Are Rewards Programs Screwing Photographers?

Let’s take a look for a moment at industry wide pricing for stock photographs, shall we? For simplification reasons, let’s agree on the process by which photographs are fed into the giant labyrinth of photo agencies and archives. Essentially, the photographer creates the images, processes them digitally, applies the metadata and uploads them to an agency. The agency (take your pick) has in place a network of buyers and other agencies and provide the platform for distribution and payment for the photographer for a percentage of the sale. In other words, the agencies simply function as brokers between photographers and buyers.

Let’s also agree for the sake of space (you’re already probably bored, so let’s speed things up here) that the photographer and the agency incur significant expenses while fulfilling their end of the arrangement. Photographers are encumbered by rapidly changing technology and have to keep pace to remain relevant and the agencies must maintain a stable, smooth and easily accessible archive of images to appease their clients. All that takes money. Lots of money, most will agree.

Like in most commodities markets, prices rise and fall. With respect to photographs specifically, prices have been in a general free fall for years and there’s no signs of it letting up. In fact, there is pressure on the agencies to maintain nearly unsustainable prices in the form of Preferred Vendor agreements. These agreements are in place to provide volume discounting and encourage buyers loyalty to a particular agency. In other words, once a buyer asks for and receives Preferred Vendor status, they will pay less per image so long as they regularly purchase images. Of the three parties involved in the agreement, who benefits the most and who suffers?

  1. The Buyer: The buyer, typically a large publishing company with needs for many images each month, benefits from a type of rewards program and receives discounted pricing on images in return for their loyalty.
  2. The Agency: The agency benefits from enticing repeat, volume based buyers with discounted pricing on images. The agencies receive less per image but attempt to make up for that with increased volume. (the Getty model)
  3. The Photographer: Not much benefit here at all for the person actually creating the content. The photographer’s image sells for far less than normal but the photographer does not participate in the agency’s volume based revenue that is designed to make up for the discounted pricing. In other words, XYZ buyer comes to BCD agency and purchases my image at a discounted price, then goes on to purchase a 10 more from 10 other photographers. The agency benefits from the volume of all ten sales, the buyer benefits from the volume based discount, but each photographer receives no portion of the other sales, hence the photographer’s revenue decreases.

Another factor that used to drive pricing but has been rendered less significant when Vendor Preferred is applied is the uniqueness of the image. I photographed a Nobel Prize scientist years ago who has not been photographed many times and is hard to contact. His image is in fair demand and has sold many times over. However, last month I had his images licensed four times to magazines in France and the Netherlands. One sale was for $25.60, another for $57.09 and the last two for $92.15 and $102.39. I receive, as is standard with agencies, 40% of those sales. Grand total for licensing the four images was about $137.Yikes…….

Nothing is ever as simple as it seems. Some will argue that without Vendor Preferred the photographer would receive 40% of nothing. Some, like myself, would prefer to find a model that rewards the photographer, not just the buyer and agency, for engaging in volume discounting. Perhaps a yearly dividend sent to each photographer so that all the photographers benefit in a small way from the discounting.

When too much power is wielded by one side in a business deal, someone gets the short end. It’s been a buyer’s market for years and it’s not going to change. The buyer’s wield the power, the agencies are adapting to survive and the photographers are watching their royalties continually decline. We just have to figure out how to fix things before the prices get so low that we hit 40% of nothing anyways.

“You’ve Received a Request………”

Is it the economy, or are they opportunists taking advantage of the economy?

Is it the result of Royalty Free or is it the result of low pricing models?

Whatever the case, it’s increasingly common to receive licensing inquiries only to discover that the request involves a very low price for a very high usage. A couple examples from the past two weeks:

  1. A division of a major publishing company, contacted me regarding using an image for the audio book. I had previously licensed an image for use in the printed book only. (This alone is a lesson why to write detailed licenses. Had I not, the division might have used the image for the audio book without contacting me). After the standard back-and-forth whereby I asked how the image was to be used, it became clear immediately that the owner of production company wished to have unrestricted use of the image for advertising, marketing, package printing, etc. Once he made that clear via email, I wrote the license for such, warning in advance that unrestricted, perpetual use of an image in any known or unknown formats would

    Book Cover License

    significantly increase the price. The reply to the quote was that the company could offer a very low fee (by industry standards) but had to have the unrestricted rights. In fairness, the person I dealt with was very kind and respectful, yet asked for a license that was worth way more than they were offering. This is increasingly the case these days.

  2. A health care company contacted me regarding images of crowded emergency rooms. The caller identified himself as working for a “start up” company. Now, I can’t say for sure, but a company that went into business in 2006 likely no longer qualifies as a “start up,” but it’s increasingly common to have that slipped into the conversation these days. Obviously, the implication is that they have no real budget to work with. The company was interested in using an image as a trade show panel to help sell their appointment management services and software presumably to ER’s, doctor’s offices and health care clinics. The owner also mentioned that he’s previously dealt with Corbis and is used to paying “a couple hundred dollars” to use the image as much as he wants. That led to a amiable discussion and time spent preparing a fair market quote.

    The crowded waiting room at the South Central Family Health Center in Los Angeles, CA as patients wait for medical care.

Both scenarios resulted in no license. That’s part of the business, but I’ve seen a continual rise over the past year or two of requests for unrestricted or multiple use licenses for fees more in line with small, restricted single use. I’m sure there are a myriad of factors at play driving such requests, but among them are surely the rock bottom pricing driven by the large stock houses like Getty and Corbis as well as the proliferation of photographer’s who regularly sign away their copyright and licensing options.

One other factor that has reared it’s ugly head is the demands by publishers to receive “preferred vendor” status and, thus, receive steeply discounted licenses in exchange for volume purchases over prescribed periods of time. This seems to be a standard agreement between stock agencies and publishers these days. The result, however,  is trickling down to us little guys who don’t license hundreds of images per month but are still expected to deeply discount the licenses.

Keeping in mind that not every customer who walks into the proverbial “store” will walk out having bought something, it’s worth noting that market trends don’t typically shift overnight and the continual drive downward in pricing is alarming.

Ten Things You Just Don’t Hear Photographers Say Anymore

  1. I have to soup my film.
  2. Where’s my 30 magenta?
  3. Is there any spot tone anywhere?
  4. I put the caption on the back.
  5. I have to hurry to make FedEx.
  6. Damn, it’s out of focus (ok, this still happens sometimes, but you get what I mean).
  7. I work for the Rocky Mountain News.
  8. I’m almost done, I just have to sleeve my chromes.
  9. Dude, you got fixer stains on your shirt.
  10. I’ll take a brick of Tri X.

READERS SUGGESTIONS/COMMENTS FROM TWITTER (@TODDBIGPHOTO) & FACEBOOK:

  • “i got paid on time, the client was a joy to work for !!!!”
  • “What’s your light meter say?” (that’s from me)
  • “I still have tri x in my freezer! Love the 30 magenta, and fixer stains, for sure lost lots of shirts.”
  • “”who used up all the Acufine?””
  • “”F’n a…this reel is all bent””
  • “I miss singing “burn, baby, burn” in the darkroom! Of course the folks who shared the darkroom with me don’t miss that!”