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MYTHS ABOUT AN ELECTRONIC FUTURE
July 27, 1998
Index Stock Imagery feels there are several "myths" about the electronic future that need
to be debunked. In March CEO Bahar Gidwani and Allen Russell, Director of Photography,
at Index Stock Imagery started sponsoring seminars around the country on how new
technology will affect stock photographers. So far they have visited
groups in Florida, New York and Arizona. Russell will also be speaking on Monday, August
3rd at the PPA Convention in New Orleans. To support their beliefs, they have shared
sales details and insights into their agency's operation that other stock agencies seldom make
available.
Myths That Need Debunking
Stock Photo Fees Are Heading Down.
This assertion usually is used as an
excuse to say, "So you'd better give up on shooting stock." In response Index points to
their average domestic fees per image for sales in the traditional stock image market during
the past two and a half years. The average fee at Index was about $440 two and a half
years ago, and it has ranged between $400 and $500 during that period. Most recently,
it is around $400. The average fee for Stock Imagery, recently acquired by Index has
gone up from about $225 to almost $400. The average fee for Picture Cube has gone up
from about $225 to $325. This jump occurred particularly since Picture Cube started handling
the sales of Third Coast which they acquired late last year. Bahar makes the comment that,
"it seems that well-run traditional agencies are doing a good job at keeping fee levels
steady or even increasing them."
The Only Way To Make Any Money From Stock Is To Get Into Print Catalogs.
Index has produced a chart that shows that two and a half years ago about 62% of their fees came
from print catalog images. That percentage has dropped to about 45% of total domestic U.S.
sales currently. This drop occurred despite shipment of six print catalogs
during the period. Gidwani says, "There is a simple reason for this drop -- technology
lets us aggressively market our 'file' images. Since all new images are scanned
and keyworded, our salespeople and customers see every image in the file -- even
those that never make it into a print catalog. As the world shifts toward on-line
buying, we expect catalogs to become a 'marketing and promotional tool', instead of
a 'selling tool'. That means photographers can make money without ever being in a catalog."
(These figures are for Index Stock sales, only, and prior to the recent acquisitions.
They do not include Stock Imagery, The Picture Cube or Third Coast. The catalog sales figures
are only from print catalogs, and do not include sales from CD-ROM or on-line catalogs. The
point of the analysis was to demonstrate that digital catalogs do well in comparison with
print catalogs.)
Royalty-free Is Taking Over.
This lame assertion drags along the following
phrase -- "So you'd better give all your images to a royalty-free distributor."
Index estimates that about 13% of the total market is for "RF" leaving 87% to the
"RP" (Rights Protected) or traditional segment of the market.
(Selling Stock believes
the "RF" share of the world market may be even smaller, around 10%.)
Gidwani says, "This shows how little revenue royalty-free agencies generate, compared to
traditional ones. Sure royalty-free is growing fast -- that's why we recently
chose to start a 50-disc royalty-free project. But traditional licensing is still
a much bigger market, and seems likely to stay that way. Remember when people
predicted stock would wipe out the assignment market? It hasn't happened yet..."
You Can't Make Money Off Low-Priced Licenses.
To debunk this notion Index has provided sales details from 15 of their top and middle-level
photographers who have earnings from both traditional and electronic sales. Gidwani commented, "Notice
that between 4% and 43% of their royalty checks have come from license fees under $100. (Most
of the 'Under $100' money was generated by our Photos To Go program, that licenses medium resolution
images to small businesses and home offices.) Over the past year, 93% of our
photographers received revenue from these small fees. While the average amount of
these fees was only $178, none of them sent back the checks!"
Benefit of Electronic Image Marketing for Selected Photographers
The following is "Average Quarterly Data" for domestic fees only based on the last
four quarters of sales. This data is actual numbers from 15 anonymous photographers who
are top and middle-level producers at Index. None of these photographers were with
Stock Imagery, The Picture Cube or Third Coast.
Photog
|
Revenue for Quarter
|
Number Images Online
|
Number Images Sold in Quarter
|
Licenses Under $100
|
Licenses Over $100
|
Revenue From Under $100 Licenses
|
Revenue From Over $100 Licenses
|
Percent Revenue Under $100 Licenses
|
Quarterly Revenue Per On-Line Image
|
A
|
$6,467
|
2,132
|
151
|
139
|
12
|
$786
|
$5,681
|
12.1%
|
$3.03
|
B
|
$2,697
|
516
|
88
|
83
|
5
|
$451
|
$2,246
|
16.7%
|
$5.23
|
C
|
$20,103
|
3,552
|
212
|
177
|
35
|
$1,147
|
$18,956
|
5.7%
|
$5.66
|
D
|
$47,275
|
6,010
|
388
|
310
|
78
|
$4,180
|
$43,095
|
8.8%
|
$7.87
|
E
|
$13,329
|
4,421
|
315
|
286
|
29
|
$1,353
|
$11,976
|
10.2%
|
$3.01
|
F
|
$2,692
|
204
|
43 |
38 |
5 |
$258 |
$2,434 |
9.6% |
$13.20 |
| G |
$14,517 |
4,572 |
315 |
287 |
28 |
$1,600 |
$12,917 |
11.0% |
$3.18 |
| H |
$1,797 |
462 |
50 |
45 |
5 |
$285 |
$1,512 |
15.9% |
$3.89 |
| I |
$1,071 |
756 |
47 |
45 |
2 |
$463 |
$608 |
43.2% |
$1.42 |
| J |
$13,921 |
6,072 |
348 |
314 |
34 |
$1,248 |
$12,673 |
9.0% |
$2.29 |
| K |
$1,224 |
1,525 |
90 |
88 |
2 |
$493 |
$731 |
40.3% |
$.80 |
| L |
$2,058 |
1,394 |
85 |
79 |
6 |
$356 |
$1,702 |
17.3% |
$1.48 |
| M |
$2,301 |
1,456 |
35 |
29 |
6 |
$321 |
$1,980 |
13.9% |
$1.58 |
| N |
$1,257 |
774 |
31 |
30 |
1 |
$426 |
$831 |
33.9% |
$1.62 |
| O |
$8,190 |
323 |
33 |
19 |
14 |
$304 |
$7,886 |
3.7% |
$25.36 |
Note that there were 2231 images licensed in the quarter. Of those 1969 were
licensed for fees under $100 and the average return for these uses was $6.94 with
the photographer receiving $3.47 per use on average. There were 262 images licensed
for over $100 and the total income from these images was $125,228. The average fee per
image used was $477.96. The photographers receive 50% of these numbers. Thus, 90.2%
of the revenue came from the 11.7 percent of the sales that are over $100, and 9.8%
of the revenue came from the 88.3 percent of the sales that were under $100.
The chart below shows the type of subject matter that each of the above photographers
is producing and selling and gives the average annual return per image on-line, the
gross annual sales and the net that the photographer receives.
| Photographer |
Subjects |
Annual Gross Revenue Per On-Line Image |
Gross Stock Income Annual Basis |
Photographer Share (50%) Annual Basis |
| A |
Lifestyle, business situations. |
$12.12 |
$25,868 |
$12,934 |
| B |
Industry, transportation, lifestyles. |
$20.92 |
$10,788 |
$5,394 |
| C |
Lifestyle, travel, business concepts |
$22.64 |
$80,412 |
$40,206 |
| D |
Business concepts, objects |
$31.48 |
$189,100 |
$94,550 |
| E |
Lifestyles, concepts, industry. |
$12.04 |
$53,316 |
$26,658 |
| F |
Objects, travel |
$52.8 |
$10,768 |
$5,384 |
| G |
Lifestyle, scenics |
$12.72 |
$58,068 |
$29,034 |
| H |
Technology, travel, lifestyle. |
$15.56 |
$7,188 |
$3,594 |
| I |
Exercise, outdoor lifestyle, objects |
$5.68 |
$4,284 |
$2,142 |
| J |
Lifestyle, business concepts |
$9.16 |
$55,684 |
$27,841 |
| K |
Portraits, Lifestyles, fashion |
$3.2 |
$4,896 |
$2,448 |
| L |
Panoramics, scenics, concepts. |
$5.92 |
$8,232 |
$4,116 |
| M |
Travel |
$6.32 |
$9,204 |
$4,602 |
| N |
Beauty, lifestyle |
$6.48 |
$5,028 |
$2,514 |
| O |
Business situations, industry |
$101.44 |
$32,760 |
$16,380 |
The gross annual domestic income for the 15 photographers was approximately $277,798 assuming
they received 50% of gross sales. Each photographer may have received additional
income from foreign sales because foreign sales were not included in these numbers.
On the other hand catalog fees would have been deducted from this number so
the net to the photographer might have been less. The average annual income of the 15 listed
is approximately $18,520.
Index Stock Imagery currently represents 1,165 photographers. SELLING STOCK estimates
that Gross 1998 income for Index Stock Imagery will be about $8,000,000 based on
previously published figures and calculating a reasonable growth. If our gross estimage
is correct, these 15 photographers represent about 7% of Index's gross sales depending
on the additional income each of these photographer's received from overseas sales.
If we divide 1,165 into $8,000,000 the average gross sales worldwide of all photographers
with the agency would be $6,867 and each photographer would receive about 50% of that number, or
about $3,433.50 per year from Index.
Low-Price Fees Will Keep Images From Being Licensed Traditionally.
Gidwani continues, "Again, better evidence comes from experience than hypothesis. Attached
are 10 examples of images that have had good license revenue in both the high-end and low-end
markets. Since we do not put catalog images into the low-end market, these are
all "file" shots. Note that the revenue on these images has been boosted between
2% and 50% by marketing them in both markets. Despite thousands of licenses in
the low end markets, we have not had a high-end customer refuse to license an
image because someone used it in the low end. Remember, people who license stock
do so because it is reliably high quality, is easy to use, and doesn't cost as
much as an assignment image. They understand there is a risk that an image can be
used elsewhere, and will pay for exclusivity when they need it. We can always
"pull" an image from low-end distribution, if a customer is willing to buy
exclusive rights."
Samples of Images
| Subject of the Image |
Traditional Market Uses |
Traditional Market Revenues |
Electronic Uses |
Electronic Revenues |
% Added by New Market |
| fiber optic |
3 |
$3,550 |
4 |
$115.00 |
3.2% |
| emergency medicine |
1 |
$1,100 |
4 |
$53.56 |
4.9% |
| earth from space |
1 |
$325 |
9 |
$168.78 |
51.9% |
| offshore oil well |
1 |
$375 |
8 |
$150.00 |
40.0% |
| power plant pollution |
1 |
$600 |
6 |
$66.07 |
11.0% |
| leaves |
1 |
$350 |
6 |
$61.16 |
17.5% |
| telephone receiver |
1 |
$400 |
4 |
$70.00 |
17.5% |
| computer concepts |
1 |
$450 |
4 |
$90.00 |
20.0% |
| sunset over desert |
1 |
$550 |
4 |
$21.08 |
3.8% |
| ballet dancer |
2 |
$650 |
4 |
$14.37 |
2.2% |
SELLING STOCK PREDICTION
Future Moves To Watch
There may be an alliance between Index Stock Imagery and Zefa Visual Media in the
near future.
According to Visuell International, the respected stock photography magazine published in Germany,
Zefa Visual Media, one of the leading stock agencies in Germany, announced plans in May to
create a network of partner agencies in which national agencies
form an organizational alliance in the areas of technology, marketing and picture purchase. The
partners will remain financially independent profit centers.
So far Zefa has signed up
agencies from the UK, Austria, Belgium, Italy, the Netherlands, Spain, Switzerland and Turkey.
It is planned that the partner agencies will change their names so there will be one Zefa
picture agency in each country in much the same way that The Image Bank has always been structured.
The interesting thing about this Zefa partnership, from the U.S. point of view, is that Erwin Fey, CEO
of Zefa has said that, "Zefa is negotiating with a 'well known American agency' on the question of
international co-operation." He also assured his listeners that the agency was not Corbis.
This statement was made prior to the sale of Stock Imagery to Index Stock. Zefa has had a close
relationship with Stock Imagery for several years and Stock Imagery represents one of their print
catalogs here in the U.S. Industry observers believe Zefa is likely to agressively pursue a
relationship with Index Stock Imagery. The thinking is that all other U.S. agencies large
enough to fullfill the marketing role Zefa has in mind, either have a solid international marketing
network already, or would not be interested. In order for the Zefa concept to be competitive with
Getty, VCG, or TIB, it is critical for them to have a strong U.S. marketing outlet.
As a side point, it was reported by Visuell that, "Sascha Weis, head of sales at Zefa, Dusseldorf,
considers the future production of traditional printed catalogues to be more a question of image, noting
that the catalogue is changing, from a sales instrument to an 'image-carrier.' The business is
likely to shift more and more to the electronic transmission of photos for selection by the client."
This fits in very well with the on-line philosophy of Index Stock Imagery.