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In that article, I mentioned how a Shutterstock survey focused on a small,
select group of traditional image buyers to gauge their purchase
expectations over the next year. I went on to say that it is the result of
surveys like this (and others) that most stock photo analysts draw the
wrong conclusions about the nature of the broader stock photo marketplace,
which itself leads to a trickle-down effect of misinformation throughout
the industry. In this case, the Shutterstock survey lead many to conclude
that the industry is growing. And this perpetuates another misperception
that agencies represent the lion's share of sales and revenue,
which itself leads to the misperception that making money in stock
requires joining an agency.
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Each misperception leads to another, and another, and another, until
finally, the industry is full of chaos and confusion, myth, and suspicion.
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For now, I want to clarify that, just because it's easy to see how most
analysts misinterpret information, it doesn't necessarily mean that
it's easy to know how to do it right.
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A primary example of this can be found in a July 18 article in the New
York Times business section, titled, A Matter
of Opinion?. The issue is how credit rating agencies were giving
high marks to the very companies that were ultimately responsible for the
credit crisis that lead to our current economic meltdown. After facts were
uncovered, many feel these credit agencies should have known all along
that banks and other institutions were engaged in speculative and complex
financial instruments that would lead to this.
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And that's how I feel about those who cover the photography industry. The
evidence is so overwhelming that the predominant view of the stock photo
industry is so wrong, that it is flatly irresponsible of the press and
analysts to perpetuate that view. It's also important to point out that
this is not the company's fault. Their survey and their data is just fine,
as their goal was to illustrate other points more german to their
businesses. The problem rests entirely within the press and blogosophere
who are inappropriately using that survey to support (and perpetuate)
incorrect conclusions about the industry at large.
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First and foremost: The stock photo industry does not revolve
around stock photo agencies. Though there are no scientifically viable
surveys that show the total size of the market—and therefore, the
proportion that agencies may represent—there is a great deal of
asymmetric information (indirect data gathered from independent
sources) to support the premise that agencies' role is minimal.
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I've written many
articles that cite multiple data sources that suggest that most
stock imagery is licensed on a peer-to-peer basis—directly from
photographers. Even though many of these individuals do tiny amounts of
licensing annually for themselves, it's their collective economic activity
that has far more gravitational pull on the industry than the entirety of
stock photo agencies combined. (They are what my books call the
"dark matter" of the photo industry: you don't see them, but they
are there, and they account for over 80% of the stock photo
universe.)
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Once taken into account in discussing and analyzing the nature of the
stock photo industry, a great many assumptions and other factors are
instantly called into question. For one, the effects of pricing and other
actions taken by agencies. If, even for the sake of argument, one assumes
they are not the center of the universe, but rather, involuntarily pulled
by everyone else, how they are presented and covered would not just change
industry perceptions, but it could have a trickle-up effect, putting more
pressure on industry executives to make better, more economically viable
decisions that lead to industry growth.
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As for the stock agencies themselves, I have no qualms about how they
conduct their businesses, per se. True, I think they leave a lot of
money on the table with their pricing, and I think they miss out on a
great deal of consumer opportunities, but I don't think this harms the
market at all—again, they do not "set trends", they are inadvertent
followers of larger forces. I also understand well that running a
profitable business is difficult, and growth is often fraught with risk.
The graveyard of companies that tried to migrate to a consumer-oriented
business is crowded.
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Nor do I have an issue with how they market themselves. There was
absolutely nothing wrong with the Shutterstock survey that I alluded to in
my prior article. Shutterstock's business is to sell stock imagery, and
their survey happened to focus on a particular market segment that they
felt was their primary buyer base. That this segment of buyers (narrow,
though it may have been) happened to show certain behaviors that also
happens to underscore Shutterstock's future prospects shows that
Shutterstock has a bright future (at least for the short term).
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Also, the PR agency that helped promote the message,
Morton PR, was particularly honest,
insightful and articulate, not just about the survey itself, but in its
own recognition that the survey was not (and did not intend to be)
reflective of the industry at large. Not every survey is designed for that
purpose, and Morton was uncharacteristically open about this, as compared
to other PR firms that have contacted me as representatives of other stock
agencies.
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I also happened to point out that iStockphoto also had a banner year, and
is showing signs of improvement for next year as well. This fact being
anecdotally supported by a comment from Lee Torrens at microstockdiaries.com on his
own bump in sales, despite the fact that he hasn't increased his
submissions to any stock agencies.
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So, if that data isn't representative of the entire market, what kind of
conclusions can we learn about industry trends? And what data do we use to
learn this information?
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In the spirit of setting expectations correctly, I can address these
questions by proxy: my replies to the emails I get on this subject.
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First, there's the most common question: "How does a photographer succeed
at selling stock if not through agencies?"
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Begin by dispensing of the premise that agencies are the de facto channel
for stock photo purchases. You can (and should) sell directly yourself,
irrespective if whether you also sell through agencies.
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As an added note: I strongly discourage anyone from signing an "exclusive"
arrangement with an agency that did not reciprocate by prepaying minimum
royalties. After all, this is standard boilerplate contract language for
book publishing. Why allow a stock photo agency better
rights than a book publisher?
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Once you take out the exclusivity clause, you can and should sell your
images through any and all channels you can. Including—and
especially—your own website.
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Selling your own stock is easier now than it ever has. Many applications
allow you to build your own stock site, that even the most technically
squeamish can produce. It's beyond the scope of discussion to address
that; I talk about it more in length in this article, which also
happens to be in my book on building a photo
career.
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The barrier to success in stock photography is less technology as it is
psychology. Most don't think it's possible (the "agency" fallacy), or they
just don't want to put the time and resources into it. There's also a
misperception of time: that sales should come right away. Or that they'd
come sooner with an agency. No—It takes time for your stock images to
derive revenue, regardless of where they are for sale. Yes, the revenue
curves are different between a personal site and an agency site, but
"different" isn't necessarily better. After one year, you may get more
revenue from an agency site than yours, but over five years, you're sure
to get more from your own site. This is usually because you will charge
more on your site (because buyers are more willing to pay higher prices—a
factor that most agencies don't really understand yet), you will keep more
of the revenues (in fact, all of your own revenues), and your own
site will likely get more traffic to your pictures than the
agency's site will.
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The assumption that the agency is going to do better for you and
every other contributor is naive. There's going to be an uneven
distribution of traffic to contributors on agency sites, and there's a 90%
chance you're going to be on the short-end of that stick.
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Which leads to next question I get: "It just doesn't seem to me to be that
smart to be in a situation where you give away 80 to 90% of your profit. I
want to create something where I keep 80 to 90% of the profit."
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Stock agencies get 90% of the profit because they're doing 90% of the
work. If all you do is take pictures and upload them, then all you deserve
is 10% (IMHO). The value of stock photography is not the photo. It's
getting it sold. If you go to the effort of creating your own
website, generating traffic, building a buyer base, then you too can earn
90% of the profit (the 10% you don't get goes into your cost of setting it
all up). I talk about that in my two articles on stock agencies, here and here.
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This next email question represents another misimpression about stock
sales: "...discussions among a number of us who primarily do landscape,
scenic, wildlife photography ... lead us to think that there is no
significant stock market for this type of work. What are your thoughts?"
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Most stock photo sales are done in vast, wide, disparate and unstructured
transactions around the world. There actually is a very big market
for landscapes and scenics and wildlife photos, but there are also
billions of such images from millions of photographers too. Even bad
photos sell. The problem isn't that there isn't a market—it's getting
noticed among the crowd. This leads to two points, one of which I've
already made: getting noticed and ranked is a function of building your
own personal site and personal presence on the internet.
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The second point is that stock photography should not be regarded as a
vehicle for generating lots of money with little work.
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Stock photography touches many people as either a buyer or seller of a
photo. So much so that it is so thinly distributed among people around the
world, it's fool-hearty for an individual to approach it with high
expectations.
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So, what does all this say about selling stock photography as a form of
personal income?
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For so long as the industry remains chaotic and unmanaged by any central
body, stock photography will also be unstructured. There will be little
innovation that helps sort, rank and distribute photos based on
merit—it'll remain as it is now: arbitrary. And just as you should not
rely on buying lottery tickets to sustain an income, neither should you
rely on on stock imagery when it is so highly subject to sales channels
that are diffuse and arbitrary.
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In this day and age, stock falls into Truism #4 of my list of The Five Truism about
having a Photography Business, which I originally wrote in 1998.
Truism #4 says Diversify Your Business. Only a very few who truly
know and perfect the stock photo marketplace should do nothing but stock.
For everyone else, you don't "succeed" at stock so much as you use your
existing imagery from other sources to augment your income.
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Most who sell stock—even well—do it as fun way to earn a bit more
from their hobby or as a lifestyle business. That's how it was for me for
well over ten years of my photo career. And as I am more into consulting
now, it's that way for me again.
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In closing, I will summarize by quoting my last blog:
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Turning a blind eye to the rest of the stock photo universe
affects decisions about where to put marketing dollars, where to do
research into buyer behaviors, pricing, and business development. If it
were generally accepted that the market were larger, agencies could form
partnerships with other media licensing agents, social groups and legal
networks that reach that larger market.
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