The State of Commercial Photography
Digital Dogma is Barking Up the Wrong Tree
Have photographs lost their economic value? One might make that assumption by connecting the dots, from photo agency consolidation and the transition from film to digital image capture, the conjunction of crowd-sourcing with the World Wide Web and social media, to underserved publishers and the sorry circumstances that challenge photographers who try to earn a living.
Taking pictures is effortless.
The BUSINESS of taking pictures is NOT effortless.
The good news is that photography (both still & video) remains vital to every aspect of commerce. Business needs photography. Its demand is both enduring and universal. Photography’s value is unequivocal for commercial brands and media companies that publish pictures to inform and connect with their own customers. However, it is increasingly hard for them to find commercially useful pictures. It should therefore be clear that the economic issues confronting photographers are directly related to issues of utility facing publishers. The question should be, Is photography underpriced?
The answer is yes. The two public companies in photo distribution agree, Shutterstock and Adobe. So do their privately-held competitors; mostly startups but including giant Getty Images. Yet, to their dismay, they have all been unable to raise prices.
It’s not an inclination of market forces that keeps prices down; it’s a neglect of administrative best practices. Back-office innovation languished through year after year of indifference while technology continued to advance on the creative side, particularly with regard to the sexier science of digital image capture. Today, in the 21st century, the administrative side of photography, including payments, limps along on 1998 technology. For example, it still relies on paper transactions: “Your check is in the mail.”
Another dictum speaks volumes: “You get what you pay for.” With stock photos, what’s available today is not exactly top shelf. The most sought-after imagemakers in the world deliberately withhold their premium content from online sales. It’s no mystery, but the reasons why are less than obvious if you’re not either a commercial art director or graphic designer (a buyer) or shooting pictures for commercial publication (a seller). Despite the fact that everyone has a camera and we see photos everywhere, the business of photography is as about as well understood as a cocker spaniel knows how dog food gets in a can.
Missing from discussions about the business of photography —and pricing it — is the importance of data. More to the point, the data are missing. Not one company collects or analyzes transactions between the singular class of photographers and publishers who generate $14 billion in revenue each year doing business with each other. Moreover, the incumbent players cannot build an online infrastructure to capture those data without pivoting to such an extreme that they would cannibalize their existing business.
This white paper will get you inside the heads of real photographers and real photo buyers. It comes from decades of empirical experience and more recent industry-wide research.
Who Am I to Say?
As a photojournalist, I’ve covered hundreds of historical and breaking news stories. I’ve shot many hundreds of portraits, including magazine covers from John Lennon to Steve Jobs, plus two sitting American presidents (Carter and Reagan) for the covers of Time and Fortune. I’ve shot advertising campaigns for Fortune 500 companies, Hollywood movie studios, and the US Navy.
My career-long body of work, shot on film, was acquired for conservation and research by the Briscoe Center for American History at the University of Texas at Austin. My prints are collected by museums, including the Los Angeles County Museum of Art and the National Portrait Gallery in London.
link: ZIMBEROFF PORTRAITS
I created PhotoByte®, the first successful CRM/licensing-and-billing software for commercial photographers. And I wrote the book, if you will, about the business of photography: Photography: Focus on Profit (Allworth Press, 2002). It has been used to teach at colleges across the country.
I founded a venture-funded startup during the “dotcom bubble” and, more recently, matriculated the StartX collaborative community of startups affiliated with Stanford University.
I was also represented (consecutively) by two preeminent international photo agencies, Sygma and Gamma-Liaison, until they were acquired in the 1990s by Corbis and Getty Images respectively. I went to great lengths to remove all of my physical film and all digital traces of my work from these two online exchanges. Despite my having forbidden them to license my work, I discovered they were still doing so — for insultingly paltry fees. In years past, I’ve received several very small checks in the mail from Getty Images for photographs I did not shoot.
A Break with Tradition Put the Brakes on Revenue
The role of the photo agency was usurped years ago by private equity — today’s middlemen. They had no prior experience in photography. They deliberately sidestepped organic growth to consolidate an obvious consumer-facing opportunity — obvious as in low-hanging fruit, easy to do. They didn’t so much disrupt the photo marketplace as buy it.
The upshot was to set in motion a creeping institutional memory loss about the larger, multibillion-dollar Enterprise-facing segment of the market; larger and more lucrative, that is, than the consumer-retail segment. These middlemen frittered away the capacity to serve Enterprise, defined as licensing imagery to commercial publishers. Instead, they became retailers who now focus almost solely on illustrating websites for ordinary consumers and very small businesses with little money to spend on photo or video production.
The displacement of the photo agency business model has been likened to a hostile takeover with two insidious consequences:
1) Photographers lost control over pricing their own work.
2) Publishers were flooded with lesser-quality content.
These outcomes are underscored by the spreading mediocrity of stock photos, their burgeoning overabundance yet frustrating lack of exclusivity, their commodified prices, a sore relationship between creatives and middlemen, and the fragmentation of billions of dollars in commissioned-jobs revenue.
These are not separate issues.
Publishers are unhappy with stock photos, in particular, because photographers — who are sole proprietors but artists temperamentally — have a hard time trying to navigate the world of business and shoot pictures at the same time. Taking care of business is problematical because online workflow automation is nonexistent.
A holistic approach is required to create a dynamic source of pre-shot stock photos that satisfies publishers by, first, making it easier for them to do business with the photographers they pay to shoot made-to-order jobs.
A New Kind of Marketplace for Photography
The online integration of stock photo transactions with commissioned jobs transactions describes a marketplace network, a proprietary B2B platform where creators and publishers want to be—directly connected together.
There can’t be three Facebooks or six Googles. Those companies became institutions because, ultimately, there remained only one of each in its class. Right now, there is no “go-to” platform at all for the worldwide community of photographers or their clients to congregate. If there were, it would be possible to intercept symmetrical information flowing back and forth between them. In addition to their commercial transactions, it could capture the photographs themselves passively, seamlessly, and cooperatively during routine electronic-file transfers—part of the workflow.
Why is the passive capture of digital image files important? Because an elite class of photographers categorically refuses to contribute their extraordinarily valuable assets to the stock photo pipeline, let alone to do so proactively.
These photographers are elite, not because they say they are, but because their clients say they are. Their clients have vetted them and continue to pay them to shoot pictures for commercial publication. But their clients also want access to the unpublished and rights-reverted photographs they’ve already shot (and continue to shoot). These are called residuals. But residuals are unavailable for publication because they’re fragmented into tens of thousands of separate pools. They’re not on the market. They’re not even online. So, how does a publisher tap into this scattered but continuously recharged trove of premium content?
Photography lives at the intersection of art and commerce. But it doesn’t live in the cloud, where intellectual property and data mingle, ready to be collected and to generate actionable market intelligence about how photographic and video content is actually used. That is to say, it indicates which demographic was targeted to see it and how they were influenced by it — what action item they took away. These data can be fed through a rights-managed AI pricing matrix — a pricing engine — and integrated with an industry-specific electronic payments system.
Ultimately, the price of any given photo, the fee charged for its commercial use, will be tied to the actual value a publisher derives from each specific use, calculated in real time, transaction by transaction, and paid in real time too. This kind of automated rights-managed pricing will undo the prevailing and problematical “one-price-fits-all” model for all but the most trivial publication transactions.
Publishers want stock imagery created by the same talent they hire to shoot jobs. They do not want crowd-sourced photos. The most talented photographers will not “join the crowd” of camera enthusiasts who contribute pictures to online vendors whose business model is pile ’em high and sell ’em cheap.
Elite imagemakers are entrusted with big budgets and tremendous creative responsibility. They are businesses unto themselves. They have operational overhead, often including a studio and many tens, or hundreds of thousands of dollars worth of specialized gear to maintain. They employ photo assistants and often direct even larger crews of freelance stylists, designers, technicians, and producers. They are not cogs in a commodified supply chain, as conventional wisdom would have them.
As far as any middleman should be concerned, photographers must have equal standing with publishers — as customers. Absent equal economic respect for the demands of photographers, it is categorically impossible for any third-party distributor to obtain marketing rights to a dynamically replenished source of premium stock photographs. And the only way publishers can, in turn, have access to pick and choose from such a source, is by consolidating these elite photographers under one virtual roof.
It is the responsibility of any third-party middleman to create an infrastructure that attracts pro photographers like a magnet by making it easier for them to do business with their existing clientele (i.e., publishers) and vice versa. Do not forget that they come with their content. It is no supposition that publishers are attracted to the dynamism and exclusivity of this content. Publishers follow the content. Invariably.
This role is different than that played by the middlemen in a consumer-facing marketplace. That’s because, in an atypical and steeply vertical B2B market like Commercial Photo, sellers and buyers already have direct relationships with each other. These relationships cannot successfully be intervened. However, rewards are aplenty for facilitating them.
The problem is, these relationships are fragmented. That means their content is fragmented. Their revenue is fragmented too.
If the most tried-and-true investment thesis is to take an essential industry that’s not digital, and make it digital, it’s not hard to see how connecting photographers online with their existing commercial clients will:
• Consolidate photographers on one proprietary platform, a virtual content cartel
• Consolidate Digital Asset Management for publishers
• Automate complex B2B licensing transactions
• Protect intellectual property rights for photographers
• Foster exclusivity in the stock photo pipeline for publishers
• Institutionalize electronic billings & payments industry-wide
Economic and creative outcomes for photographers and publishers are radically transformed by building a marketplace network where photo industry participants want to be. Such a marketplace prevents inventory bloat and the overuse of individual photographs, thus protecting every buyer’s unique brand identity, so different companies don’t get screwed using the same picture. It makes prices sustainable for photographers and affordable for publishers by leveling the economic playing field, then tilting both sides toward a facilitating proprietor in the middle of the revenue stream.
I wrote a book alluding to this issue sixteen years ago: Photography: Focus on Profit (Allworth Press, 2002). It is timelier today because the technology to do this is available today. By the end of this in-depth article, summarized at the end, it should be clear that photography is indeed underpriced; why it is underpriced; and how underpricing adversely affects industry-wide productivity and growth.
To have an intelligent discussion about photography (for both commercial and editorial publication), three misconceptions must be dispelled. Here are your noise-canceling headphones:
1) Blockchain addresses issues that keep photographers up at night.
NOT TRUE. In the commercial photography industry, blockchain is hardly necessary to establish intellectual property ownership and provenance.
Blockchain is categorically incapable of “protecting” either the legal or economic prerogatives of copyright holders. Straightforward ways to do that already exist, although they can and should be automated. Moreover, relying on a “distributed” or “decentralized” inventory of pre-shot stock photos would only create new problems, not solutions, for publishers.
2) Image curation and post-production image processing pose grand problems for artificial intelligence to solve.
NOT TRUE. This is routine stuff. Creatives have bigger fish to fry.
3) There are millions of photographers.
NOT TRUE. Many people say they are, or wish they were, photographers; but they don’t make a living by having their pictures published for commercial use.
Many are camera enthusiasts who enjoy the concept of “sharing” photos. Less concerned about making money but proud of their work, they’ve found an outlet to show-off online. A lot of them are quite good — better than good. Sometimes they earn a few dollars for pictures in a retail, consumer-commodity context. Still, it’s not enough to buy a new lens.
Lots of other people make a living shooting weddings and head-shots and “grip-and-grin” events. But they do not shoot jobs for either commercial or editorial publication.
<<end of introduction>>
First Order of Business: Understanding the Economic Difference between Stock Photos and Assignment Photos (Jobs)
Stock Photo is a $4.5 billion segment of the $14 billion Commercial Photo industry. It is the business of licensing and re-licensing pre-shot photographs for publication. For commercial and editorial use that is, not art to hang on the wall or to memorialize private events. Stock photographs are used mostly by very small businesses — shopkeepers, startups, freelancers, etc. — to illustrate Web pages, blogs, brochures, and Powerpoint presentations.
Commercial brands and media companies license stock photos too, often for comprehensive page layouts (“comps” for short). Comps are visual rough drafts presented by graphic designers and art directors to their clients for approval, to show what a finished product will look like when published in print, online, or even broadcast.
If a stock photo is used in the final version of a publication it will command a higher licensing fee (also called a usage fee) commensurate with the extent of publication rights granted. But, generally, these pictures are available for quick digital downloads on the cheap when a limited budget or a looming deadline makes it impractical to hire a photographer for a made-to-order photo shoot.
Stock photos are sometimes available directly from the photographer who shot them. They are more likely to be licensed from a centralized customer-searchable catalog, an e-commerce exchange owned and operated by a third party. Stock may include pictures of timeless historical value (all digitized now) including famous people, places, and things. But middlemen, as well as photographers dedicated to shooting stock, continuously anticipate abstract themes and specific subject matter that publishers are likely to want illustrated in a rapidly changing commercial and visual environment, news photography notwithstanding.
Most stock photos have a limited shelf-life just like food — a “use-by date.” They are considered perishable if their subject matter is likely to lose credibility or relevance over time, and look dated. Ergo, stock photos must continually be replenished to reflect what is new in the worlds of fashion, politics, sports, celebrity, cultural ephemera — generally everything imaginable. (There are stock videos too.)
Life’s a Pitch
Many attempts have been made to reinvent Commercial Photography. After all, it is a multibillion-dollar industry with equal relevance to technology, commerce, and culture. Yet it is fraught with severe customer-satisfaction issues, and its potential for growth is not clearly understood beyond consolidating existing stock photo inventories: big fish swallowing smaller fish. Nevertheless, entrepreneurs have shown a serial determination to take a crack at beating Getty Images, the biggest fish, at its own game. But, first, they have to run a gauntlet of investors.
As an “artrepreneur,” I’ve seen a few investor pitches. I’ve made a few investor pitches. It’s a Silicon Valley ritual. Typically, a successful pitch describes a problem that has immediate relevance to everyone in the room. And it offers a solution. Or it addresses a new twist to an established technology that affects consumers only indirectly, but is quite familiar to investors. That said, no one in the room has ever licensed a stock photo for either commercial or editorial publication. Nor has anyone ever hired a photographer to shoot such a photograph — or shot one themselves. Still, both the ubiquity and demotic appeal of photography predispose everyone to think, I know all about this.
Everyone has a camera. Many people have an Instagram account. Maybe SmugMug or Google Photos is their electronic shoebox for storing snapshots. Lots of people have hired a wedding photographer or someone to take a publicity headshot. It could be that someone attracted news-media attention and became the subject of a photojournalist. And who hasn’t downloaded a photo for a landing page or a Powerpoint presentation? But laypeople are totally unfamiliar with the business side of photography. That’s everyone in the room who isn’t either a commercial art director, a publisher, or a working pro shooting pictures for publication.
How many more times must the latest razzle-dazzle team of MBAs and Ph.D. engineers, with zero experience in photography, sing the same old song to credulous investors before they all realize it ends on the wrong note — every time?
Two Separate MARKETS
Photography’s commercial value, to say nothing of its other inherent values, is habitually undermined by businesspeople with no photographic experience and by photographers with no business experience. Both parties are to blame for a persistent arrogation — sadly mistaken — that one business model can serve two totally separate markets. The two markets are:
- Commercial Photo, the business of licensing intellectual property to publishers
- Social Photo (aka Wedding & Portrait), the business of selling memorabilia and tangible goods for personal use (e.g., photo albums)
Note: Social Media is NOT a photography marketplace per se because IP is neither bought nor sold on these platforms. Neither are tangible goods. Social Media is simply a conduit for advertising. It is a medium. It is not “the media.”
Two Separate SEGMENTS
Investors and startup founders compound this mistake by further conflating two separate segments of the Commercial Photo market as one and the same:
- Enterprise, the business-to-business segment (B2B/pro-sourced) serving brands and media
- Retail, the consumer-to-business segment (C2B/crowd-sourced) serving shopkeepers, freelancers, and startups
Note: If one accepts the notion that there is such a thing as a B2C segment photo segment in the first place (i.e., business-to-consumer), it follows that third-party middlemen would be the B in B2C; that only they would profit by exploiting amateurs and naive wannabe-pros who think that getting published for pennies or for free on a Web site will lead to some vague sort of recognition. Or big-time photo assignments perhaps? The corollary to that assumption is that Enterprise-level businesses don’t mind being cut off from premium content and being underserved.
Only when Enterprise and Retail are acknowledged as separate segments of one market, with each segment serving a different class of customers, is it evident how one hand washes the other.
You can lead a horse to knowledge, but you can’t make him think.
This writer, both a seasoned photographer and startup founder, is bewildered by the fact that investors, time after time, apply the rules of conventional consumer-facing businesses to the steeply vertical enterprise of commercial photography. Their failure to appreciate the idiosyncrasies of this marketplace — idiosyncratic even for B2B — is the very reason an opportunity exists to disrupt it in the first place. This circumstance elicits a rhetorical but unapologetically indignant question: How many more times must the latest razzle-dazzle team of MBAs and Ph.D. engineers, with zero — bupkis, nada — experience in photography, sing the same old song to credulous investors before they all realize it ends on the wrong note — every time?
Investors might be forgiven for their confusion, if only because both the Commercial Photo and Social Photo markets use cameras as tools of their respective trades. Less pardonable, however, is the same investors’ inability to differentiate between two segments of one market.
The differences between Enterprise B2B and Retail C2B are as profound as the differences between chess and checkers: two completely different games with completely different rules, whose only similarity begins and ends with a playing board; just as any similarity between two profoundly different business models, Enterprise vs. Retail, begins and ends with a camera.
The public at large is very familiar with the Retail C2B segment because the public at large pretty much means consumers; and they all take pictures. Ironically, the most lucrative segment of the most obvious commercial enterprise in the world — literally obvious — lies hidden in plain sight. Big corporations along with an aggregation of smaller companies spend billions of dollars every year to make sure you see the photographs they produce every day, aiming to influence the commercial, social, and political decisions you make every day.
Texting & Pixting
Let me clear up one more industry-wide misconception. So-called “influencers” on social media platforms like Instagram play, at best, a tangential role in the advertising industry. They play no role at all in the Commercial Photo industry.
Don’t let that surprise you. Influencers are not paid to provide photographic services but for how many “followers” they attract, given their respective talents for garnering “fifteen minutes of fame” (as per Andy Warhol’s timeless dictum). Of course, real celebrities can be influencers too: athletes, musicians, movies stars, etc. They all get paid to guilefully display or deliberately pose with name-brand products, thus making tacit commercial endorsements to their followers.
It’s called “product placement,” of course. You already know it’s a successful way to advertise. But it gets more interesting. Influencers with large followings are often financially supported by advertising agencies who employ “ringers” to shoot pictures that merely look like user-generated content. But it is not UGC. Many of these photos are created by professionals, hired for their ability to reliably produce an “amateur-looking aesthetic.” Attribution of the resulting pictures is, shall we say, disingenuous. The point is, social media is just another medium for advertisers who pay professional photographers to create content the traditional way.
The vast preponderance of so-called “content creators,” people who enjoy illustrating what they ate for breakfast to their online “friends,” are not influencers per se. Real influencers consider it a vocation, a job description. It earns them income. They work hard to market themselves. I’m not trying to disparage any porridge paparazzi, but millions of social media snapshots cannot accomplish what one commercial photographic illustrator can do, just pretending to be an influencer, to get you to buy any given brand of breakfast cereal.
I’ve coined a word for the use of photographic technology on social media: pixting.
Pixting is to photography as texting is to literature. It means engaging in perfunctory conversation by utilizing pictures instead of words across a digital medium. It’s visual smalltalk; the appropriation of a one hundred and seventy-year-old technology called photography for visual chitchat.
Do professional photographers use social media? Sure they do. But it’s a means of self-promotion (marketing) for the most part, to get the attention of clients who will pay them real money to shoot real jobs—including for publication on social media itself. Can an image first published on Instagram be picked up for use in a commercial ad? Sure, why not?
Defining a Twofold Problem
There are two Bs in B2B, representing two sets of customers. The two sets do business with each other:
- Commercial photographers who create and own intellectual property
- Commercial publishers who license IP for their own use
The 2 in the middle of B2B represents, of course, the middlemen. Their role is to facilitate transactions between the two Bs. It’s a coveted position. But middlemen have failed to acquit themselves in that role, in lieu of the photo agents they displaced. Poof! That caused a whole host of problems. Two in particular are voiced loud and clear by both sets of B2B customers:
- Commercial photographers say, “We’ve lost control over pricing our own work.”
- Commercial publishers say, “Stock photo inventories offer too many choices, but too few good ones.”
The two problems are interrelated. When photographers lost control over pricing stock photos, publishers got flooded with mediocre content. It also became harder for photographers who shoot commissioned jobs to stay afloat financially, to remain economically viable and available to serve the publishers who rely on their talents for visual problem-solving.
Several recently funded photography startups, including Wemark, Photochain, Meero, and EyeEm et al. epitomize “deja vu all over again” or we’ve seen this movie before. Each one boasts about having on-boarded tens of thousands of pro photographers and, by implication, professionally produced content. They say their attraction includes the promised implementation of blockchain technology. They’re kidding themselves.
Many of the ostensibly pro photographers they claim to have “on-boarded” are the same ones contributing to every other stock photo distributor online. Nevertheless, whether they call themselves professionals or not, some terrific photos are bound to turn up in circulation. But terrific photos, too, get lost in a sea of mediocrity, increasingly diluted by too many millions more not-so-terrific examples. This flood of poorly curated pictures is continuously overtopping an already bloated inventory. Call it photobesity.
Startup founders are delusional if they think the photographers they attract are working pros. Outliers aside, these are categorically not pro photographers; particularly not just because they say they are, or hope to turn pro eventually. In fact, incumbent photo vendors lead them to believe they will make more money by getting their work seen by more potential buyers. There is a technical term for this gambit: bullshit.
Besides, it is misguided to think that any company’s success corresponds with the number of proactive content contributors they can recruit. Publishers, the buyers that is, already complain about how hard it is to find the kinds of photos they want amongst so many tens of millions of them in any given vendor’s inventory. And it’s not because they can’t find the good ones; IT’S BECAUSE THEY ALL FIND THE SAME GOOD ONES, EXACTLY BECAUSE THEY’RE GOOD.
A great photo, once it’s discovered by one buyer, will be discovered by additional buyers too. It will be sold over and over and over again dirt cheap. Overused, it is published too many times in too many places by too many different end-users. That’s bad for buyers with brand identities to protect. And it’s bad for photographers trying to make a living.
Enterprise publishers are particularly frustrated because they have to comb through inventories that have already been picked clean by tiny businesses and individual consumers who outnumber them exponentially. Too often it costs a major brand or media company more money to find a useable photo than what they might pay for a license to publish it.
A huge percentage of stock photos — 82% of those added to the online inventory each year — are found and sold on multiple stock photo exchanges. There they sit, gathering digital dust on the shelf for far too long. The incumbent vendors’ business model prevents them from seamlessly adding curated content and eliminating what becomes stale and overused. When big fish resort to eating small fish just to replenish their stock, they wind up cannibalizing themselves.
It’s worth saying again that just because most stock photos are created by amateur enthusiasts, instead of professionals, it doesn’t mean they’re no good. But it does mean the best ones, the most useful ones, are few and far between.
Quality is inconsistent because image inventories are restocked incoherently, casting a wide net willy-nilly with no effective curation. Boatloads must be uploaded just to find a few that are worth a publisher’s time and money to download. But poor curation, overuse, and dysfunctional pricing are only symptoms of the root problem.
By now it should be clear that better stock is NOT about better search. Nor does a better stock photo inventory have much to do with uploading greater numbers of photos, better tagging, distributed-content blockchains, AI image-recognition, or the ability to scale technology of any kind.
Very simply put, ninety percent (90%) of professional photographers do not contribute to the Stock Photo pipeline. Why is that?
Hundreds of millions of dollars have been spent — one could say squandered — by investors on dozens of startup and upstart companies, all of which claim to know how to get pro photographers on board, hence better content. They admit it’s their holy grail. But with one risable scheme after another, what they believe will incentivize professionals to proactively contribute content just puts different shades of lipstick on the same old pig: “We’ll give them a bigger percentage of royalties.”
No matter how one describes offering a bigger share of revenue to contributors, royalties mean little to professionals, almost all of whom earn fees, instead, directly from their existing clients for shooting commissioned jobs. That’s how they earn a living; not by dribs and drabs of commodified income. Pros simply do not expect to monetize their stock in the current market environment. Besides, they’ve all heard that empty “royalty” promise before. It doesn’t jibe with the free in “royalty-free,” the prevailing business model.
Photography has changed radically in the 21st century.
The principles underlying the business of photography haven’t changed one bit.
The incumbents are incapable of aggregating a dynamically replenished, professionally produced content inventory because it would require connecting photographers directly online with buyers; something that would contradict the very idea of being a middleman a crowd-sourced, consumer-facing business model.
The incumbents are super-glued to the idea that one price fits all. It’s fundamentally what “royalty-free” means. And it is because of that kind of inflexibility that the incumbents are vulnerable to disruption. They represent the proverbial battleship lumbering low in the water, so big and heavy it cannot outmaneuver a fast-attack torpedo boat running circles around it. Still, every trope, every meme, and every buzzword that startup founders pitch to investors is tied to RF consumer-commodified pricing:
- AI image-recognition, to search collections
- Blockchain, to “register” and “enforce” copyrights
- Decentralized, distributed-content
- Initial Coin Offerings (ICOs) and cryptocurrencies
- Networking smartphone cameras to capture breaking news
- “Briefs” . . . i.e., persuading dozens or hundreds of photographers at a time to spend their own money shooting “jobs” on speculation (“on spec”), then submitting pictures to a distributor’s proprietary clients on an approval basis; whereby, if chosen, only one photographer gets paid. And — still — that photographer will have lost control over licensing terms and fees
- “We have more contributors and more photos than anyone else.”
- “We’re pickier about who our contributors are.”
- “Our photos are free.” [Are you frickin’ kidding me!?]
There is nothing inherently wrong with either blockchain or decentralization; and certainly nothing artificial about the promise of artificial intelligence. But not one of the ideas listed above will incentivize professionals to contribute to the stock photo pipeline. Not one of those ideas represents a viable business model. Not one of them solves a problem that creatives and publishers experience working together. Not one of them addresses the bigger and underserved Enterprise segment.
Typically, startup founders prescribe remedies for the Stock Photo segment that are either irrelevant or at cross purposes with the business problems they presume to solve, looking right past an obvious fact: pro photographers will avoid any company whose business model would exploit them economically. They are, after all, professionals. Professionals do not crowd-source.
Expecting pro photographers to contribute to a vendor like Shutterstock, for instance, would be like expecting all National Geographic staff photographers to shoot and edit their photo assignments on smartphones, instead of using sophisticated cameras, lenses, lights, and grip equipment along with side-by-side arrays of thirty-inch color-corrected monitors, gobs of RAM, specialized graphic-processing cards, and untold terabytes of hard drive storage space. Ain’t gonna happen.
Starups and investors have a long history of failing to appreciate what separates professionals from mere camera enthusiasts; or, more important, why Enterprise buyers make that distinction themselves. Yet, on-boarding pros is the key to a sustainable competitive advantage in the Stock Photo segment. Getting pros connected in the cloud with their own existing clients is a necessary condition for obtaining marketing rights to their work, to their content.
Investors’ and startup-founders’ familiarity with camera-toting tyros and wedding photographers who enjoy seeing their personal pictures shared online cannot offer any insight into the arcane business of licensing photographs for publication. Considering that publishers ALWAYS follow the content, neither the incumbent stock photo vendors nor the myriad startups trying to outdo them have a viable plan for reaching out to pros and garnering the content they create.
So, how does one, first, identify pro photographers and, then, secure their cooperation? How is it possible to create a filter for professionals? If you want to get people to do something for you, make it ridiculously easy to do something for themselves. Remove the barriers!
Sidebar: Define “Professional”
Professional photographers (and videographers) are trusted and hired to shoot commercial jobs by their own carefully cultivated clientele, to whom they grant publication rights and from whom they receive payments in return, commensurate with the terms of a written copyright-licensing agreement, with different terms negotiated for each and every separate transaction.
Photographers who shoot weddings, bar-mitzvahs, headshots, “grip-and-grin,” school portraits, amateur sports teams, and other social events participate in a totally separate market: Social Photo. It is not related to either one of Commercial Photo’s two segments: Enterprise and Retail.
It should go without saying that photographers who are full-time employees of a company, other than their own, are excluded from a Commercial Photo marketplace.
Throwing the Baby Out with the Bathwater
Just because it suddenly became free to distribute photographs via the Internet, it doesn’t follow that their commercial value should be trivialized by unimaginative middlemen.
Why do investors and entrepreneurs keep making the same mistake, conflating two different kinds of photographers representing two different segments using two different business models, resulting in too few professionals contributing to the stock photo pipeline?
First and foremost, it is erroneous to believe that best practices, having once supported a robust analog photography market, are mutually exclusive with online photo sales & licensing. Technology can be used to institutionalize best practices instead of side-stepping them.
Early on, entrepreneurs and their financial backers were cocksure that creating a new e-commerce channel for digital photos meant sacking all previous pricing models. It was a classic case of throwing the baby out with the bathwater. They operated under a widespread belief that “the Internet changes everything” and that that mantra would usher the “old economy” kicking and screaming into the future.
A lot did change. Technology made taking pictures effortless. But no one used technology to make the business of taking pictures effortless.
There is a greater demand today to publish photographs than in the heyday of film. If the number of in-print venues has declined, it is more than offset by an exponential increase in online publication opportunities. Demand continues to grow. There are also just as many pro photographers working today throughout the world as there were then, still winning contracts to shoot photo assignments. To say otherwise, we would have to believe that the number of practicing doctors would decline in direct proportion to an ability self-medicate for minor maladies with over-the-counter drugs; or because anyone can self-diagnose any illness simply by Googling their symptoms. On the contrary, there is always a need for authoritative professional practitioners of medicine. The same goes for photography.
Significantly, the Internet has not changed any principles that determine business outcomes. Photography itself may have changed radically in the 21st century; but the business of licensing photography for publication hasn’t changed one bit. Just because it suddenly became free to distribute photographs via the Internet, it doesn’t follow that their commercial value should be trivialized by unimaginative middlemen. But that’s exactly what happened.
Some well capitalized interlopers, good at reading spreadsheets but, frankly, photographically illiterate, expected professional practitioners to embrace an amateur ethic without regard for undermining their own economic well being or for underserving their own clients. The Internet-changes-everything proponents failed to see any difference between an already established business-to-business sales channel and a new consumer-facing sales channel that emerged at the same time as, and was made possible by, the World Wide Web; which itself evolved on, and because of, the Internet.
The early interlopers deserve kudos for developing this new channel. It continues to serve a class of customers that had not existed before the the Web: ordinary consumers and very small businesses who previously had little need to publish photographs or the wherewithal to pay for them. But the new distributors, the interlopers, were too short-sighted to see how an existing B2B channel could coexist with a new C2B channel. Driving at breakneck speed down the newly paved Information Highway, failing to pay attention to posted warnings, they made roadkill out of the goose that lays the golden eggs: pro photographers.
Institutional Memory Loss
Nearly thirty years ago, Bill Gates and Mark Getty bought the photo business, full stop. They had no experience with photography. Gates and Getty were the first interlopers, the middlemen.
Gates and Getty (Corbis and Getty Images) were in competition with each other; but both saw how to make money by rolling up the many existing photo agencies into one big ball, funneling their many smaller and fragmented revenue streams into one huge torrent of cash: the whole is greater than the sum of its parts. It was a shrewd consolidation play in the best tradition of investment banking, irrespective of the havoc it played with photographers’ careers or the cultural, commercial, and historical underpinnings that account for the value of photography in the first place.
Gates and Getty knew what photographs were worth to their respective bottom lines. The care and feeding of photographers and the integrity of photography itself were incidental to their costs of doing business. The artistes were tolerated until what came to be known as crowd-sourcing grew widespread: an open call to the general public for submissions; an effort to obtain more photos at no upfront cost.
In the 1990s, it became obvious to investors that photography was the perfect product for electronic commerce (e-commerce). There were no manufacturing costs (photographers paid their own production costs); nominal warehousing costs (digitized files were stored on servers); customer demand was high, profit margins were huge; and there were no shipping costs. In fact, there was no need for a FedEx or UPS delivery truck at all.
Amateur camera enthusiasts, less concerned about making money but nonetheless proud of their work, were given an outlet for their photos on the Web. It’s hard to find fault with that. But when hundreds of thousands — or millions — of contributors get paid peanuts individually, what might seem like a big payout in the aggregate pales in comparison with what just a few stakeholders in Corbis and Getty raked in due to sheer sales volume.
It’s easy to see how this could be construed as exploitation. But that debate is irrelevant if one considers that the recklessness of the consolidators lies first and foremost in their conflation of all that crowd-sourced amateur content with professionally produced content — INTO ONE SALES CHANNEL.
Professionals were offered shelf space inside the store, so to speak, but only if they shared it side by side with amateurs at pathetic prices, thus taking the wind out of their sales (pun intended). Consequently, as time went on, lower licensing fees fostered a notion amongst publishers — the corporate bean counters, not the art directors — that pictures viewed on a screen were worth less than those seen in print. Baseless as that opinion was, it stuck. It didn’t take long for pros to disappear from the stock photo shelves, while, at the same time, they began to lose control over pricing their commissioned photo shoots too — their jobs. They had little recourse against a powerful alliance of capital and the supersonic pace of change it wrought.
In a consumer-facing marketplace, crowd-sourced submissions made professional photo contributors superfluous. Tiny businesses and freelance proprietors of all stripes, who had only recently developed a need to fill their newfangled Web sites with photos, were happy with low prices. But upscale Enterprise buyers were increasingly dissatisfied with the mediocrity of images available online. Money was — and still is — left on the table that they would have been happy to pay for more consistent quality and exclusivity.
By the late aughts, which ushered in a conjunction of universal broadband with the eclipse of film (i.e., the fast uploading and downloading of digital images culminating in Kodak’s 2012 bankruptcy), the Corbis-Getty juggernaut had long since cut photographers out of the profit proposition. Professionals, an entire class of individual business owners, were treated collectively like an unskilled labor force, employees in a manufacturing supply chain creating a raw material.
There is no other way to describe it. The vendors’ disdain for, and mistreatment of, established photographers, their utter ignorance for how the business was run successfully for decades, spawned an adversarial relationship that persists to this day. There was no reason for it. A younger generation of photographers has little knowledge of this acrimonious history and how it continues to adversely affect their careers.
Some laypeople and young photographers have a general impression that Getty Images is a bastion of photojournalism, that’s it’s a feather in any photojournalist’s cap to be a “Getty photographer.” After all, Getty offers prestigious competitive grants — albeit relatively tiny ones — that foster the work of selected photojournalists. Getty sponsors events and conferences attended by professional photographers. And one sees Getty photo credits everywhere, including on photographs it acquired for distribution long after their creation; having had no role in their production, economic or otherwise, except to vacuum up distribution rights.
As practically the only game left in town, not due to competitive superiority but deep pockets, Getty Images has become a behemoth of editorial-photo distribution (for publication). However, it is with gross cynicism that Getty itself lays blame for the existential problems facing photojournalism, today, on social media and search platforms, instead of acknowledging the fact that its own cofounders, Mark Getty and Jonathan Klein, are personally responsible for creating and perpetuating photo industry dysfunction in the first place, and that they began their economic assault on photographers before the advent of the World Wide Web. Ironically, it was the Web’s effectiveness at fostering consumer-facing, commodified transactions that saved their insidious business model from total failure.
Copyright is the sine qua non for determining license fees.
Initially, Bill Gates, Mark Getty, and Jonathan Klein hired people to run their companies who cared deeply about photography and photographers. Whether by resignation or firing, they left in quick succession. Today, there is no longer anyone at the helm with firsthand knowledge about best practices that once governed a true photo agency. There are no photo agencies anymore; far fewer anyway, to competitively recruit and foster the best creative talent. By the time millennial photographers and photo buyers habituated to crowd-sourcing, along with a new generation of software designers and engineers, an institutional memory loss prevailed. No one knew, anymore, how to maximize the economic value of photography.
Industry-embraced best practices got lost in a fog and were consigned to oblivion, despite the hard work of an earlier generation of photographers and the guilds that represented them to establish honest principles with photo buyers. The American Society of Media Photographers (ASMP) and the Advertising Photographers of America (APA) promulgated one simple and fair principle that remains protected by federal copyright law: the more one pays to license a photograph, the more market reach one gets (i.e., broader publication rights). That principle applies irrespective of what medium a photograph is published in; online, in print . . . wherever.
Copyright lingers in a state of disuse, hardly the yardstick it once was for meting out publication rights (hence copy-rights) for any given photograph.
Digital Dogma is Barking Up the Wrong Tree
Cameras, lenses, lights, and photo-editing software have flourished with technological innovation since the dawn of the Digital Century. It’s been all on the creative side. But the business side of photography is riven by technological indifference. That’s regrettable because it was always possible to shape technology for the benefit of photographers and the clients they serve, rather than to upend they work for the sole economic benefit of middlemen.
Neither Corbis or Getty Images were based in Silicon Valley; but early on they boarded a train of thought headed in that direction. The Valley has long been obsessed with the notion of “sharing” and a so-called “gig economy.” Uber and Airbnb are the two most obvious examples. However, unlike Uber, whose riders and drivers are universally interchangeable, and unlike Airbnb, whose renters and landlords are also universally interchangeable, contracting a photographer for a commercial photo shoot is a highly subjective matter. It is usually the result of a cultivated, long-term professional relationship.
Vendors who crave the competitive advantages that on-boarding professionals will bring are obliged to remember that publishers are the photographers’ clients, not theirs.
The very meaning ofthe word professional became skewed, if not deliberately skewered, by Silicon Valley’s obsession with “on-demand labor,” quick and cheap transactions for simple services. The fallacy is, you can’t just collar the first person to pass by, wearing a Nikon on a neckstrap, to shoot an ad campaign for Toyota or Pepsi. You can’t call Task Rabbit to shoot a magazine cover for Wired or Forbes, or a brochure for Boeing. If you’re a freelancer whose marketing needs aren’t more than posting pictures to Instagram, you might get by with such a meager effort. But if you’re an executive with a company that employs more than three or four people, you’d be mad to ask anyone to snap pictures with an iPhone to support your advertising campaign.
Photo vendors who crave the competitive advantages of on-boarding professional contributors to the gravy train are obliged to remember that publishers (i.e., buyers) are the photographers’ clients, not theirs. Vendors must own up to the fact that the revenue they earn comes from photographers because the photographers own the product — the intellectual property — being sold (licensed actually).
Receiving that kind of economic respect may not matter much to mere enthusiasts who are happy and proud to make a few extra bucks with their cameras. But the idea of pro photographers getting paid so-called “royalties” by vendors (who own nothing), instead of acknowledging that it is the pros who actually pay sales commissions to vendors, is an insult because every professional is a business owner running either a sole proprietorship, S Corp, C Corp, LLC, or LLP. Incidentally, the payment of royalties illustrates a disingenuous accounting method vendors use to book their gross revenue, to fake out stakeholders.
Workflow & Copyright
Given that the ability of individual photographers to establish professional relationships with paying clients depends as much on professionalism itself as it does on talent, the complexity of any given licensing deal requires all parties to memorialize their agreements in writing.
Unlike typical invoices, if invoices are even needed for consumer transactions, a photo shoot requires an invoice that is, in fact, a contract. More than simply a demand for payment, a contract memorializes an agreement. The agreement acknowledges a deal, and keeps it from becoming an ordeal.
In the Commercial Photo industry, each invoice includes a multiplicity of arcane and industry-specific, line-item expenses. Each invoice also contains a copyright-licensing agreement, the contract alluded to before. It specifies publication rights granted — and specifically denies those not granted — to any given client for any given job.
Each job is different. The copyright-licensing agreement literally defines what the client (i.e., the licensee) is allowed to do, and not to do, with the photographs produced on assignment by the photographer. The breadth of publication rights granted depends on how much, or how little, the client pays the photographer.
This highly idiosyncratic workflow must be automated.
Copyright is just a tool. But it’s an indispensable tool. When applied in the context of a written licensing agreement, it comprehensively describes how a publisher intends to use the photograph(s) in question. That licensing agreement is instrumental in tallying up a fee. It’s called a usage fee. It reflects each and every publication right granted. Copyright is the sine qua non for determining photo-licensing fees, the essential tool for pricing pictures for publication.
When a publisher’s needs can be accounted for incrementally, in units of value called publication rights, costs can be kept down; yet the price is still optimal for the photographer. Otherwise, the photographer would have to charge a higher price — sometimes much higher — to cover any and all imagined uses by the publisher, now and in the future, whether those uses would be implemented or not. On the other hand, copyright allows publishers to pay as they go and, of course, only for what they actually use. It’s like ordering dim sum à la carte. This parceling-of-rights process can easily be automated.
Writing a copyright license describes the size of a publisher’s appetite. For example, if you’re hungry for a T-bone steak, you needn’t pay for the entire steer. But if you have to cater a banquet with T-bone steaks, well, you have to pay accordingly. Prices vary from job to job, and from stock photo to stock photo; but they must always be consistent with the commercial value a client derives from the publication of any given photograph(s). The act of composing a copyright license susses out limited needs versus comprehensive needs and, thus, helps determine a price that is fair to both seller and buyer.
A usage fee can range all the way from an inexpensive one-time, non-exclusive publication on a single Web page at 1/8 screen size for no longer than one week, up to a total “buyout” by an ad agency representing a major corporate brand. A buyout might include the photographer’s outright sale of a copyright itself, which would transfer ownership of the photograph(s) in question to the buyer. That should cost a whole lot more than a carefully defined, limited use. On the other hand, if securing exclusivity and broad publication rights are less important to a publisher, a lower fee paid to the photographer is offset by the photographer’s right to earn additional income by re-licensing, or re-selling, residual rights, to the photograph(s) in question, to additional publishers or even to the same publisher if further uses arise later on. Thus copyright helps determine fees that are affordable for the publisher and, also, economically sustainable for the photographer; a fair balance.
These are the criteria used to determine price. They can be implemented by algorithm:
1) Duration — how long over time a picture remains in public view
2) Frequency — how many different instances a picture appears
3) Exclusivity — how many (or how few) different places a picture appears
4) Prevalence — how many people, total, are ultimately expected to see a picture
5) Size — how big a picture appears, relative to the medium of its publication
Note: A sixth pricing criterion is Reputation; which returns a production fee (as opposed to a usage fee), and relies subjectively on the prestige a photographer commands.
Pro-sourcing vs. Crowd-sourcing: Photographs Are Not Widgets
Seventy percent (70%) of the buyers now served by Getty Images, Adobe Stock, and Shutterstock et al. are either ordinary consumers and freelancers with locally-reaching Web sites or companies of fewer than twenty employees, also with limited reach. Such small entities can easily make do with crowd-sourced content. On the other hand, companies requiring the broadest conceivable market reach, Enterprise brands & media, are poorly served by crowd-sourced content because crowd-sourcing inherently lacks the exclusivity necessary to protect brand identities throughout vast markets and market segments — often internationally. Pro-sourcing, rather than crowd-sourcing, is a matter of recognizing who the buyers are and what they want.
A Shutterstock shareholder publicly admitted just this year, “Worldwide, the number of customers willing to actually pay for the images they use seems to be flat.” The company’s corporate annual report validates that statement; yet, it represents only one aspect of an industry-wide malaise: Stock Photo revenue has fallen flat for a decade.
Despite combined sales in the billions of dollars, the reigning Stock Photo vendors swap revenue back and forth with each other like squeezing air in a balloon. If one gets bigger, the others get smaller, and vice versa. Not one of them can increase revenue by raising prices because buyers complain about their stale and overused inventories; but neither can they increase quality because the prices they charge — what retail consumers are willing to pay — are too low to attract better content contributors. Again, money is left on the table that Enterprise buyers are willing to pay for dynamically replenished, professionally produced content.
The same shareholder acknowledged that Shutterstock had cut its already low prices yet grew the size of its inventory by forty-six (46%) percent in 2017. THAT’S THE PROBLEM, NOT THE SOLUTION! Photo buyers continue to gripe that there are more pictures in any given vendor’s catalog than there are atoms in a cow, making it harder to find what they want. It’s also hard to find photos that haven’t already been published by someone else. Incidentally, that shareholder concluded, “AI doesn’t seem to be solving the search problem. Acquisitions don’t seem to be the answer [either].”
To paraphrase an old truism, it’s easier to sell a thousand photos for a dollar than one photo for a thousand dollars. That’s the Stock Photo market mindset today. It seems rational. But if a buyer thinks it’s only worth paying a dollar for a photo, a vendor makes out okay because it has millions of other one-dollar photos to sell, from just as many millions of contributors. All of those photos don’t have to be “good.” Most of them are not. Nevertheless, the best ones have been published too often. That takes them out of the running when it comes to attracting sophisticated and higher-paying Enterprise customers. Because such photos lack any kind of exclusivity, they’re of little to no commercial use.
Photographs are not widgets. They have no monolithic utility. Collectively, their use is infinitely variable and, yet, each one is subjectively unique. That fact holds true despite the gazillions of images made every day using photographic technology. It’s the technology that makes images photographic. But they are not photographs, per se, in any context of usefulness. They have little value as commercial illustrations — or as original works of art for that matter. The value of an original photograph can only be determined by how and where it is published and how well it conveys either a social, political, or commercial message to its intended audience. (I’ll add emotional messages, too, for art’s sake.) Therefore, photographs cannot be packaged, priced, and sold like consumer products. In fact, even the value of original art depends on its very nature of exclusivity, rarity.
The bottom line is, a buyer can’t expect any measure of exclusivity for a photograph that costs only a dollar. It is useless commercially. A seller’s right (i.e, the creator and owner, not the middleman) is to demand a price that suits his own economic sustainability as much as it reflects the commercial value , or utility, of its publication to the buyer.
Is piracy is a problem? Not so much in a B2B marketplace because publishers know that severe economic penalties apply for infringing registered copyrights. That means for copying and publishing a photograph without permission, attribution, and payment.
Infringers know they are subject to either actual damages (i.e., lost profits, or what any given photographer would have earned sans infringement) up to $150,000 per infringement, if the infringement was willfull. These cash penalties are imposed by United States federal law for each infringement of each photograph. That’s $150,000 per photograph or, for example, $1,500,000 if a successful lawsuit involves ten photographs.
Although any and every photograph is copyrighted by default from the moment of its inception, from the moment the shutter button is pressed, no copyright is registered by default.
Registration of a photograph’s inherent copyright requires proactive execution by its creator. But taking that extra administrative step, to register a copyright, gives creators tremendous leverage over infringers. It is also a tremendous deterrent to potential infringers, keeping them at bay.
Registering a copyright gives creators the keys to the courthouse, so to speak. It usually ensures the means to pay for the prosecution of infringers in civil-court by providing a financial incentive for a lawyer to take the case.
It’s pretty straightforward to federally register a copyright; but tedious and inconvenient. It’s made easy by adding that step as a default to an automated SaaS workflow. Registering copyrights automatically, on behalf of photographers, for virtually every photograph they shoot, is a powerful way to attract them to the platform.
When photos are infringed by very small retail businesses and individual consumers on the Web, it’s a minor economic affair. In the Enterprise segment it rarely occurs because of the severe penalities enforced by US statutory law. With automatic registration, the matter pretty much disappears altogether.
Back in the day, despite being fragmented throughout the US and Europe (with a lesser presence in Asia and elsewhere), traditional photo agencies made good money for themselves and the photographers they represented. Agencies flourished from the 1940s through the 1990s; but their heyday lasted from about 1970 to 1995. They were true agents, acting in the best interests of the photographers they represented. They served buyers well, too, because pricing was fair, based on the principles of copyright ownership. And they protected both exclusivity and quality.
Some agencies marketed proprietary collections of stock photos. Others represented a “stable” of photographers shooting editorial and commercial assignments. Most agencies re-licensed residuals on behalf of the photographers who shot them. Photos were all shot on film, of course. Starting in the mid-1990s, the consolidation binge began. Agencies were gobbled up.
No one questioned the absurd proposition, that the best way to serve customers and reward shareholders was to devalue photographs as an asset class. Instead of regarding their value individually, their assertion was all photos were alike and should be sold as a commodity. No investors questioned the economic feasibility of a business model that excluded photographers as customers and purported that their intellectual property was theoretical, not actual. No one realized, or cared, that technology could be used to increase productivity and simplify rights-managed pricing for online transactions. Thus they cut commercial photographers and commercial publishers — and their more lucrative revenue stream — out of the marketplace.
When Corbis (Bill Gates’s company) and Getty Images each imposed a consumer-facing business model (i.e., high volume, low price), they set the bar low for the entire industry. They would tell you, at the time, rights-managed pricing was useless in an online economy. But the move they made toward consolidating Retail consumer sales revenue blinded them to any kind of vision for industry growth. They simply knew nothing about photography.
The world began to look less picturesque to pro photographers. Buyers, having gotten used to paying low prices for pre-shot pictures, now expected to pay lower fees for commissioned jobs too. Of course, Enterprise buyers, now that they too were publishing content online, expected it to cost less simply because it was online.
To replenish their “stock” when a given set of pictures in their respective inventories became too stale or outdated for further licensing, Corbis and Getty aggressively recruited new photographer-contributors. Some willingly relinquished their copyrights to any photos they might create in the future by signing work-for-hire contracts; which meant they gave up ownership — they gave up their business proprietorships too — in exchange for a minor measure of economic security. They were now expected to shoot various kinds of subject matter and themes under the aegis of Getty or Corbis. Getty and Corbis anticipated market demand and told them what to shoot. But because they would get paid less, it’s reasonable to assume that not many established professionals heeded the siren’s call. Most of the photographers who had been represented by agencies, now that they had been acquired, had already run for the hills and taken their photographs (on film) with them, rather than let them be syndicated by middlemen who would deliberately devalue them.
Unlike buying a record company, which generally includes a library full of songs and publishing rights, or unlike buying a Hollywood movie studio that comes with a library of feature films, and other than some notably larger collections of timeless and historically valuable photographs that were already in the public domain, the photographers who had been represented by agencies owned their photographs. The agencies did not.
When a gap became evident in any given vendor’s collection for one kind of subject matter or another, the vendor would sometimes buy an entire archive of film (color slides & b+w negatives) from a photographer who had specialized in one of those categories; e.g., music or astronomy or sports. Vendors also began to digitize entire collections for on-line licensing. But most top photographers gave up any expectation of earning income from stock after bearing witness to the Corbis-Getty buying spree. From that time on, they relied solely on contracted photo assignments to earn a living.
Today, the industry is undergoing another round of consolidation. Beijing-based Visual China Group (VCG) bought Corbis and 500px. Getty, having recently bounced back and forth between private equity companies Hellman & Friedman and The Carlyle Group, is once again in the private hands of the Getty family and its fortune. Adobe bought Fotolia and has since struck distribution deals with EyeEm and Stocksy. Getty, too, has a distribution deal with EyeEm (another content overlap). ImageBrief’s implausible low-balling business model folded like a cheap shotgun. So did Blend Images. Twenty20 can’t make ends meet. Even the enthusiast photo-sharing site SmugMug bought Flickr, to gobble up more quotidian content. But Stock Photo startups continue to pop up like mushrooms in an investment-market mulch. I predict that they, too, will fall victim to an industry cannibalizing itself to acquire more content. To wit, VCG, immediately after acquiring the financially failing and unprofitable Corbis from Bill Gates for pennies on the dollar, turned right around and made a distribution deal with Getty. Remember, though, Corbis had been Getty’s biggest rival. Getty’s then CEO Jonathan Klein boasted sardonically, “Lovely to get the milk, the cream, the cheese, the yoghurt and the meat without buying the cow.”
Economic Death by a Thousand Cuts
Getty Images was powerless to stop Google from “scraping” photos off of its exchange and letting Google Photo’s own users freely copy them. Google, the only company big enough and amoral enough to bully Getty had been circumventing both copyright attribution and payments to photographers. But Getty recently inked a deal with — wait for it! — Google itself. Google’s VIEW IMAGE button is now a VISIT IMAGE button that links back to Getty. But Google is still free to use Getty content in all of its own products and services. Emphasis is on the word free.
Contractually, photographers have no say in transactions like that, despite the fact that they own the copyrights for the photographs in question. This is just one more reason why pros are loathe to “join the crowd” (i.e., to crowd-source).
Incidentally, along with millions of other culturally iconic, previously American-owned photographs, the Chinese now have digital distribution rights to, and perhaps outright ownership of, the famous 1989 Tiananmen Square “Tank Man” photograph. Many photographs like that one could disappear at the discretion of the Chinese government, now that VCG controls their distribution.
Making photo distribution deals with sub-vendors to get access to more content is cheaper than buying whole companies and their archives outright. But it further dilutes the income of contributing photographers. And, as already stated, such deals overlap content from one vendor’s inventory to another’s, all hurled together into one big bin, making it harder still for buyers to discover original content.
Photographers who contribute to any given vendor’s inventory can expect to see their work distributed to additional — even competing — e-commerce exchanges, whether they like it or not. For example, EyeEm’s collection is now distributed by both Getty and Adobe. Contributors can rationalize that more buyers may see their work, download it, and publish it. But any additional income they might receive is offset by progressively diminishing royalties, as an ever-expanding hierarchy of sub-vendors takes a percentage of a percentage of a percentage of the original deal the photographer struck with whichever vendor was higher in the food chain.
Typically, a contributing photographer will earn less than $300 — per year!— if anything at all. That means individual professional photographers lose tens of thousands of dollars each in potential annual income because this segment has been alternatively erased or usurped by vendors who are not only unscrupulous but simply don’t have the know-how to squeeze additional revenue out of separate licensing transactions.
Fixing Jobs Fixes Stock
In addition to consolidating pro photographers, their residuals too, vendors would love to take a cut of revenue from independently-contracted photo assignments too. But pros nurse a deep-seated antipathy for the way vendors have encouraged dysfunctional pricing practices to evolve. Collaboration with the incumbent vendors’ business model represents economic suicide. It has already cost them their income from stock sales and driven down income down from their bread-and-butter business shooting jobs.
That said, pros are keenly aware of the economic value of their residuals. They also know they have little reach into the stock photo marketplace, fragmented as they are. Individual photographers don’t have the wherewithal to put their work in front of as many potential buyers as a well capitalized vendor can do. But every effort so far to persuade professionals to proactively contribute has meant looking through the lens of crowd-sourcing: the original sin.
Notwithstanding how it harms photographers, crowd-sourcing harms publishers too, by putting a cap on the quality of content. Crowd-sourcing is antithetical to serving Enterprise goals. It’s a matter of millions of random contributors serving Retail consumers at commodified prices versus thousands of curated contributors serving Enterprise buyers at rights-managed prices.
Instead of making empty promises aimed at attracting professionals, only to funnel them into a sales channel clotted with amateurs and fostering commodity pricing for consumers, a parallel channel must be created explicitly for professionals who serve Enterprise publishing buyers.
The key to creating a discrete catalog of premium, professionally produced, and dynamically replenished stock photos is to abandon the idea that professionals will ever proactively contribute their work.
Even if they didn’t expect their residuals to be ruthlessly commodified, there is no guarantee that professionals, who are busy shooting jobs, would ever find time to curate, caption, and upload their residuals — not even with helpers to do the actual work. Incidentally, I’m not suggesting that artificial intelligence should be used for that purpose. AI is not up to the task of professional editing and curating. The question, therefore, is, How do you get a critical mass of pro photographers onto a single platform, where their content just already is, where it can be captured passively? And what kind of incentive would encourage them to let anyone do that?
The answer is, once photographers and their existing clients are connected online, residuals can indeed be captured not only passively but seamlessly as a routine part of their jobs workflow. It’s accomplished by electronically executing licenses, invoices, deliveries, and collecting payments on their behalf.
In other words, fixing jobs fixes stock. Once connected online, once agency is restored, both literally and figuratively, it’s easy for photographers to see for themselves how their clients can gain long-desired access to residuals at prices that make everybody smile.
A Holistic Solution
Photographers encounter too much friction, as artists, trying to navigate the world of business and shoot pictures at the same time. Their plight is worsened by a 1998 workflow.
Not only is workflow off-line, it’s a very different kind of workflow than that used to create invoices for simple consumer transactions. In fact, each invoice for a B2B commercial photo shoot is a contract. Liyerally a contract, it is a signed agreement between a photographer and a publisher. It outlines specific terms and conditions pertaining to the licensing of publication rights for intellectual property (i.e., photographs). In addition, it includes any number of arcane line-item expenses that would not appear on an ordinary invoice.
Professional back-office inefficiencies lose money and clients:
- Photographers don’t know how much to bill because each job is different. Different clients have different uses for photography, some more modest than others, and different budgets, some more expansive than others. Individual photographers have different production costs and overhead.
- Photographers easily forget which ones of dozens of arcane line-item production expenses to estimate, mark up, and then bill to their clients.
- Photographers cannot call a lawyer every time they pick up a camera, to compose a written copyright license for each and every job they shoot.
- Neither photographers nor publishers are reminded when a license expires.
- Sales tax rules are applied haphazardly, resulting in legal exposure and punishing fines.
- Electronic photo delivery is fragmented, with countless FTP sites and a distrust of Dropbox et al. Some photographers still put a hard drive in a FedEx box.
- Clients have to wait too long for invoices because photographers are several days into one job and weeks behind with “paperwork” for previous jobs. Cashflow makes sucking sounds.
- Photographers wait even longer to get paid (by paper check via snail mail). Alternatively, it’s counterproductive for photographers to subscribe to various on-line payment apps used by as many different clients.
Corbis and Getty consolidated fragmented photo agencies to obtain content. There are no more agencies or content collections to consolidate. Having driven away the best creators of new content, who are now fragmented themselves, with no agency affiliation, the incumbent vendors came to rely on crowd-sourcing stock photos instead. The irony is that crowd-sourcing is anathema to the best-paying customers.
Enabling photographers to electronically invoice, deliver, and get paid for jobs, with automated efficiency on one proprietary platform, is a magnet for fresh content from the very photographers who were, and remain, alienated by the incumbents. With the exchange of symmetrical throughput stemming from transactions with their existing clients, thus greatly reducing their administrative burden, not only can residuals be captured and monetized, but transactions themselves — the workflow itself— can be captured and monetized too.
As a further draw, to get photographers connected online, their administrative workflow can be integrated with their creative workflow in Adobe Lightroom® or Capture One®.
Practically all photographers use either Lightroom or Capture One to edit and cull a set of “selects” from amongst the dozens, hundreds, or even thousands of pictures they shoot during any given photo assignment. They use these tools to eliminate duplicates, mis-flashes, out-of-focus frames, poor exposures, shots of their feet, and images that are irrelevant to the client. Once these “outtakes” are eliminated, the selects are treated to post-production editing techniques; e.g., fine-tuned for composition, color correction, cropping, retouching, special effects, etc. These perfectly polished pictures are finally delivered to the client.
Selects are pre-curated.
Because digital selects can be delivered electronically via the same platform that manages each photographer’s production workflow, including accounts receivable, residuals can be captured on the fly and backed-up to the cloud. In the cloud, a continuously updated inventory, a collective photographic archive representing each individual photographer’s most precious assets, is protected off-site against both natural disaster and theft, the kinds of catastophes that defeat the inherent lack of security in physical computers and back-up devices. This is just one more value-added service that adds to the magnetic appeal of the platform.
When a photographer’s client receives e-notification that a job is ready for delivery, for download, just a mouse-click agrees to the photographer’s Terms & Conditions and simultaneously deposits payment into the photographer’s bank account.
When using a back-office workflow, automated and integrated with a photographer’s creative workflow, selects can be electronically imbued with metadata. That means “legalese,” the written text or technical language used to describe the Terms & Conditions pursuant to any given publication license, is embedded in a Virtual Paper Trail™ of documentation for each and every photo assignment. It is also electronically embedded into each and every digital image file (i.e. photo itself).
When a the publication license expires for any given photograph(s), and, also, as the inherent legal rights reserved by each photographer pertain to unpublished photos from any given job, online permissions can be obtained by the same client, or subsequent clients, to license and re-license the photo(s) in question at rights-managed prices. A Pricing Engine algorithm suggests a reasonable figure, one in accordance with each individual photographer’s economic profile vis à vis the buyer’s budget. For example, the algorithm will use answers to simple questions posed to each photographer when they register on the platform for the first time:
- How much annual salary (take-home pay) do you expect to earn?
- How many jobs do you think you’ll have to shoot each year to earn that salary?
- How much money do you want to put into a savings account each year?
- What’s your annualized cost of doing business? (A list of overhead expenses is presented.)
All of the above data are analayzed in conjunction with each buyer’s history of payments to photographers throughout the network for similar jobs and, also, according to their always-variable spending budgets.
A modest commission can be paid to the proprietor of this platform in exchange for solving the three problems topmost in every photographer’s mind:
- How can I manage my business, including monetizing my residuals? (spending less time behind a desk and more time behind a camera)
- How much should I charge my clients? (to regain competitive control over pricing my own work)
- How can I compose a written legal copyright license on each invoice? (I can’t call a lawyer every time I pick up my camera to shoot a job)
A symmetrical platform to facilitate transactions is comprised of a back-office workflow app for jobs (on one side) that “talks” to an e-commerce stock photo exchange (on the other side). Ultimately, photographers and publishers will find themselves connected by an interactive Digital Asset Management Network (DAMN) with reciprocal access to actionable market intelligence about distribution and pricing.
An AI Pricing Engine suggests a separate line-item assignment fee, based on each photographer’s personal profile (factors analyzed for sustainable income) plus a separate line-item usage fee that corresponds to the publication rights granted to a publisher. The platform proprietor doesn’t pay royalties to photographers but, instead, accepts commissions in exchange for acting as an electronic licensing agent.
Information symmetry turns a fragmented army of freelancers — all generals, no privates — into a consolidated workforce, a virtual photography cartel, resulting in radical productivity gains across the board for commissioned photo shoots in tandem with a new and dynamically replenished source of premium stock photos for Enterprise publishers.
Ultimately, the Pricing Engine algorithm will be imbued with the same authority for pricing photographs and photographic services as Google’s algorithm has become the authority for Search.
Commercial imagemakers are as disproportionately few, considering everyone has a camera, as their works are innumerable and ubiquitous. Despite being few in number, their influence is global.
Working pros number about 120,000 worldwide. They are one-man bands. And they are fragmented. Collectively, however, they generate more than $6.5 billion each year in fees for commissioned jobs.
With an AI pricing matrix in place (i.e., a Pricing Engine), fees will likely increase gradually, notwithstanding increased revenue from a vast reservoir of lucrative residuals, ready and waiting to be monetized.
These valuable assets, residuals, are so far invisible to buyers. They are stored on hard-drive arrays in photo studios and home-offices, hidden like cash stuffed under mattresses. They are NOT in the cloud. They earn dividends for no one. It is estimated that residuals are worth an additional $3B in sales annually. Pros create millions and millions of additional premium residuals updated every day, continuously.
Photographs will be curated automatically as photographers and their clients interactively use the platform . Machine learning automates the following:
- Complex B2B licensing transactions (including composing copyright language)
- Asset-based, rights-managed pricing (in sync with commercial value to buyers)
- Predictive image search
- Publication provenance & term-of-license expiration reminders
- Federal copyright registration
- Digital Asset Management & Networking (DAMN)
- Cultivation of long-term client relationships
- Electronic Payments (eliminating written invoices and paper checks in the mail)
AI Levels the Economic Playing Field
Photography’s inherent value is memorialized by the famous one-to-a-thousand ratio for the number of words used to describe what one picture can illustrate. That value cannot be downplayed. But it’s monetary value has indeed been downplayed.
Most well rounded photographers can’t roll downhill when it comes to pricing their own work.
Nobody picks up a camera just to start a small business. Photographers want to support their art. They hope it will support them too. But they have a hard time figuring out how much to charge for their work. For example, they rarely have enough information, or the right information, to calculate an assignment fee, to compensate for their physical effort and time (sometimes called a camera fee or shooting fee), let alone a requisite usage fee, billed on top, to compensate for the commercial value a client receives as a direct result of publishing the photographer’s intellectual property. Notwithstanding all the rest of a photographer’s back-office “administrivia,” coming up with a bottom-line price for a “simple” photo shoot, including taxes, can be as complex as producing and budgeting a scene in a movie.
It must be reiterated that pro photographers who shoot jobs do not contribute to the stock photo pipeleine because there is no economic upside. And from the buyers’ perspective, royalty-free pricing is both arbitrary and gratuitous for all but the least discerning amongst them. The prevailing smorgasbord approach to stock photo sales — all you can eat for one low price — doesn’t satisfy buyers with a taste and a budget for haute cuisine prepared by a top chef.
Technology to the rescue! A Pricing Engine algorithm, instead of all too common guesswork, can determine a fair market price without aiming high or aiming low, and without aiming at the middle. It acts on market intelligence to provide the optimal price for both the seller and buyer, having analyzed symmetrical information captured during the transaction. It calculates the actual commercial value to the end-user for any given photograph by weighing production costs, profit margins, how many people will see it vis à vis the extent of rights granted to publish it, and the history of previous transactions between specific creators and clients.
Chicago GSB Professor & Nobel laureate Eugene Fama famously said, “Prices reflect all available information.” His theory about pricing Wall Street stock market assets holds true in the Stock Photo market too.
An easy-to-use business-automation app, one that includes a pricing feature integrated with an e-commerce photo exchange and distributed FREE to photographers, can self-select for professionals and their Enterprise publishing clients— exclusively. On the other hand, Retail transactions — and the photographers who shoot social events — are excluded by default because only commercial pros would have any use for a tool that bills their clients for licensing fees; and, conversely, only Enterprise publishers pay commercial pro photographers. Self-selection!
Enterprise buyers recognize that the best source for stock photos is the same platform they use to work with pros they already trust and hire to shoot jobs.
The e-commerce photo exchange (the buyers’ portal) will not look much different or operate very differently than any existing photo exchange. It’ll be just like visiting, say, Getty Images’ website. However, the content will be entirely different because it comes from an exclusive and better curated source.
When middlemen fail to connect photographers with Enterprise photo buyers in a world in which all other aspects of commerce are connected via the Internet, indeed when hubris makes distributors believe they are the sellers, instead of the actual owners of intellectual property (i.e., the photographers who create and own the IP), they see only one side of each transaction. This kind of information asymmetry, seeing only half of what goes on, makes incumbent Stock Photo vendors vulnerable, underscored by their most fundamental error: failing to appreciate that photographers and publishers have equal standing as customers.
There are two Bs in B2B (business-to-business), representing two sets of customers who do business with each other. In this case:
- Commercial photographers who create and own intellectual property
- Commercial publishers who license it for their own use
Both sets of B2B customers are complaining loud and clear:
- Photographers say, “We’ve lost control over pricing our own work.”
- Publishers say, “Stock photo catalogs offer too many choices, and too few good ones.”
Approximately 120,000 photographers worldwide earn $6.5B in fees shooting jobs directly for their own clients: commercial brands and media companies. That figure does not include potential licensing revenue from residuals. Residuals is a term of art for professional-quality stock photography — offshoots, so to speak, from jobs.
For the most part, these photographers do not contribute to the stock photo pipeline, despite the fact that their residuals — those offshoots— are in demand by publishers for relicensing after initial publication rights expire, and when only a limited publication license was required in the first place. The content is not monetized at all; not by photographers, not by vendors.
That $6.5B in jobs revenue is fragmented because the jobs workflow itself is off-line. With an offline workflow it is impossible to consolidate top-tier photo- and videographers on one proprietary platform. Without consolidation them, it is impossible to capture symmetrical data from photographers’ licensing transactions with their clients (publishers), as they pertain both to pricing and the seamless capture of premium residuals for monetization. Residuals are worth an additional $3B in annual revenue.
All of those 120,000 photographers are recognized by their clients as professionals. They do not self-designate. They are professionals by definition because they are trusted, hired, and paid to shoot jobs. But even working pros have a hard time getting invoices out accurately and on time, and a harder time, still, getting paid because they are obliged to rely on twentieth century desktop software and paper documents.
No company monetizes either jobs or residuals, let alone both. A broker situated between commercial publishers and photographers, one who appreciates their equal standing as customers, sits smack in the middle of their revenue stream, facilitating complex licensing transactions, including payments, while capturing actionable market intelligence. As a routine part of moderating that workflow, it becomes possible to capture a dynamic cascade of premium residuals for exclusive monetization, as well as the data that make rights-managed pricing of residuals possible in the first place. It solves the singular problem suffered by incumbent photo vendors: they cannot raise prices. They can only swap market share back and fort with each other.
Sellers and buyers alike want to be on the one platform everyone else in the industry is using. That’s the network effect. Right now, the best photographers, the professional photographers who are in demand by commercial publishers, whose work is most prized, categorically decline to participate on any existing platform.
The most tried-and-true investment thesis is to take an essential industry that’s not digital, and make it digital.
The emergence of crowd-sourced, consumer-to-business (C2B) stock photo sales created new customers, a new market segment: shopkeepers, freelancers, and startups that previously had no need to publish pictures, let alone the wherewithal to pay for them. Now they need photos to fill up their websites. Middlemen stepped in to capitalize on this need.
At first, Enterprise publishers got a windfall, paying the same cheap licensing fees for photos as retail consumers. But a crowd-sourced supply chain inevitably led to photobesity: commodified prices for an increasingly bloated and stale inventory.
The incumbents still believe that revenue is possible only through high-volume sales at low prices. That philosophy is belied by the fact that they are unable to increase revenue, despite an obvious growth in demand for photography. Their error was, and continues to be, recklessly lumping B2B content together with C2B content into one bargain basement bin. That‘s why industry revenue is static.
Getty Images bought its market share with no hands-on experience in commercial photography. They left a knowledge vacuum in the wake of their rapid expansion via serial acquisitions of existing stock photo inventories, steadfastly pursuing consumer-facing sales. But having sidestepped organic growth and technological innovation, they let Enterprise revenue fritter away.
To paraphrase Facebook’s CEO, if you move fast and break things, you have an obligation to fix them! Getty Images was always bullish about crowd-sourcing. But they were, and still are, the biggest bull in the china shop, clumsily shattering everything valuable in sight. Many feckless startups — matadors, if you will — have dared to enter the china shop and pick up the pieces, only to be gored by the bull.
Fixing a dysfunctional marketplace requires an acknowledgement that photographers own what they create, and that their ownership of intellectual property, and its commercial value, is the basis for industry-wide revenue.
This is not rocket science; just an opportunity for bona fide domain expertise to engage a network of like-minded professional practitioners with the kind of deliriously cool product-market fit that builds a moat around the most premium content in the world. It’s a tool that they can use, instead of a tool that uses them. Exploiting existing vulnerabilities that the competition is incapable of correcting without canniblizing its existing revenue model is how to turn this indispensable and extraordinarily lucrative industry inside out like a sock.
Economic and creative outcomes for photographers and publishers are radically transformed by building the platform where photo industry participants want to be.