A couple weeks ago I proposed an adjustment to current agency pricing strategies that offers the potential to get higher prices for the images in greatest demand and still make large quantities of excellent images available to customers who can’t afford the best. (See “
Solving The Problem Of Too Many Images”)
Chuck Cecil commented, “Popularity alone cannot be the sole factor used in arriving at price.” and went on to point out that production costs should be taken into consideration.
I totally agree that productions costs are a major issue for photographers. In the long run they are also a problem for agencies. Eventually, photographers will stop producing many of the images customers want to buy because they simply cannot cut their costs enough to afford to continue to produce and realize a profit. That is already happening for a lot of photographers producing images of a wide variety of subjects. And it will get worse. But, so far it is not a serious enough problem for agencies that they feel a necessity to modify their approach.
The agencies believe there will always be enough amateurs producing images that will satisfy the needs of their customers, The amateurs aren’t worried about profits. They are happy to produce images even if they lose money in the process.
The Problem In Factoring Cost Into The Equation
As far back as I can remember stock agencies have never taken the costs of producing images into account. Back in the 60s, 70s and to some extent 80s stock images were for the most part outtakes from assignments. It was expected that the costs had been covered by an assignment. Stock income was a supplement to the income earned from the first use.
Photographers started shooting stock on speculation when they realized they could make enough from stock sales to more than cover their cost of production. This was a time of high demand for stock images and relatively low supply. It was also a time of high prices for stock images. Today we have totally the reverse – astronomical supply, relatively low demand and usage fees declining every year.
There was about a decade where demand exceed supply enough that if a photographer consistently produced good quality images he could be reasonably sure that they would sell often enough that he would recover his costs in a fairly short period of time.
It has always been the attitude of stock agents the they will try to get the best price possible for the images they accepts, but
they will never turn away a sale. There are rare exceptions where they will say no because the price offered is too low, but for the most part that never happens.
In fairness to the agent it is almost impossible for them to have even a remote idea of what it costs to produce a particular image. You can’t look at most images and tell how much it cost to produce them. Agents don’t know whether the photographer had to travel, spend time researching the subject and getting permissions for access, or whether the situation just developed in front of the photographer on his daily rounds.
Twenty or thirty years ago the people negotiating prices may have talked to their photographers frequently enough to have some idea of what was involved in producing images. Some agents were getting assignments for their photographers. Many of the stock images came out of these assignments. In such cases the agents had some awareness of costs. That is not happening today.
Many agencies used to be operated by former photographers. These managers understood what was involved in producing images. Today, the people in charge at the big companies are all business people that have never earned any part of their living producing images.
Back in the 80s a photographer asked Henry Scanlon, co-owner of Comstock and one of the great stock agents of the time, “How do you decide what to charge a customer for a particular use?” Henry answered, “
I want to find out what the customer can afford to pay, and then get all of it.” Even then Henry and his staff had some advantages. His partner Tom Grill and their in-house staff produced a big percentage of the images Comstock licensed. The Comstock sales people had some idea of what it cost to produce the images and could present arguments to customers as to why they were worth more.
That kind of communication between producer and the person negotiating the rights no longer exists. And, it cannot be reestablished in the high volume, time sensitive, Internet sales environment.
My proposed strategy isn’t a perfect solution, but it would be and improvement for virtually all sellers in the industry, not just those who think all licenses should be negotiated based on use. It may be hardest to implement for subscription sellers who are committed to “every image being of equal value,” but it could even benefit them.
PhotoShelter And Selling Direct
Chuck points out that
PhotoShelter provides the
PhotoQuote calculator that enables photographers to adjust prices for specific images depending on how they will be used. This works when the individual photographer is negotiating rights for the images he produced. It totally breaks down when an agent is doing the negotiating.
The photographer knows what it cost him to produce his image. The image producer down the street may have had totally different costs to produce similar images. It these photographers are dealing directly with the customer each could present arguments as to why their images are worth more than the customer initially wants to pay. And if the customer is not willing to pay what the photographer thinks the image is worth the photographer can say, “I don’t want to license it at all for the price you’re offering,” and get nothing. His ego allows him to accept nothing rather than earn a little money from this customer.
The philosophy of most agents is, “I want to get as much as I can, but I don’t want to lose any sales. I want all the customers I make contact with to keep coming back.” When this is the philosophy a knowledgeable buyer with lots of other options can always drive the price down. The only question is how much effort the buyer is willing to spend to save a little more money. At some point it is no longer worth the effort to try to save a few more dollars.
With PhotoShelter the problem is in getting buyers to deal directly with the image creators. From everything I can determine very few photographers generate much revenue by licensing uses to the images found on their PhotoShelter site. In cases where this happens photographers usually do a lot of direct marketing to customers and develop their own client base. The vast majority of photographers with sites on PhotoShelter use the site as a way to present their portfolio, not to license rights to a portfolio of stock images.
Should The Industry Refocus On RM Selling
Bill Bachmann wants everyone to return to RM selling, stop selling anything as RF and stop selling anything CHEAP. That horse has already left the barn. Not, only are more than 98% of the images licensed today offered under RF licenses; in many cases the RM images are licensed for less than Microstock RF prices. If Bill isn’t receiving some royalty payments for less than $5,00 he is the only photographer I know of who isn’t.
In addition it is undeniable that many photographers are earning significant income licensing volume at relatively low prices rather than insisting on high prices and making very few sales. I am absolutely convinced that there are more photographers licensing their work as RF who earn over $100,000 a year in stock photo royalties than there are photographers who license their work as RM. And the trend is going toward the RF. Photographers earning this kind of revenue are a miniscule percentage of all those trying to earn some money from stock, but today an RF license seems to be offering more opportunities than RM.
I often think of Reinhold Niebuhr’s serenity prayer. “God, grant me the serenity to
accept the things I cannot change, the courage to change the things I can, and the
wisdom to know the difference.”