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I was recently sent email from someone who asked very good—and very
common—questions, and I thought it might be apropos for my blog:
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Do you think that a price does not depend on target
audience? I imagine that for web use it has not a sense, but for
books, newspapers, magazines, CDs: does not it have still importance in
current market?
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The current stock photo market is such that simplicity is king. For the
most part, buyers are no longer accustomed to pricing tiers based on the
criteria you mentioned above. Back before the internet, buyers and sellers
had those pricing tiers because the economics permitted it. That is,
buyers understood that different uses and tiers made it possible for them
to get access to commodities that used to be under much tighter controls.
In the 1990s and before, stock photography was sold through glossy,
elaborately designed books; if a buyer wanted a photo of a tiger, there
was a page with about 10-15 images, and that was the entire lot to choose
from. When the supply of images and the distribution channel are tightly
controlled, the distributor has much more control over the pricing
structures.
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Furthermore, the supply chain between image creators and users was more
complex and expensive: there's the overhead of having slides sent (both
ways), the overhead of scanning and touching up photos, personnel and
expertise in design and technology, all of whom were skilled and nuanced
trades.
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The combination of a controlled distribution channel and an expensive
supply chain implied a delicate balance in the financial flexibility
between buyers and sellers, each wiggling up and down in price
negotiations to settle at an equilibrium: a pricing structure that allowed
lower-revenue editorial clients to participate alongside their commercial
counterparts. This inherent inequality was balanced by those very pricing
tiers, where buyers could plan their publication budgets so that they
could put more money into images that appeared on more prominent positions
(e.g., a cover shot vs interior pages), or to buy more or less "exclusive"
content that fit their needs.
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But then the internet and digital photography came into the picture. Here,
the cost of creation and distribution of images went to zero, which
subsequently opened up the channel to everyone that was previously locked
out: consumers, hobbyists and semi-professionals. These two factors
contributed to the collapse of the entire economic "reasoning" behind the
pricing structures of stock licensing. Back in 1999, I said that it'd take
about 10 years for this to filter through the economic ecosystem, and the
supply/demand imbalance would erode those tiers, and the pricing
structures would invariably flatten.
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Indeed, publications no longer hire high-end photo editors with an art
degree, skilled in design, and savvy in the business of creating quality
publications. As lower-skilled (and lower paid) workers leveraged
increasingly more sophisticated page-layout and print software, very
high-quality publications can be created at much lower physical and
employment costs. This has created a fundamental shift in the economics of
every single business that uses imagery, not just photographers and
agencies. Every company in the world uses photos of some kind at some
point in the company's lifetime, and since companies employ people, one
can say that the entire world's cultural attitude about imagery shifted:
it's no longer considered a skilled labor, but that of a commodity, where
just about anyone can do "a reasonably good job" (not that all of them
actually do).
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The net effect on the photo industry is a recycling of the photo-editor
staff to an entirely different kind of employee. This new photo buyer is
not only unaccustomed to any of the historical tiers of pricing rationale,
but they are financially constrained to work within a budget that, like it
or not, yields no material difference in the overall business. In a
difficult economy, where companies share the financial challenges as the
employees they employ, those who try to be the Good Samaritans and help
the needy photographer only find they suffer at the bottom line.
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Now, all that said, there's one overwhelming factor that can be used to
preserve pricing structures: the fact that the most overwhelming cost
associated with acquiring images is not the license fee of an image, but
the cost of search and
acquisition. The huge supply of images on the internet, and the
exceedingly poor search mechanisms on all search-based sites (ranging from
Google to the common stock agency) means that finding images is a very
costly endeavor for photo buyers, irrespective of their "skill." As I've
written in the past, it often takes anywhere from 1-5 hours per image for
a photo researcher to find a set of images that exceed the
lowest-threshold of acceptability for their needs. The actual cost of the
license is negligible compared to the cost of search and acquisition.
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(Note that the latest Pulitzer Prizes for economics has gone two to
economists who've used the same mechanism to explain the disparity between
the high rate of employment at the same time as there is also huge amounts
of unfilled jobs. They came to the same conclusion: the cost of "finding
where those jobs are" exceeds the feasibility for the job-seekers to go
get them.)
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Accounting for this economic reality, I have flattened my pricing tiers
from the more traditional menu of editorial/commercial use and
"placement", to that of a single metric: the size of the image. I don't
care about anything else because I'm reflecting the attitudes of modern
photo buyers: they don't care or understand the older pricing rationales
and just want to get the image they want and get out. They are more prone
to buy when the licensing mechanism is fast and simple.
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Though my prices have also lowered a bit, they have not dropped nearly at
the same rate as the pricing structures found in stock photo agencies, big
and small. The rate of photo buying on my site has not dropped, despite
the fact that my prices are 100-1000% higher than those on microstock
sites. But don't let the huge percentage ranges fool you: just because I
may sell an image for $50 when a microstock might sell the same image for
$1 doesn't really mean anything to the photo buyer. That cost differential
is largely irrelevant. They know that in order to save $49, they have to
go back to the research stage, retrofit new images into their page layout,
get new approval from clients, and so on. That's not worth the $49
difference.
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What about exclusivity? Have you ever licensed an
image with a exclusivity clause for a certain amount of
months/years?
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Perception of exclusivity is way overblown. While all buyers love the idea
of using an image that no one else will use—which often causes them to
"request" exclusivity—the economic reality is that there's very little
market for that. Whenever anyone asks for it, and I quote them any kind of
upcharge, they always say, "nah, forget it." The issue of exclusivity
turns most photographers into worry-warts, concerned that they'll fail to
get the gig, or license the image, or scare away the client... And of
course, they don't know what to quote, which they feel they need to do
because the client asks for a quote.
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My recommendation is not to worry about this, but instead, give a simple
explanation to the client that the need for exclusivity is largely
overblown. Unless the image was specifically shot for the client and
contains very unique or proprietary information (people, things, or
access), the upcharge for exclusivity will not pencil out to be
worthwhile. In a global market of many images and many businesses, the
risk of having the same image used by a competitor (or anyone else) is too
low to bother paying the upcharge. Yes, I am aware of the famous 'oops'
stories—these are anomalies, not truly representative of the market.
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... how could you manage everything before becoming a
full
time photographer? I mean your previous job, photos,
website, business
analysis, blog, wife and a
child?...
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I have always recommended that no one should ever enter into the business of licensing
photography as their sole source
of income. This is not the type of job that you jump into and instantly
start making money. You should always start with photography as a hobby,
build your inventory, establish your web presence, participate in social
networking, and set up a stock-licensing fulfillment system. And do all
this while you have a real job (or income) doing something else. If you go
about your hobby efficiently and effectively, your licensing income will
grow, and more importantly, be sustainable and predictable. Your traffic
to your site should be a repeatable wave pattern (high traffic during the
week; lower on weekends), and your sales should be similarly consistent.
If this data is erratic, your business is not yet established well enough
to rely on it as your sole source of income.
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