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Glazer's Camera

Playing the Stock Market: How to Make a Living in the Stock Industry

A young hiker leaping across tiny islands in a lake is a versatile stock image that is "full of symbolism." A young hiker leaping across tiny islands in a lake is a versatile stock image that is "full of symbolism."
© Jonathan Andrew / Corbis

Can I make a living in stock photography in 2006 and beyond? What business model is right for me? Which agents should represent my work? How many images should I produce?

How do I shoot for international markets? How much time should I spend on post-production?

These are only a few of the questions posed by professional photographers, and those who aspire to that status, in today's rapidly changing and very confusing image marketplace.

It's important to pose these questions and research a strategy that is right for you — your lifestyle, your level of creativity and your business focus. Also consider your level of talent, your degree of access, your finances and your business acumen.

Finally, be sure you have the desire and the discipline to persevere in a high-end, challenging and ever-changing marketplace.

The players in the industry

With a rash of stock agency consolidations, plus a rapid increase in digital technology, the stock industry is changing more radically today than ever before.

Ron Rovtar, of Stock Asylum (stockasylum.com), says that "industry consolidations may just be the market's effort to clean up what is left of an old business paradigm." The 2005 purchases of Photonica by Getty, Zefa by Corbis, and Creatas and PictureArts by Jupitermedia are prime examples.

Rovtar also notes that many new companies are springing up, with business models that give photographers and other suppliers an "unusual amount of flexibility in offering images to the marketplace," including some with very aggressive pricing. A few examples are Digital Railroad, MyLoupe, IPNStock, Stock Pipeline, StockPhotoFinder, iStockphoto and ShutterStock.

Bahar Gidwani, CEO of Index Stock Imagery (indexstock.com), observes that the "overall median price in the stock photo industry dropped dramatically over the past 15 years." The shift, he says, was due to increased competition among agents; pressure on agents, from both editorial and design clients, to accept "special pricing" deals with fixed, pre-negotiated fees; and expansion into smaller markets.

"We grew our distribution over this period from approximately 25 countries to more than 60," Gidwani says.

Getty to know you

Any discussion about the health of the stock industry has to include the two giants, Corbis and industry leader Getty Images. Getty is a publicly traded company, so its finances are a matter of public record, and often is seen as a bellwether of things to come.

Stock industry expert Jim Pickerell publishes a newsletter called Selling Stock (Pickphoto.com) that always offers the best statistics on the industry in order to help photographers understand their options. In December 2005, Pickerell offered some grim figures about Getty's return-per-image: "In 2003, the average return per RM [rights-managed] image was $775.29," he reported. "In 2004 it was $673.54, a 13 percent fall off from the previous year, and recently it was only $413.19, a 47 percent drop from two years earlier.

"Since the RM photographers only receive about 35 percent of the gross revenue," Pickerell wrote, "the photographer's share would be about $271.35 for 2003; $235.74 for 2004; and $144.62 for 2005."

Pickerell suggests two reasons for the precipitous drop: increased competition on Gettyimages.com and a lower position in the search results. In both cases, he says, Getty Images has added many new third-party deals, representing the work of agents and collections that they do not own.

He also observed a decrease in the return-per-image for Getty's Photographer's Choice collection, introduced in the fall of 2002. A Getty statement, however, claims that Photographer's Choice "is better represented than many of the major Getty Image collections, with the second-highest number of slots per image."

So, how do you gain access to editors at places such as Corbis and Getty if you are just starting out? The short answer is: do your homework.

High-end agents can be a challenge to contact in today's competitive environment, where the ante is up for unique talent. Study the needs and styles of the online agents and portals to understand where you might fit. Be sure to follow their contributor guidelines exactly, or your efforts may be ignored.

Virtually all agents have pages on their sites for contributor information, usually adding "/contributors" to the URL. As Paul Banwell, director of photographer and filmmaker relations at Getty, noted at PhotoPlus Expo last October (see related article, page 30), "We are very honest with you about whether we think your work matches where we're going."

RM vs. RF

In recent years, sales of royalty-free (RF) images, which fetch significantly lower prices than RM images, have become more common, much to the dismay of many longtime stock photographers. For instance, Banwell told a PhotoPlus Expo audience that in Getty's third quarter of 2005, the average price was about $230 for an RF image and about $575 for RM.

The issue of whether to adopt the RM or RF pricing models is a complex question that touches on a number of areas, says Stock Asylum's Rovtar(For definitions of some of the terms used in this article, see the glossary on page 25.) The use of RM will have a major impact on the future of advertising and design, he says, as well as changes already happening in the stock industry that threaten to once again rebalance the relationship between the creation and distribution of visual content.

The market determines who is going to make money and who is going to succeed in this business.The little mom-and-pop operations are starting to have a hard time competing because they don't move to the new market requirements.
— Jeffrey Burke, Jupiterimages

Rovtar says that the market for RF is probably peaking, given the "pressure from subscription services, and the inability to control theft of royalty-free content." RM is not going away, he adds, noting that the Picture Licensing Universal System (PLUS) recently published a glossary of picture licensing terms, making it easier to negotiate all kinds of image transactions simply and with the same language.

RM "clearly serves a purpose," Rovtar says. "Considering the fact that the industry has done little, if anything, to promote RM in recent years, the product has shown an incredible resiliency. We don't see Getty, Corbis or anyone else of consequence talking about getting rid of RM. We do see Jupiterimages, UpperCut and others getting into it."

Regarding the RF vs. RM issue, celebrity and portrait photographer Lynn Goldsmith says,"I think images are rejected that my experience in the market tells me would sell if they were presented for sale. I know Getty's Photographer's Choice works, because I have a number of photographer friends who are with Getty. They tell me [that] when an image is rejected, they put it up themselves and they see very good returns.

"It's frustrating to be with Corbis," Goldsmith adds, "and have them turn down images, thinking that I have to go to another agency to get them out there. I prefer to keep my life simple and be with one agency, but the way it works now, that is not possible."


Work-for-hire model

One new option is work-for-hire, says Jeffrey Burke, senior vice president of product strategy at Jupiterimages (jupiterimages.com). The agency, a division of Jupitermedia, the third largest imaging company in the world, has a strong basis in the subscription model, which demands vast quantities of varied royalty-free images for daily downloads.

"I can say with certainty," says Burke, "that Jupiterimages also does not favor wholly owned content over royalty-based material, because it's in our best interest to best serve our customers. Our customers are not best served by how much money we make on the picture but by whether or not they are getting the picture they need."

He proposes that photographers take a new approach to the stock business in which they "make a viable living doing contract-based work-for-hire production for the three main agencies, and all the others besides, because there are evolving market needs.

"The market determines who is going to make money and who is going to succeed in this business," Burke says. "The little mom-and-pop operations are starting to have a hard time competing because they don't move to the new market requirements. Those new requirements for publicly traded companies are to increase the quarterly bottom lines and capitalize your image costs rather than pay quarterly expense costs. Work-for-hire is about to be a very large part of the business."

Micropayment and custom stock

Bruce Livingstone, the president, founder and CEO of iStockphoto (istockphoto.com), says that his business represents one of the "micropayment" systems that are becoming popular in the stock industry. His company allows images to be licensed for $1 to $3 per image.

"Our best-selling images sell two, three, and four thousand times," Livingstone says. "We make up in volume for what others do in dollars. Even our photographers, on a per-image basis per year, make more than they would at other agencies. If an image is selling for $300, it may sell for two or three times a year, and that would be a decent selling image. Whereas we're selling the same image for $3 and it sells for a few thousand times. So, in the end, it comes out the same, or it tips in our favor, especially if it's a hot-selling item."

As chairman and CEO of OnRequest Images (onrequestimages.com), David Norris comes at these issues from the other side of the coin. His company specializes in custom assignment photography and production, with the added advantage of working within stock image pricing.

OnRequest Images produces what it calls Custom Stock Images, which are custom images shot to customer specifications in two to three days, and licensed at stock photography prices. OnRequest Images also produces collections of on-brand imagery, called Custom Images Libraries, for customers.

More customers are going to turn to custom photography for tailored imagery that better fits their businesses, Norris predicts. "With the recent technology advances that lower production costs," he says, "photographers will be in a good position to compete with stock, as wholly owned content continues to reduce the number of shooters that participate and financially succeed in stock."

Thinking like a business

In the end, the decision a photographer has to make is if he/she wants to be everything to everyone, or to be specialized. We found that clients are happy to find a niche like us if they need these types of images, and we happily charge 15 percent above the market.
— Beate Chelette, Beate Works

Photographer Roger Ressmeyer, CEO and founder of Science Faction Images (www.sciencefaction.net), has an extended history in the industry, having held management positions at both Getty Images and Corbis. His first photo agency, Starlight, was Corbis' first major acquisition. He's quick to say that photographers have to evaluate carefully who they are and what they have to offer, because there's no easy formula for everyone.

Ressmeyer reiterates that the market has changed because of the cost of digital imaging. "It had to become a real business; therefore, bringing market focus into the business that was not there before." He adds that agents used to exist to serve the photographers and were not a true business in the corporate sense. Getty added a huge component of fiscal responsibility, he notes, by bringing in professional accounting and business development personnel to serve their investors.

Photographers often attach their egos and emotions to their product, Ressmeyer observes, so it's much harder for them to see the inevitable market changes and understand how to flow with them. The business is now influenced by "standard capitalistic market forces," he says, and the system is "set up to support quite a few very good artists." He advises that artists need to think in a more corporate manner and learn to promote their work and their businesses with that level of sophistication.

Searching for a niche

With so many stock agencies consolidating, some are finding success by thinking on a small scale.

The industry has moved away from what makes a great image to focusing only on what sells and the return-per-year, says Beate Chelette, president of Beate Works (beateworks.com), a photography library of imagery related to interior decor, architecture, home decor and lifestyles.

Chelette says that RF is unstoppable and that the wholly owned content will be dumped primarily into subscription for now. She also realizes that there will be other unforeseen business models to come. "In the end, the decision a photographer has to make is if he/she wants to be everything to everyone, or to be specialized," she says.

In the big business models, one finds a flood of images, Chelette says. "My projection is that clients will find themselves frustrated by [getting] 100,000 search results for one image request," she adds. "We found that clients are happy to find a niche like us if they need these types of images, and we happily charge 15 percent above the market. We have seen 100 percent growth for the last three years in a row and, like any business, the more time invested, the greater the results."

Joseph LaCugna, a financial analyst for the stock photography industry and an executive at Expedia, says, "Just because you have been successful in the past, it is not a formula for tomorrow." He agrees that the market is fragmented, and that there are more niche agencies than ever before.

It is now a "generalist vs. specialist" market, LaCugna adds, with a bottom end that makes images available at low cost or for free. He notes that we now are seeing the advent of image production companies that produce large amounts of very market-targeted photography. The average salary for a large number of photographers will go down, he predicts, but there will remain a select number of stars in the industry who make a large amount of money.

View from the other side

Betsy Reid is the director of the Stock Artists Alliance (www.stockartistsalliance.org), the most influential trade organization for stock photographers in the United States. She agrees that there has been a shift from agents' representing artists to agents' catering to corporate-driven image needs, and that the stock distributor's business is customer-driven rather than photographer-driven.

"Most RM deals, other than Alamy, which is at 65 percent, give the photographer 40 to 50 percent of the license revenues," she says. "If there is a subagent involved, it can drop to 25 to 30 percent. But with RF, I think the top is probably about 25 percent when you license directly. Most of the licensing is done through sub-distributors, so the photographer is probably getting about10 to 15 percent."

Artists and their images are at the center of this industry, yet they feel largely unempowered and acquiescent to the status quo. There is no standard road map anymore, but there are strategies that work.
— Betsy Reid, Stock Artists Alliance

The changes have made business more difficult for photographers, Reid says. Distributors need to reduce operating costs, and the reduction often comes from photographers' royalties. She says that the general message is to "accept deals, produce for RF, shoot work-for-hire and sell collections."

She notes that, "artists and their images are at the center of this industry, yet they feel largely unempowered and acquiescent to the status quo." The artists should "strive to improve the business for themselves," she urges, "and look for better deals and opportunities, since there is no standard road map anymore, but there are strategies that work."

Randy Taylor, CEO of StockPhotoFinder.com, notes one aspect of the discussion that should not be forgotten: "Photographers with a strong niche can supplement other revenue sources with direct sales," he says. "They can host their images online for e-commerce, licensing at our StockPipeline.com (or IPNstock, or myLoupe, or Photo Gateway, and so on) for about $50 per month. They can directly market their images via StockPhotoFinder.com (or Google or direct mail, and so on). In this way, they can build their own brand and personal prestige, get slightly higher prices for stock usage, build a client list with crossover potential for assignments, control rights more tightly if there are ‘tricky' uses and, most importantly, keep 100 percent of the licensing revenue."

In this decade, all stock photo agencies are facing many of the same challenges and changes. The general consensus seems to be that the near-term opportunities include more focus on RF and wholly owned material, on targeting content to high-growth and underserved markets, and on new technologies and the new markets that they create, such as mobile and multimedia, to name just two.

"Without question, a technology-driven paradigm shift is occurring in the stock photo industry," Rovtar says. "Indeed, a good argument can be made that we are, at best, just halfway through this shift."

Their issues highlight a few of the never-ending movements in the stock photo volcanic lava flow. It's hot, it keeps going and it is eating up everything in its path. Rest assured that there is money to be made on every level for all types of talent.

How much money depends on some minimum requirements of tenacity, courage, business acumen, planning, research, finances, time and talent. Do you have all of those?


Pat Hunt
Story Author: Pat Hunt

Pat Hunt is managing editor of MacTribe.com and vice president of corporate relations at Index Stock Imagery. She is a writer for various photographic publications, a consultant to the industry, and is currently working on a book. Hunt can be reached at path@mactribe.com.

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