The Exclusive Dilemma

472

April 15, 2002

Need to expand your supply of images? Then don't drive photographers away with terms and
conditions they can't afford to accept. Agents in smaller and specialized markets need to
understand why insisting on exclusive rights to ALL the images they represent may be limiting
their access to images their customers would buy.

Traditionally, agents have wanted an exclusive right to sell the images they represent in
their territory. This way they can guarantee their customers that no one else will use the
same image their customer is purchasing. For certain types of imagery such a strategy may
still be wise, or necessary. But, with rare exceptions, most editorial users have little
desire to prevent others from making use of the same image they are buying.

In today's marketing environment agents may be limiting their ability to grow revenue, and
their ability to service the needs of their customers by insisting on "exclusive rights" to
every image they represent.

Let me explain what I see happening from the perspective of the photographers.

Preliminaries

Preliminary to this discussion it is important to accept a couple facts. The first is that in
their rush to go after high end advertising sales, and get away from labor intensive research,
Getty, Corbis and some of the other large international agencies have eliminated from their
files a lot of the imagery that is useful and in demand by editorial buyers. When these
agencies do news and personality coverage they focus on major events, not the broader more
comprehensive coverage needed by specialized publications and book publishers.

Corbis has a better representation of this specialized material than Getty, but a large number
of buyers who used to buy heavily from the brands represented by these two companies are now
finding that they must go elsewhere for the images they need. This strategic realignment by
the major companies has created an opportunity for everyone else in the business.

The other fact to consider is that there are two reasons for having exclusive rights to an
image. The first is to be able to guarantee the customer that no one else will use the image
for the duration of the customer's license. The second is to keep the agency's competitors
from simultaneously licensing rights to the same image. This second reason may benefit the
agent, but it certainly doesn't benefit the photographer whose interest is to have every image
licensed (for good prices) as often as possible.

If the primary concern is to be able to offer restricted usage licenses to the customers then
it is important to recognize that there are types of imagery for which such requests almost
never arise, and other types of imagery where the requests that occur are usually infrequent.

In the category of "never arising" I would put most travel, nature, wildlife, scenic,
education, industrial, scientific and construction uses for books and editorial illustration.
For this segment of the photography market there may be a few other subject types that also
fall into this category.

Granted some of this same subject matter may occasionally be used in advertising, but within
these categories many images have almost no application for advertising, but can be very
useful for editorial purposes. And, we know that Getty, Corbis and some of the other major
companies are ignoring much of this imagery.

I am not contesting the value of having "image exclusive" control of lifestyle and business
images that are primarily used in advertising, even though some agencies operate very
effectively without having exclusive rights to this type of imagery. But there is a strong
case for not extending the same requirements to every image represented or offered to any
customer.

I would suggest that most agents carefully re-think their requirements for accepting images of
the type where exclusive or restricted rights are seldom, if ever, requested by their
customers.

Cross Purposes

When it comes to international sales many photographers and stock agencies seem to be working
at cross purposes.

Since most agents want to sell into both the editorial and advertising markets, and there is
no way to be absolutely sure which image will be needed by which customer, agents have tended
to ask for exclusive rights to everything they represent.

They also expect these rights to extend to any "similar" of an images they retained. Having
an "image exclusive" agreement with restrictions on the marketing of similars certainly
simplifies their lives. They never have to ask any questions when a customer wants to restrict
usage of a particular image. There is never a risk of losing a sale because they do not have
enough control to guarantee a restricted use. But this may drastically limit the imagery that
photographers will make available for them to license.

Online Databases Complicate This Issue

The rise in the use of online databases complicates this issue.
One of the most desirable ways to market images today is to get them into an online database.
Even when such databases are primarily marketed to customers in a single country they
occasionally (sometimes frequently) make sales in other parts of the world.

Getty, Corbis and a few other major agencies have image databases with good worldwide
penetration. But as we pointed out earlier they focus on pushing advertising sales and are
limiting their acceptance of editorial images. None of the databases with a depth of strong
editorial content currently have good worldwide penetration of the market. Thus, the
photographer with editorial imagery must either have the same images represented on several
different databases or limit the market potential of the image.

From a practical point of view it becoming easier and easier to supply the same scan and
keywords to several online databases. The only problem is that there may be cross over
marketing within a particular country.

Even if the images are only on one database there can be cross over marketing. One buyer may
prefer to use one database and the buyer next door may use a different one, or the buyer next
door may go to a traditional local supplier to find the images they need.

What's A Photographer To Do?

Consider the plight of an American photographer who has images on PictureQuest. PQ accepts
images from many agencies and in nearly all cases is licensing rights to these images on a
non-exclusive basis. If they have a request for an exclusive use they check with the agency,
and the agency may need to check with the photographer.

While the vast majority of sales are to customers within the U.S. PQ makes occasional sales in
Europe and other parts of the world. Some of these sales are automatic so there is no way to
control who is buying.

Thus, any image that is being marketed through PictureQuest can not be given to any other
agent in the world on an "exclusive" basis. The same is true of a number of other online
sites. The photographer needs to both use online marketing for his best images in his primary
marketing area, and make every effort to get these same images marketed effectively worldwide.
The two needs conflict. If an exclusive guarantee is necessary the photographer must pick one
marketing outlet or the other.

One way to license an exclusive of one of these images, once the specifics of a need are
known, is for the agent to go through the process of examining the past history of sales from
all sources, and have the photographer recall the image and all its similars from other
marketing sources. While this sounds burdensome, several agencies operate in this manner and
find that it is not a major problem.

European agencies that insist on exclusive rights to every image they handle may be putting a
severe limit on the images that are available to them for licensing. If their customers
regularly insist on exclusive rights to the images they license then the agencies may have
little choice. But if the prices charged for most uses are any indication there are very few
sales where the fee is high enough to justify any kind of restriction on the use of that
image, or to warrant its removal from any online database.

Another factor to be considered, as all image buyers try to expand the marketing reach of
their products, is that often the use planned by the buyer (particularly when they want an
exclusive) crosses territorial boundaries. In this event the selling agent must check with
other agents and the photographer anyway.

Smaller Markets

This exclusive problem is magnified for agents in some of the smaller markets. When North
American photographers begin to look for ways to market outside the U.S. they tend to go to
the larger markets first. They make agreements with agencies in the UK, France or Germany, and
maybe a few other markets. These agencies then make sub-agent agreements with agencies in the
smaller markets. Very few photographers will seek out arrangements directly with these small
markets because the volume of sales for an individual is not large enough to justify the
effort invested. Thus, the only way agents in the small markets can get new material is to
work through agents in the larger markets.

For example, one agency in the UK has agreements with Ireland, Poland, Hungary, Romania,
Austria, Czech Republic, Holland, Belgium, Spain, Finland, Estonia, Russia, Hong Kong,
Australia and New Zealand. If a U.S. photographer has images on PictureQuest or Alamy (in the
UK) -- in both cases on a non-exclusive basis -- there is no way that the UK agency, or any of
its sub-agencies, could license exclusive rights to those images in their territory without
first insuring that the photographer remove the requested image from PictureQuest or Alamy.

There is a good chance that the images the photographer has placed on these online sites are
the best and most marketable the photographer has to offer. Thus, by insisting on exclusive
licensing rights the agency has limited its access to many quality images. The UK agency may
be willing to accept these images on a non-exclusive basis for its local marketing, but given
the pressure from its sub-agents it feels that it can not make the images available to them
for licensing, if it can not guarantee that the sub-agency has exclusive rights to them.

This makes it doubly hard for agencies from smaller markets to get access to good new imagery.
These markets do not generate enough volume to make it worthwhile for individual U.S.
photographers to try to deal with them directly. The same may be true for a lot of European
photographers.

It may be necessary to insist on exclusive rights to catalog images and images aimed directly
at the advertising market, but is it necessary for all images?

What Do Agents Tell Their Customers?

Agents in smaller markets should be very careful about making guarantees to their customers
when they think they have "exclusive rights" to market a particular image. Often the images
they represent as "exclusive" may also be available directly from the photographer, or on one
or more internet sites.

The agreements the prime agency has with its photographers may not lock down the exclusivity
as tightly as might be necessary. Often these agreements are in a friendly letter format that
is open to a lot of ambiguity and interpretation. These letters don't define carefully enough
just what rights are being granted.

In many cases photographers interpret "image exclusive" as being an exclusive right to a
particular frame, but allowing the photographer to license rights to "similar" frames through
other sources. The use of a close similar by a competitor of your customer can get you into
just as much trouble as if it were the exact same frame, depending on what you promised your
customer.

One thing that can be said for Getty and Corbis is that they lock down very tight agreements
with their photographers. They know exactly what rights they have to each image.As a general
rule photographers don't like these agreements, but reluctantly accept them because these
agencies really do market effectively and aggressively worldwide. Very few other agencies can
make that claim.

Many customers believe that Corbis has exclusive rights to every image on its site, but, in
fact, they represent many of these images on a non-exclusive basis. These non-exclusive images
are often available through other sources in other parts of the world.

Photographers

Photographers who license their images worldwide tend to use many different agencies. Often
they provide the same or very similar frames to many of these agencies on either a
non-exclusive or a very narrowly defined exclusive basis. Seldom do these photographers make
more that 30% of their income from any single agency, and the highest producer is usually in
their home territory.

In order to continue production at the levels they are operating they need that additional 70%
of income. Thus, they can not afford to remove any image from multiple marketing until they
know they are being paid a significant amount of money for a particular "exclusive" use.

They must have their best images online, and in nearly all cases that means that some
automatic, uncontrolled, sales can be made of the image. This makes it impossible to offer an
exclusive license in any part of the world as long as the image in on the site. The image must
be removed from the online database for the period of the exclusive. No photographer is going
to agree to pull images out of other marketing unless they are assured of significant
compensation for the "exclusive" use. The only practical way to deal with this problem is on
an image-by-image basis as each specific request arises.

Otherwise, the photographer must either limit his sales to only the major markets, or put the
images in multiple outlets and "hope that a conflict never develops." Unfortunately for
everyone, faced with these unacceptable options, many photographers choose the latter.