PDN Interview: the complete story

The article had to be edited to a bare minimum for print use, and though I felt the edits were fair, it was largely incomplete, and failed to really impart the breadth of the scope of the industry, especially as it pertains to future growth and opportunities. So I thought I would print the complete interview here. I have also added material here to include reference information, links, and extended analysis for clarity.

PDN: Why do you think the $2 billion figure underestimates the size of the stock photo market?

DH: Because it's just an aggregate of the sales of what are perceived to be traditional stock buyers and sellers. There are a lot of other people who are selling images, and there are many more types of buyers than before, too. It would be like trying to measure the size of the advertising industry by only looking at ads placed in mainstream media outlets, and not taking into account ads placed on web sites that were never traditional players in the industry.

That would be absurd today because we're all familiar with Google now. But it wasn't that long ago that analysts never took online ads into account when looking at the total size of the advertising industry, even though there was money exchanging hands through informal peer-to-peer transactions online. At the time, the rationale was the same as it is with photography analysts today: the non-traditional players are too new and to difficult to measure. Understandable, but to deny their very existence leads to erroneous assumptions about not just current economic activity, but future growth. By inference, the estimates of the potential size of the market if photography were to "formally" to open up in the same way advertising did are being similarly undervalued. In other words, history is repeating itself.

PDN: What do you think the license revenue number is, if not $2 billion?

DH: That depends upon how you make the calculation, but I would estimate it closer to 20 billion range. This is fuzzy math for sure, and no one can possibly know precise numbers, for reasons I'll get to. However, I didn't derive it out of thin air. I used an economic method called "asymmetric information", which is a fancy way of saying that I look at related data that we do know, and extrapolate plausible guesses for the data we're looking for.

For example, historical charts of high-end pro-level cameras have run in parity with the size of photo industry for decades, ending in the early part of the 2000's, at which point, the number of pro camera sales swelled, but we didn't see corresponding increases in the size of the photo industry.

One could say that consumers just started buying those models, but it was also the time when the internet was really taking its place in the photo market. How do we know which of these two may be more responsible for this disparity of trends? We need more data. So, let's look at other numbers, like the rate of advertising purchases that use photography, including all forms of print, broadcast, and online media. Looking at the growth of such forms of advertising, we again see parity up to 2001, at which point there is a departure with the rate of growth in the photo industry.

What leads to the more compelling data is that the growth rates of advertising and pro-camera sales remains in parity with one another as well, but not with the growth of the photo industry.

...at least, the way traditional analysts measure it, which is why I think they're wrong.

"Asymmetric information" suggests that the photo industry is growing in parity with other photo industry figures, and along with it, the additional ways that photo content is licensed and monetized that the traditional analysis doesn't take into account. Add it all up, and depending on how liberal or conservative you want to be (and what data you want to include or exclude), the total overall market is likely between $15-25B.

PDN: Why does the number--be it $2 billion or something higher than that--even matter?

DH: In the simplest case, Getty and Corbis would be changing how and where they market in the pursuit of business. And because they don't see it, their models and business decisions aren't changing. (They only play the futile game of catch-up in similarly a futile attempt to meet with microstock's lower prices. This is a market reaction, not a strategy with a cogent understanding of the industry at large.)

But in the broader world, the implication of a larger market has huge ramifications. The estimated size of any market is what garners investment and participation. The internet itself existed since the early 1970s without hardly a mention in mainstream media till 1993, when Al Gore mentioned "the information superhighway" as a potentially new platform for commerce. The rest is history. (His comments came about because the National Science Foundation lost its charter and funding for maintaining it, so the net had to find new sources of revenue. Gore's comment was made in the context of this announcement. Suffice to say, that problem took care of itself.)

The result was a reformation of the world economy: People were able to participate in trade where they couldn't before. This potential (but unrealized) economic activity is termed, "latent demand". A simple example is the number of people who traded shares in the stock market: it ballooned once online trading became available and the commissions on such trades dropped to meet the demand. As companies from other industries also found new buyers and sellers, they too have benefited from the latent demand as well. Yet, the one exception to this has been the photo licensing market, where the leaders and photographers themselves have largely ignored the opportunity of latent demand.

We can get a sense of this untapped potential in the huge supply of photos being used for free in one form or another, whether it's intentional give-aways by consumers, or equal indifference to copyright infringements by working photographers. Why the industry ignores this potential market is only partly due to a perception that there's nothing that can be done about it. But another reality is that the prospect of introducing new competition (from the consumer) that will harm them.

Yet, the real opportunity is precisely because of all those free exchanges of images. They could be converted into real dollars if there were a more mature, sustainable and reliable infrastructure that people actually knew about and participated in. The size of that market would grow even beyond the real, yet elusive, current market activity that I've been proposing.

My twist on the Field of Dreams quote: "If it were believed that people will come, people will build it."

So, it matters that people are aware of the true size of the photo licensing industry because it's that very perception that gives rise to their participation and thus, investment in the evolution of better, more efficient buying and selling mechanisms.

But I don't want the concept of latent demand to divert the present focus away from the size of the current, tangible market of $20B.

PDN: Where are all these $20 billion worth of pictures being bought and sold?

DH: In the long tail of the market. This is a term coined at the time a reporter at Wired magazine noticed that unusual and low-profile books were selling in ones and twos, but their aggregate numbers added up to huge sales for amazon.com. Who bought these books? The millions of people that buy such products when they can be more easily found because of the Internet. Again: latent demand had already been converting into real sales, but no one quite knew it yet.

The long tail gets it name from the "tail end of a bar graph." To illustrate, if you were to graph all book sales using a bar chart with the largest sellers on the left, and the smallest ones on the right, Harry Potter might lead with big, huge towering skyscrapers, but successive books will taper off into a "tail" of minuscule sales at the end. Each of those little "bumps" on the graph would be small, but this "long tail" of them just keep going, and going, and going... And those sales add up. It's been noticed that the long tail is so substantially long, that it minimizes even the largest best-selling books by several orders of magnitude.

The concept of "the long tail" (latent demand) shook the world's perception on what opportunities lie with the Internet. Amazon.com saw it, and they tapped into it. E-Bay saw it with how people's junk and other artifacts can tap into it. And so it goes down the line to every industry in the world... except for photography licensing.

How can we see evidence of how everyday people are taking part in in the long tail of photo licensing? Go to your mailbox and look at all the junk mail for new mortgages, free checking accounts, value-pak coupons, credit card offers, and catalogs; and examine every photo you see. Does each photo originate from pro photographers and/or established stock photo suppliers? I did a non-scientific study by calling each of the companies that featured photos in the junk-mail I got on one particular day, with the intent of counting how many I would go through before someone told me they got the image from "a friend" or any other kind of non-professional photographer. To my surprise, the reverse happened: I had to go through five pieces before I found one that said they got the image from a traditional source (like a pro photographer or agency)! In this one case, the image was from an ad agency, though I don't know where that agency got it from. Hmm....

I'm guessing that the long tail of photographers feeding the supply chain of actual economic activity is probably around 10 million. (The longer tail of non-economic exchanges of photos from consumers that could be realized is probably "everyone." This, much the same way that "everyone" eventually started using email, despite the fact that 1990 estimates were that only one in 20 Americans would do so by the year 2000.) So, I feel that my estimate of 10M photographers contributing to the photo licensing economy is on the conservative side of reality.

PDN: 10 million professional photographers in the US? Come on! Who are they? Where are they?

DH: Something I'm going to come back to later is: define what a "pro" is. But, for the moment, understand that anyone that contributes to the supply and demand affects the industry, regardless of their so-called status, so they should be counted. The nature in which you ask the question suggests that only pros are involved in the buying and selling of photos, but that assumption is naive. The real question that PDN and other industry trade groups should be asking is what is the real ratio of pros to the total number of people who buy and sell images? If that number is low, then it demands a reassessment of the pro's ability (and thus, their trade associations' abilities) to effect change in the market. In fact, this should be their prime directive: self-analysis on who it is they should really be representing, and how. It may be that their current activities results in little more than rearranging the deck chairs on the Titanic.

If traditional pros are going to complain that the consumer has a negative impact on pricing and other aspects of the photo supply chain, then shouldn't they be studying the consumer in this space? What really matters is that there is an unknown number of people that are somehow affecting this industry, and no one's properly counting them.

But still, let's assume the number of so-called "pros" does matter. So, I can address your question of how I came up with 10 million of them. Again, asymmetric information: Canon's on record saying they are selling 100 million digital cameras this year (see their press release about building a new $450M facility so as to meet an even bigger demand coming, doubling their capacity). Of those, three million are bought by "pros." (We don't know how they define it either.) If we assume pros buy cameras every three or four years, and if we include sales of Nikon and other camera manufacturers, and if we consider these are annual sales (not just one-time sales), it all adds up to a range that suggests there are around 10 million professional photographers. True, we don't "know" they are pros, but that brings us back to our not having a reliable definition of what a pro is, or that camera companies are using the term consistently among themselves. But we can certainly assume that if their own definitions are similar enough to PDN's (or anyone else's), then 10M is probably accurate from the data I cited.

But I want to use this very question (and how you asked it) to illustrate a far more important observation of the photo industry: the incredulous prospect of there being 10M pros is horrifying. The unfathomable concept that the universe could potentially bigger than just the stars that we see in the sky reflects a head-in-the-sand bias held by most in the photo industry.

And this perception is not just ubiquitous, it's self-perpetuating. I call it the "echo chamber effect". Everybody repeats what everyone else says because such beliefs serve certain short-term self-interests. Thus, nobody challenges the conventional wisdom about who's selling and who's buying. I'm reminded of the great quote, "When everyone around the table agrees, someone's got it wrong." In this case, not one entity -- including PDN -- questions or makes any other attempt to challenge the conventional wisdom of the size of the photo market. The data they use is less scientific as it cherry-picked anecdotes that support the answers they want to see.

If PDN considers itself as targeting the pro, how does it define one? How many pros does it think there are? What percentage of the total economic engine of the photo industry do pros play? By my observation, most industry groups consider a pro to be "their members" (as well as those of other similar type of trade organizations). This initially faulty assumption begins the domino effect of poor analysis: If you're not in the group, your sales don't count. And if you don't buy from the members of our group, your purchases don't count. So the "size of the industry" is the aggregate sales of the companies who sell stock, plus those from members of trade associations.

This is not real analysis, nor can it be used to extrapolate broader information about the size of the total market. Real surveys must pass college entry-level statistical analysis standards that reflect a viable snapshot of the population at large. This means that sampling sizes, questionnaire objectivity, and data collection methods have to be done by credible polling organizations, not just the usual suspects. Asking the fox how many hens are in the hen-house may not yield reliable answers.

If you were to read through an entire issue of PDN with the perception of the market being the larger size that I've been proposing, you may better understand why I think the editorial bias may not necessarily be serving anyone's best interests.

Now, I'm a realist, and I know that PDN is no more likely to change its editorial stance from the focused demographic that it currently serves. And it may even surprise some that I agree with one aspect of its position: PDN's focus helps readers know what's going on in the small niche industries they may happen to work in, editorial bias notwithstanding.

But it still suffers from having a singular viewpoint, and a visceral rejection of alternative or contrary views. To remedy that, they should have additional columns that offer a more objective perspective of the same subjects being covered, but with more global, less niche perspectives. Give the "other side" of stories as a counter-weight to the bias, just so readers get a chance to see a broader vision. Not only would this serve its readership better, but it would increase circulation, which increases ad rates that pays for the extra costs of columnists.

Speaking of circulation, I believe publishers underestimate the potential readership for a PDN-like magazine that broadened its target reader to include more of the consumer (but still being very much oriented towards the news and events of the industry). Consider a lead story and cover photo highlighting (in a positive light) the Flickr member who had his images included in Microsoft's new operating system as another example of the industry is moving towards the consumer, and along with it the great self-promotional opportunities that such a windfall can present. A story with that kind of bent would mark a shift in perception of opportunities by the readership, thereby increasing awareness and participation in this market by more and more people--especially those who might not have considered moving into stock before, but might want to do so now.

PDN: Doesn't that model of pitching to the consumer already exists in the form of microstock sites?

DH: Microstocks neither appeal to, nor target the consumer. While they are certainly more liberal in their standards on who their photographers are and the photos they submit, they're just getting the photo enthusiasts and semi-pros that tried to get into traditional agencies in the past, but weren't accepted. And, they're not selling to consumers--they're just chipping away at the same market as the major agencies, stealing their prime business for pennies on the dollar.

Not that this is unusual. In fact, most industries have low-cost alternatives like this, so I don't fault Microstocks at all for what they do or how the do it. The photo industry is very weak right now, and the leaders of the group have squandered the opportunities that would have prevented microstocks from entering the space in the first place. That microstocks exist is just a byproduct of this mismanagement. But those small companies themselves don't present major growth opportunities in their current form, and they'll largely be reabsorbed back into the system, once it eventually materializes again in another form.

As for consumers, most have never heard of stock photography. So, no, there is currently no one targeting the consumer. But, there should be. I realize that my advocacy of the consumer photographer causes traditional photographers to start frothing at the mouth, but the reason they do is is because of the simplistic thinking that their presence would cause prices to sink, sink, sink.

To that, I say, "no, no, no." What makes market prices sink is NOT because there are uninformed consumers who give away pictures, nor is it because of microstock's lower prices. The only thing that affects broad-scale market pricing (up or down) is the fundamental industry-wide infrastructure. Prices are low because of the lack of efficiencies to the pricing/licensing/distribution models.

I'll get into what that means soon, but the usual retort is that such an infrastructure doesn't exist. I agree, but trying to blame anything else on the erosion of prices is not only incorrect, but leads to making worse decisions when trying to combat the problem. An example of this is cited in this article from PDN on Sept 11, 2007, which noted how the Stock Photographers' Alliance and five other industry trade associations asked Getty Images to exclude rights-managed images from their new $49 flat price for online uses. The letter said, "Getty is unnecessarily giving up money from commercial and high-end advertising customers willing to pay premium prices for the most exclusive imagery." This implication that Getty is intentionally leaving money on the table is exceedingly naive. Everyone knows Getty is having a hard time maintaining sales of any sort -- all one needs to do is read mainstream press about how their revenue and market penetration is sinking very fast, so the assumption that Getty could possibly maintain any kind of revenue is silly. To say they are doing so "unnecessarily" shows ridiculous naivete about the market. The letter is akin to asking that the first class passengers on the Titanic be allowed to sit on the newly re-arranged deck chairs.

This simplistic view of the world illustrates just how ineffective most trade associations are when it comes to business advice for their membership. For the photo industry to save itself, this naivete must end. It will require a major psychological reassessment of the pro's real, measurable contribution to the economics of the supply side of the equation, and act accordingly. It will have to abandon certain principles they've relied on for years, though with dubious results anyway: the intent to keep prices artificially high by limiting competition, chocking supply, creating bottlenecks in distribution, and of course, "mutual cooperation among photographers." While those were the rules of the day before the internet, none of those methods work in the post-internet era anymore, and the more you try to plan your career around it, the less likely you will succeed. (See my blog posting on The Prisoner's Dilemma.)

The only way to assure price optimization in a free-market model is to optimize efficiency in the sales channels through what is perceived to be an open-market system, backed up by a stable and reliable infrastructure that isn't biased towards anyone--either the buyer or the seller. This has been the case for everything from commissions on stock prices, prices for phone calls, advertising rates, and so on. Whenever some kind of sector gets out of kilter, it's almost always because of an inefficiency of sorts, like Cable TV and old-style telephone rates. If you think prices are too high or too low, it's because an imbalance in the infrastructure is biased towards one party or the other. When there's balance, people and companies can compete on quality of products and other marketing incentives. Participants win or lose based on merit. Since photographers can no longer control the market, their only hope is to rely on merit. And the way to win in a market where the "best" survive, is to introduce unworthy opponents: the consumer.

It is true that a market-based system causes unit prices to go down with increased supply, but it would only be for those kinds of images where there's an oversupply anyway (and whose prices were unfairly and artificially supported by the aforementioned mechanisms). Though photographers would give up top-dollar for a simple image of the Golden Gate Bridge (because it could be easily provided by a consumer) this would be offset by higher prices for more difficult images, whether because of technical skill, creativity, timeliness, topic, or other factors. So, things that anyone can shoot can be provided by consumers, and the better stock shooters would be getting top dollar because, well, they're the ones with real talent.

The reason photos today are not priced in the manner I just described is because of inefficiencies in the infrastructure. Photographers have to rely on themselves to negotiate well (and most don't), leaving the rest of the pricing up to perceptions of value by the buyer. This creates a sort of feedback mechanism, where tons of photos are available from everyone, in an unstructured free-for-all of peer-to-peer sales, and prices drop as the feedback of this noise drowns out all other signals.

What will that "efficient" infrastructure look like? Oddly, that's putting the cart before the horse; there are other things that must happen first before such a thing can take shape. For example, social-networks online could have never taken the form they did had it not already been for chat programs to prime users of the experience. And chat programs would never have evolved had it not been for email, which preceded it. For the photo industry to evolve, the first thing that must take place is a psychological shift by those who need it most, and it will be the result of that shift that attracts the future builders and shapers of the new infrastructure to come. So, once I describe that, I'll come back to what the new infrastructure might look like.

The first point of that psychological transformation is that photographers will have to accept is that weaker contributors (lesser-skilled stock shooters) would fall off towards the end of the income scale, creating a larger disparity of income for photographers in general. This is the true by-product of a merit-based working class. This means that photographers can no longer chant, "all for one, and one for all." No more mantras of "stick together." And no more presumptions that all photographers are equal, nor should they be treated equally. One must accept that the stronger, more diligent stock photographer would succeed, at the expense of the weaker ones.

It also means that photo industry groups have to not just allow consumers in, but embrace them. And this very implication translates to a very different kind of rallying cry and set of "codes of ethics" than what the industry currently advocates. There must be no such concept as "bad for photographers" (in economic terms).

I realize these things are very hard to accept, but my prediction is that it would lead to a much stronger herd.

Of course, to really grasp why this might work, one also has to take into account who the buyers are. Again, I cite industry groups' (PDN included) overly narrow focus only on the traditional media and ad agencies as buyers, not the very long tail of buyers online, such as a local dentist office that's making a small brochure using Microsoft Word on a PC. If the true analysis of buyers were more thorough, it would violently shift everyone's perception about where the opportunity is, and redefine the best strategies to capitalize on it. Take a look at the junk mail in your postal mailbox, and think about all those buyers, too.

I should also mention that the "traditional" stock and assignment photographer as we know him today doesn't die off. Nor do the traditional media buyers that PDN and industry trade groups currently represent. Yes, these groups will always exist, and along with them, the current infrastructure that supports them: Companies like Getty and Corbis who have staff that really knows and understands each side of the equation for this niche industry of media, celebrities, professional sports leagues, and global editorial news organizations. And, theirs will likely always be a $2-3B industry, which grows and shrinks within the confines of the media world, whichever direction it may fluctuate. Indeed, the current stock agencies will probably always dominate in this niche industry because of their specialized forms of expertise. That is, this will remain the case as long as technology doesn't improve upon the methods for image distribution and pricing that we see today. Therein lies a risk they assume for the long-term.

So, now I can talk a bit about the new infrastructure.

For background, say it's say it's 1993, and you had an old chandelier you wanted to get rid of. What did you do with it? You'd either throw it away, give it away, put an ad in a newspaper, or take it to a local consignment store. What you got for it largely depended on the local market and your pricing and negotiation skills. Sound familiar to selling photography?

Now fast-forward 10 years, and you now have E-bay: you simply put it online, and the economics of the market figure out the best price. Maybe it doesn't sell, or maybe someone recognizes it as a rare collectible, and bids $15,000 for it. Either way, the efficiency brings the pricing mechanism closer to what the real market will bear for it. It's "real worth."

If a similarly efficient infrastructure were available for photos, there would be no incentive to either give photos away, or use microstocks. Buyers and sellers would have both incentive and access to that mechanism, and prices would be more appropriately market-driven--even if there were competitive players in the market. Some photos may drop in price, others stay the same, while others will be home runs. But what makes the system work is the efficiency of the model that removes the very elements that keep prices down: arbitrary and disjoint transactions. Best of all, the efficiencies keep prices stable. Low-balling simply wouldn't exist because there would be no incentive to. Sure, you could try to go directly to buyers and offer steeper discounts than what the market is paying, but why go to such an effort if getting a higher price is even a simpler task: just put it into the system.

The obvious question is "what's the system?" Is it a website? An agency? A supplier? A consortium? That answer can't be known, but there is precedent for similar infrastructures to exist. Trading shares of stock on the various exchanges, for example. The same kind of infrastructure exists for trading not just shares of companies, but commodities of all sorts, ranging from oil to orange juice. You can even trade on what the future prices can bring. You can even trade "options" that give you the right to buy or sell all these items at a future date for a future price. And the efficiencies of the underlying infrastructure is what makes it all possible. It's a mechanism that works, and therefore draws buyers and sellers alike. Sure, people can do peer-to-peer exchanges if they like and use their own pricing guidelines, but there's little incentive to do this because it's too easy to participate in the better, more efficient system.

How might such a system materialize for stock photography? I'm not saying I know such details yet, though I have been working on just such ideas with friends from similarly related industries. It's too soon to really articulate where this is going, but at least it's been legitimized as a viable business model by the mere existence of a huge market of buyers and sellers.

To be sure, it's not a matter of content gathering and distribution (stock agencies) or bidding/auction (e-bay), or even use monitoring (advertising). It's the actual intelligence behind the system that needs to be optimized, and once it is, it's entirely dependent on execution: the appeal to a broad base of buyers and sellers.

For the current market of $20B to be properly tapped into, there needs to be this kind of evolution of licensing intellectual property, and photography is the simplest, purest and most ubiquitous atom within the framework.

PDN: Let's assume there is $20 billion worth of photo licensing business worldwide. A lot of sales are so piddling and diffuse, how can individual photographers benefit?

DH: There are two answers: the short term (they can't benefit) and the long term (lay a foundation for the emerging industry transformation).

The current spoils are currently going to the people who anticipated this in the 1990s and embraced the internet as their sales and marketing platform early on, just as I had warned people to do back in the 90s (See this article.) Building a web presence and adopting a new sales and marketing paradigm was the life vest that is now keeping these photographers alive today.

But, unless you were in that group, there's not much you can do to in the short term. You're right that most sales are piddling and diffuse, and it's reflected in your own salary surveys, as you reported last May in this article: 66% of your own photographers report income of less than $10K/year from stock sales. Add another 10% of those who "aren't sure" of what their income is, and you have over 76% of PDN readers who really aren't making money in stock photography, despite their best efforts.

In fact, if you're just starting out, your options are even more limited than that. And this is also reflected in modern culture: Discussion boards are constantly buzzing with questions about which agency is worth joining. Yet, I feel that the window of opportunity to join an agency is gone now, too. In fact, I don't even think a seasoned photographer that isn't already with an agency should join one. Agencies have plenty of content from their existing suppliers (if not an over-abundance) so the continued dilution of even more content means that your chances of sales diminishes more quickly. And because you only get a "commission" on sales, your income potential is largely irrelevant.

Compare it to developing your own internet presence (a web site as well as other internet social and business networks), where your opportunity for sales may begin equally small, but have the potential to grow. It's also building a permanent, long-term investment that not only helps your stock sales grow, but other aspects of your business.

Best of all, when the industry evolves to its next stage, you'll be much better positioned than most others, especially those who are trapped inside an agency. And like it or not, building it yourself is what many consumers are doing today.

PDN: I've been hearing that there's this consumer demand waiting to burst out ever since Corbis started 15 years ago. It never materializes.

DH: Well, first: Corbis' original plan was not based on any of this. Their goal was to acquire the copyrights of famous pictures because Bill Gates believed that people's homes would be supplied with electronic picture frames that would display these famous works. Owning the copyrights to the largest supply of collectible content was born out of Gates' belief that the consumer would want to buy art for personal use. And if there were some licensing opportunities through that consumer-driven market, all the better.

But your postulation that the latent consumer demand in the photo world never materializes is one in which I beg to differ. I claim that it's already here--it's just that people haven't recognized it yet, due to its informal, peer-to-peer, underground economy. (Just as I described earlier.)

Photography is not the only industry where pundits have made errors in judgment on the size of its market, or the role of the consumer. People used to say that internet advertising was going nowhere. The music industry didn't think there was a market for music online. Online securities trading didn't emerge until small innovators demonstrated that, yes, the consumer really does trade. Microsoft itself completely denied the opportunities of the Internet itself, and tried to compete with it using MicrosoftNet in the early 1990s. Similarly, they also missed the boat with internet search and advertising, both of which were in full economic swing by the time they finally recognized it.

Pick your industry, and history is packed with stories about how ALL the big players simply missed the mark because they didn't think the consumer was going that way, despite clear and present success stories by their very own competition (or by looking at economic and social trends). And even though I feel we are already there now with photography, I still consider it early in the game because there are no corporate players in the midst--it's still peer-to-peer. And there won't be till either the echo chamber starts to believe the market is actually big enough to bother, or someone demonstrates it through actual market activity. When that happens, someone will build the kind of infrastructure I've been talking about.

PDN: This doesn't bode well for professional stock photographers. It sounds like the competition is just going to get worse for them.

DH: The nature of how you asked the question is further proof of the kind of bias I was referring to before: "bad for photographers." It's like the old cliche: "have you stopped beating your wife?" There are erroneous assumptions made before the question is even asked.

You presume the glass half empty view; but worse, the assumption that the increasing presence of the consumer is a bad thing--or even that increased competition is bad. That assumes that all photographers were equal, and the mere presence of more of them (consumers or not) is inherently bad. This is a simplistic and unrealistic interpretation of economic theory. We all know the grade-school mantra about the laws of capitalism: the laws of supply and demand dictate that prices move inversely with supply. While that fundamental principle is true, the real-world is so much more complicated than that. I've already described how the industry will benefit from market efficiencies, and the only way such efficiencies can come about is if there is a perception that such a market exists. Until then, the inefficiencies remain, and prices that stock shooters get will under-perform their potential.

In fact, you could say that the resistance of consumers into the market is the very thing that is ultimately hurting professional photographers more than anything else.

So now for the glass-half-full view: the reality of the market is that not all photographers are equal, and newly emerging competition is worse than you, thereby making it easier for you to beat them in that newly emerging marketplace. In fact, today's stock photographers are the lead wagons in the great sprint across the great plains in the photography gold rush. The current lack of infrastructure is akin to the wild west of early America, providing the unique opportunity to stake your claims ahead of the onslaught of consumers rushing in behind you--they have neither the skills nor the business experience to do well here...but not for long.

I think this is not only good for stock shooters, but photographers in general. In fact, it's the best opportunity to truly corner the market that they've ever had, and they'd better do it now before it's too late. This will be a bad thing for photographers if they don't capitalize on it soon.

I understand that people don't like change. And having to change your business frame of mind is not just upsetting, but it introduces a perception of risk. And that is what prompts you to say, "it doesn't bode well for them." Yet, living in a bubble doesn't bode well for them either, because that bubble will not protect from the trends in the market. And given the two opportunities, one of them clearly has a much much better upside potential.

PDN: How? What can photographers do right now to take advantage of this yet-to-be realized opportunity?

DH: The number one thing is to establish your online representation. There are many ways to do this, starting with building as much content as you can on your own web site. The more content you have, and the better indexed it is, the more likely it is you will be found in search engines. But more importantly, the more "stake" you have in contributing to the infrastructure that will evolve. Secondly, building a name for yourself as an expert in something--it doesn't necessarily have to be photography, although it can be--is a way to build goodwill into your site, which also raises search ranks. Post things to discussion groups and other platforms that cause people to use you as a resource--a reference information or photography or whatever. If you're a destination of any sort, this helps your photo business. If you contribute a lot of content to other sites that link back to your site, that helps because your search engine rankings are based a lot on how many (and the quality of) other sites that link back to you.

We are in a chasm between the old dying era of traditional stock sales, and whatever it is that's coming next. When it arrives, the better positioned you are to take advantage of it by establishing your name and presence and content, the higher up in the new food chain you will find yourself.

I'm a prime example of my own advice: I was writing stuff like this in the 1990s, back in the days when pros (and PDN) questioned the very use of the Internet as a viable platform for stock photography. In a paper I wrote for PDN (but it was rejected), I not only advocated the use of the Internet, but forecast that it was likely to be the only model for stock distribution within ten years.

Those who followed that advise are doing very well for themselves today. In fact, one article that I submitted to PDN in 2000 (also rejected) advised photographers on how to have their Web URLs listed as photo credits instead of their names. The editor's response to me was "Photographers don't want their websites listed as photo credits." Well, that's what I did, and boy did it work. The photo credits I get for my images gives my URL more visibility, especially on sites that license my work, and has combined with the other methods I listed above to yield a nice healthy rate of traffic to my site at the order of about 22K visitors a day. (My Stats)

Unlike years past, photographers aren't just competing with other photographers anymore--consumers are the new competition, and they don't care about the rules. They will eventually figure out how to do all of these things, too, and today's stock photographers will have a harder time competing at a future date if they don't leverage the advantages they have today. And that's really the best news: you can own the future if you embrace it.

Labels: asymmetric information, dan heller, economics, financial analysis, getty, interview, licensing, microstock, photo agencies, photo business, photography business, pricing, stock agencies

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