is helpful to have someone to monitor usages. Without such monitoring, or
its threat, there will be a great temptation to make uses beyond those licensed. In some
cases legal action will be necessary. That is only practical if the action is brought in the
country where the sale and usage took place.
Legal Action. This doesn't happen often, but the fact that it does happen encourages
buyers in general to be honest. In the marketplace, there is a constant need to pile
contract provision on contract provision and clause upon clause to try to protect one's
rights.
One thing that agencies can usually do better than photographers, because they have the
manpower and more incentive, is keep up with industry developments and changes that need to
be built into the paperwork and processes. One of the ways they do this is through
participation in trade associations.
All things considered, it is not even a close call as to whether you need a foreign agent
representing your interests. By now it should be clear that any photographer who wants to
sell outside of his or her local territory needs a representative in every region where
sales are to be made.
Double Dipping
Many photographers who have listened to the mantra of the Internet gurus, and believe that
the Internet should be eliminating the middleman, are beginning to get much more upset about
"double dipping" or the situation where a parent agent in the U.S. makes arrangements with a
foreign sub-agent to handle sales for them in a particular territory overseas.
This is particularly distasteful and hard for photographers to accept when the foreign
office is wholly owned by the parent. Photographers want to receive the same percentage of
the "gross fee paid by the customer," no matter where the sale is made.
Nevertheless, there are legitimate reasons for why the costs of marketing and selling will
increase as the sales chain from producer to buyer gets more complex. If a photographer is
producing something in San Francisco and selling directly to a customer right around the
corner there is a much less complex sales chain than if that same photographer is trying to
sell to someone in Greece who he has never met and knows nothing about -- and if the
photographer hopes to collect for the use of his image.
I have outlined above all the things the selling agent does to earn his share of the fee.
Depending on the specifics of the situation the Primary Agent or the Parent Agent certainly
has less costs in making overseas sales than when that agent makes sales in their home
territory direct to clients. The parent agent is not involved in the negotiation or the
collection of the sale. Thus there may be an argument that the Parent agent is entitled to a
lesser share of the fee.
The parent agents participation in the foreign marketing may be less. The parent does have
the additional costs of putting together a network of foreign agencies and making sure they
are the most efficient operators in a particular country. The parent agent also has to make
sure funds are transfered properly and that photographers are paid promptly.
The foreign selling agent is involved in the most critical work. There is an argument that
the Primary agent has less invested in the foreign sale than in a local sale and thus should
take a lesser percentage. On the other hand even if the prime agent's percentage stays the
same they are earning less in real dollars because it is calculated on the remainder after
the selling agent takes their percentage. As we move from analog selling to digital selling
there may need to be some adjustments as to which group receives what percentage of the
gross sales, but clearly all parties -- photographer, prime agent, foreign sub-agent -- are
still providing necessary and important services, and each must be compensated.