A State of Stock (3 of 3) - Jumping to Conclusions

The way that this used to work in my former position was that, at the end of a bulleted list outlining the issues I’d just gone through in the previous two posts, I’d outline a list of conclusions and action elements specific to the company and departmental goals. Here, rather than make specific conclusions, I’m going to outline more general conclusions, and observations that I’d suggest for publishers and agencies, and more specifically individual designers, in regard to the RF stock industry, keeping the options as open as possible and keeping cost effective measures in mind.

The talent that manipulates the image is your best resource in stock imagery. This is a major issue with many publishers, in my experience. Often the product is seen as the key resource, and not the personnel developing the product. But often that designer will make the difference between a mediocre design and something truly excellent. The committee can’t design it. The AD can do little more than inspire and direct. The designer needs to have the freedom of inspiration, and feel he or she has the confidence of the AD and Marketing to run with an idea.Bottom line; they used to say the image is only as good as your photographer. Now, in this digital age, I'd amend that to say the image is only as good as the photograpehr AND the designer who manipulates it for the end product. One can make up for the shortcomings of the other, but you need one to have a high level of skill. And most often it's the designer who you have the most ability to train, to bring the image to the level you need. Treasure that.

Create micro-payment accounts for key personnel, and let them purchase the images from that account. Between Us, this is an alien concept at most publishers, which prefer to let the money flow through one set of hands, and always want the left hand checking what the right hand is doing. But for crying out loud, no real damage can come from allowing staff members to manage a specific account for images using company credits. Make each individual responsible for acquiring, and documenting their imagery (and usage rights for that imagery) then just let them go.

Create a special service account with a RF stock house (with a contact person or account manager), or specifically limit the use of that house. It’s a pretty simple concept-get your best deal, play hardball, or move on to the next guy. This can work with a corporation or a one-person agency. Getty currently has one of the best and most robust search engines and image identification tools out there. But that does not mean they have the market cornered on the best images. Not yet. Get a contract with them to get the best deal and discount, or pull the plug and don’t use that agency for a year. Get them to give you something, or cut them off. Poor customer service should be rewarded with less or preferably no, business. Move on to the next guy, the likely hungrier guy, and cut a better deal.

Ensure you are on their e-mail list, and check the site often. The best deals are often available through the site. This includes free images, and special discounts (though it’s hard to beat free). Checking the sites regularly can amass a very large collection of free, especially useful for budget-conscious smaller agencies. Stockbyte (before they were swallowed) used to offer three large format images per week. iStockPhoto still has a free image (and free video) of the week. Corbis has a disc-of-the-month, offered at significant savings. But both of these can be hard to find unless you are on their direct e-mail list.

There are more recommendations, of course, more specific to specific situations, but these are the start and should give casual readers an idea of how to frame the coming changes in the RF stock image industry, to take advantage of those changes cost-effectively and with intelligence.

Next: A perspective on Designing for Generation Y

A State of Stock (2 of 3)—The Rise of the Micros

I believe iStockphoto was the first. If not the first, it was the first in my experience of the micro-payment agencies whose business model was (and hopefully is still) creating such a challenge to the strength of the growing monopoly in Royalty-Free Stock photography that is Getty Images.

The business model is simple-individual sellers can create an account, and through that account make images available. Then other individuals can purchase credits, through which they can buy the images. The cost in credits to purchase an image is affected by image size, and intended usage. For each credit used to purchase your image, the seller gets half—gold hard cash, or the digital equivalent thereof—in a micro-payment. Hence, these types of sites are known as micro-payment agencies.

And purchasers get discounts for buying more credits at one time. First, you can get up to 10 credits, depending on the deal and the code you find, just for opening an account. From that point, you get more “free” credits the more credit blocks you buy. The catch, and of course there is one, is that credits expire a year from purchase. So you run the risk of losing your “free” credits if you buy too large a block, that is, too many credits to use up in a year.

And it’s not just images. iStockphoto offers original vector illustrations, video, and Flash files, all available for purchase, all Royalty free. It’s a truly unique marketplace, and, thus far, a growing competitor to the strength of RF conglomerates like Getty. The image quality is lower, of course, and in general the images suffer from an apples to apples comparison to top RF professional photography. But there are gems there, rough diamonds that, with a little digital polish in the right hands, can become the stuff of Wonder.

The big issue at Company B was unlimited usage of images. Publishers that rely on keeping products in print seldom keep track of actual print runs, as a whole. They keep an inventory in stock for customers to order, and base profit on copies sold, not copies printed. This gives them flexibility to go to press as needed—print on demand of a sort—and that business model isn’t flexible enough to determine exact print runs, which is how the basic micro-payment agency, or rights-managed agencies for that matter, gauge their prices. As a solution for this, the micro-payment agencies allow you to purchase additional rights—say for unlimited press runs—for additional credits. Again, there is the quality trade off. You need the talent on the back-end to make it a worthwhile exchange.

But the disturbing part is that Getty Images purchased iStockphoto, this year. Thus far, the purchase has not adversely affected the business model, at least from this users perspective. But it’s still disturbing to see an idea, which was changing the very paradigm of RF stock imagery swallowed up by the biggest fish in that industry. In the interim, there have been other purveyors of this business model to come up since I first noticed iStockphoto. StockXpert.com, for example (which is now owned by Jupiter Images, which narrowly avoided getting swallowed up by Getty), and there are more coming up every day. Shutterstock.com. Fotalia.com. Dreamstime.com. Imagecatalog.com You can find a dozen more, of varying sizes and quality, in a simple search.

But, as has ever been the business model for the internet, the first and best run usually ends up being the dominant force. And, again, the dominant force has been swallowed in turn by the more dominant force.

That said, with so many alternatives out there, it seems likely that, as Napster changed the way a reluctant music industry looked at music downloads, these RF image community websites, creating a conduit from photographer directly to designers, are changing the shape of RF stock today. How to best take advantage of this paradigm shift is what I’ll consider next.

Next: Some conclusions.

A State of Stock (1 of 3)

I’d been doing research recently on the state of the Royalty-Free Stock image industry, as it’s a field that directly effects the bottom line of most publishers, be they print or online. My next three entries in this new blog will outline that research and some conclusions. This blog is written from the perspective of a back-end user, as opposed to the wide variety of photographers blogs out there which discuss the perspective of the front-end photographer/seller. Their viewpoint, for the most part, seems a lot more bleak, and I invite you to explore some of their perspectives.

History according to Marcus

Five years ago, the major players in the realm of royalty free stock were numerous; Corbis, Digital Vision, Digital Stock, Rubberball, Thinkstock, Stockbyte, Punchstock (to name but a few), and the grand-daddy of them all, some might say the evil step-grand-daddy, Getty Images. But in the ensuing years, there’s been major consolidation in these names, bringing most of the stock houses under a single roof.

In some ways this has been good. Consolidation of the multiple houses has helped clarify licensing expectations, no longer having one house say one thing in its Royalty Free license, while another offers something completely different. Such inconsistencies make it difficult for companies that take licensing, copyright and intellectual property issues seriously, to keep it all straight. One company means one take on the agreement, one consistency.

But it also means monopoly. Previously there was considerably wider variation in pricing within the stock industry. Royalty-free stock CDs contained about 200 images, at a price-tag of about $300, just two short years ago—at an average cost of approximately $1.50/image. Today, sample CDs in Getty Images Royalty Free library contain about 50 images for about $500-$600—a new average of $10/image. That’s a huge jump. And that jump is driven mainly by Getty Images, which establishes the standard prices the rest of the industry follows, and uses that industry leadership to buy up other smaller houses to further enforce its price structures.

The pond gets smaller, the fish get bigger.

In 2002, Getty bought the number three stock photo agency, Digital Vision for $165 million. In 2005, Getty purchased Photonica and Iconica, for about $50 million, In 2006 it purchased WireImage and iStockPhoto for another $50 million. And in February, Getty was in talks to acquire Jupiter Images, which had previously acquired Thinkstock, Stock Image/Pixland, Goodshot and Bananastock, and had launched it’s own micro-payment agencies, called Stocxpert.com and stock.xchng. A bit before, most disturbingly, Getty had purchased iStockphoto. iStockphoto was the precursor of a new micro-payment stock photo trend in the industry, rather like the Napster of digital photography. through this major outlet, individual, non-affiliated amateur and pro photographers alike can make their digital images available for purchase. And other individuals, agencies, companies, designers and corporations alike can purchase the royalty-free images. I’ll go into this development in a bit more detail in the next part. It's changing everything, and in a real sense, is the answer to a lot of the issues I'll outline here, while raising a host of other issues as well.

While all this gobbling was taken in stride by the industry as a whole, there were personal repercussions. I had been a major purchaser from both companies, coordinating a collection comprised of dozens of Digital Vision CDs, second only to the Getty CDs. As such, I had relationships with account managers (AMs) at each of the companies. Getty’s Account Managers were less responsive, and in some cases almost belligerent in my requests to clarify elements of their licenses. In contrast, Digital Vision and Stockbyte’s AMs seemed to bend over backward to give good deals, and great service. Smaller fish were much more eager to please, and I came to be on a first-name basis with those AMs. Getty, on the other hand, shifted me off to no less than 4 AMs in six months, moving their offices from one coast to the next, and my calls were not readily returned. But they had the CDs that the designers I managed were requesting, and so I had to continue to deal with them. And in the years that followed, both Digital Vision and Stockbyte, and the relationships I had built with their AMs, were swallowed.

Now, just a month ago at the start of May, Getty has purchased Punchstock. Punchstock was one of the largest remaining stock houses, offering all the other houses, plus some unique offerings of their own. As with all the others, the acquisition was met with an immediate stream of CD titles being retired, and the remaining titles being raised in price. Somebody’s got to pay for all those acquisitions. And it’s not going to be the Getty stockholders.

Next: The rise of the micros.