Photographers frequently ask how royalty-free still photography got started and why creators only receive 20% of royalty free sales. Here is a little history.
Clip-art illustrations and typefaces have been sold for decades through various types of print catalogs. Customers were allowed to make unlimited use of anything they purchased. The first still-photo illustrations came on the market in the early 1990s, after Kodak introduced its PhotoCD technology.
| EARLY ROYALTY-FREE PLAYERS |
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In addition to Corel and Photodisc, early royalty-free brands included EyeWire and Digital Stock.
In 1994, Adobe Systems purchased the Calgary, Canada-based EyeWire, a company that had specialized in selling typefaces on CDs to the graphic arts community. Adobe created its visual content division that also started selling photos on discs. Though the company created a brand that was fairly widely used, it did not generate enough revenue to satisfy its management. In September 1998, Adobe decided get rid of this division and sold it to the division's management team and EyeWire founder and president Brad Zumwalt, who sold it to Getty Images 11 months later. After Zumwalt's non-compete agreement expired, he founded Veer, which was subsequently acquired by Corbis at the end or 2007.
Another major company was Digital Stock, started in 1994 in Southern California. Corbis purchased Digital Stock in February 1998, and it became the core of Corbis' royalty-free collection. Interestingly, the director of photography (or creative director) of Digital Stock was Rick Becker-Lechrone. He stayed on at Corbis but eventually left, after Corbis bungled its early royalty-free efforts compared to what Getty and Photodisc were doing. Becker-Lechrone freelanced for a few years before establishing the very successful royalty-free company Blend Images.
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One of the first companies to put images on discs was Canada’s Corel, which would buy 100 images on a particular topic from photographers and resell the CD compilation. Most of such images were from amateurs. If I remember correctly, Corel paid $50 per image for all rights. Corel was a major developer of Word Perfect and graphic arts software programs. Several other small companies, mostly with strong connections to the graphic design community, put out similar discs using the same strategy.
Photodisc was the first major breakthrough in getting images from professional photographers. I believe the company started in 1991 and obtained its early images from amateurs, just as Corel. But Photodisc wanted better quality, so it made a deal with a small Seattle stock agency called West Stock to get images from its professional photographers, agreeing to pay a percentage of sales. West Stock received 20% of Photodisc sales, and the photographer received half of West Stock’s share. Each disc carried about 300 images, so photographers with only a few images on the disc received very little per unit sold.
Discs were originally priced at about $125.00 each. Photodisc argued that, because of such low product price, all the company could afford to pay for the images was 20% of sales. The company had to spend huge amounts of money to scan images and print and distribute catalogs to hundreds of thousands of potential customers in order to sell the product. Photodisc argued that it was exploring a new market with a customer base that had never been able to afford traditional stock photo prices, and thus the offering would have no impact whatsoever on traditional sales. West Stock and the photographers who agreed to participate bought this argument in the hopes they would earn a little extra on top of their current sales and, if the project was successful, prices and royalty share could be raised.
This is where the 20% we live with today came from. Discs are no longer a major part of royalty-free licensing. There are no more scanning charges, because photographers are now required to deliver digital files. Expensive print catalogs are no longer being sent to potential customers, greatly reducing printing and postage costs: in the heyday, Eyewire was distributing more than 8 million print catalogs a year. Yet the fact that these costs are no longer incurred has not induced most distributors to up creators’ percentages of the gross licensing fees.