Size of Market for Stock

48

November 13, 1996

The figures below are my estimate of the size of the world market for stock
still photos at the end of 1996.

There is very little public data available, and therefore a lot of guesswork
goes into these figures. To compile them, I have used the available public
data, information from a few stock agencies who are willing to talk to me,
information from many photographers and general observations. I would welcome
input from anyone who has access to better data and would like to challenge my
assumptions.

Traditional Stock

I believe the stock photo market in the U.S. is about $300 million a year.
This represents about 45% of the world market. Approximately another 45% of
worldwide sales are made in the Common Market countries. Sales in Germany,
France and the United Kingdom comprise about 70% to 80% of the Common Market
total.

Japan may represent 4% to 5% of the worldwide sales. All the rest of the
countries of the world have a combined total of somewhere in the range of 5% to
6% of world sales which means they generate $30 to $40 million in total sales.

Probably 60% of U.S. stock photo sales are for brochures, catalogs and
advertising. Editorial may represent 15% of gross sales and books may be 10% to
15%.

In Europe editorial makes up a much higher percentage of sales than in the U.S.
and brochures and advertising a corresponding lower percentage.

I estimate that no more than 10% to 15% of the gross dollar sales are made by
individuals selling directly to clients. The bulk of all sales in terms of
dollar volumes are made through stock agencies.

(As many as 25% of the total images licensed may come from individual selling
directly to clients, but the actual dollars collected for these uses is lower
because so many individuals are part timers who tend to sell for lower rates
when they are negotiating for themselves. This is particularly true when the
individuals are licensing editorial uses. There are certainly some individuals
who insist on rates as good, or better, than those negotiated by the stock
agencies, but they are not in the majority.)

Photographers are receiving somewhere in the range of 30% to 35% of the $700
million after sub-agency commissions and other fees are deducted.

The growth of clip-photo has been phenomenal. In four years the growth of clip
has gone from $0 to $125 million (maybe as high as $150 million) while the
traditional stock photo market may have gone from $600 million to $700 million.
Sales of clip-photos currently represent at least 15% of the total sales of
stock photography. The impact of clip photos on the market is probably greater
in the U.S. than overseas because a high percentage of the total clip-photo
discs produced are being used in this country.

This has to be carefully considered by everyone trying to make a portion of
their income by producing or marketing stock photos.

Stock Agency Growth

Many of the big stock agencies have been reporting steady, and in some cases
dramatic growth, in sales in the last five years. Some of this growth has been
the result of a consolidation (when agencies acquire other agencies) and does
not represent a true growth of market for images. I also believe the major
agencies are taking market share from small agencies. Many of the small
agencies are experiencing hard times which could get worse.

Small agencies, in particular, find they are losing sales to clip. In
addition, they often find that their prices are being undercut by larger
agencies as the big agencies push to make volume sales. When this happens the
smaller agencies must cut their price or lose the sale. Put these factors
together and overall the market for traditional stock has been relatively flat
for two or three years.

In estimating agency sales, I have tried not to include that portion of the
gross sales of some editorial agencies that comes from assignments, and
attribute to them only what I perceive to be the "stock" portion of their
business. In the same manner, I have tried not to include "motion picture"
stock. Several agencies now have divisions that sell stock motion picture
footage, and such sales seem to be growing. This may be a direction for stock
photographers to take in the future, but for now there seem to be so few
photographers doing it that I have not wanted to include this in these figures.

I have also tried not to double count sales, which is a strong tendency. An
agency in Europe may make a million dollars in sales of work supplied by a U.S.
agency. The agency in Europe keeps 40% of the gross sale and remits 60% of the
gross to the U.S. agency for division with the photographer. The agency in the
U.S. normally counts the 60% remitted as part of their "gross sale," while the
foreign agency is counting 100% of the sale price as their "gross sale." Thus
the reports of the two agencies combined indicate the sales at 60% higher than
they actually were.

At Viscomm PACA said that they expect a 25% growth in sales before the end of
the century. I think this is unrealistic and in the best of circumstances will
only happen if you include the growth that clip photos will provide.