15 July 2010

Penny Stock

My daughter and I have been discussing careers in photography. I don't know a lot about it, but there is no question that many pro photographers are having a tough time. The economics of photography have changed drastically. Newspapers and news periodicals are in decline, putting a lot of journalists and news photographers out of work. Freelancers are doing decent business, but competition is fierce and the pay has always been low. In the commercial sector, stock photography has always been cheaper than commissioning new work and is being used more heavily than ever.

But the stock photo agencies since about 2000 have made changes to licensing and royalty models that have just sucked the money out of it for pros. Stock sales used to feed pros a constant stream of residuals, but now stock photos are penny stocks. The problem for pros is that the internet enables photo agencies to source stock photography from amateurs or semi-pros, who will cheerfully license their work for next to nothing. It's all gravy to them.

Amateur sourcing started with so-called microstock agencies, who will license photos for as little as a quarter a piece. They quickly became very popular, and microstock services are cheap and easy to start. They sprouted like dandelions. The old blue-chip agencies, like Getty Images and Corbis, quickly found these upstarts taking ever bigger bites out their business, a $2 billion a year business. In 2006, $800 million of that business was going to Getty alone, and they wanted to keep it that way.

So Getty purchased the pioneer microstock agency iStockPhoto, then bought another agency that was itself buying microstock companies. Then Getty got straight into microstock-style acquisitions by directly approaching select users of the social photography site Flikr. Now Getty is taking it to a whole new level, by acquiring entire portfolios from any Flikr user who will tick yes to a few terms of agreement.

A recent editorial from a UK photo mag outlines the massive downsides of this. It's not readily available online, so I'm reproducing it here:

    If you’re a Flickr user you may have noticed that stock photo library behemoth Getty Images has just opened up to the entire community what was up to now an exclusive arrangement with a few select members. Yes, you too can now have your pictures considered for inclusion in the files of the mighty Getty, which they’ll then sell for thousands to agencies around the world. All you have to do is wait for the cheques to roll in. Sounds great, doesn’t it? Except that, when you look into it in more detail, it isn’t.
    With the advent of digital and web publishing and the explosion of small-scale publishers, the economics of selling images has changed. Agencies such as iStockPhoto have sprung up offering lower prices, with many images produced by skilled amateurs. Publishers have turned to Flickr too, going straight to the source and cutting out the middle man. This shift has benefited the many photographers who would never have been able to get into the exclusive Getty club.
    Getty’s response has been to take over and snuffle out the competition—it’s aim is make it impossible for anyone to publish any pictures anywhere without paying Getty for the privilege. Having bought iStockPhoto and increased its prices tenfold on all the best work, it has now has turned its eyes on Flickr. This move, in my view, represents the hijacking and commercialisation by a powerful global corporation of what has been until now a hobbyist community website.
    The fact is Flickr users have always been able to sell their work to anyone who wants to use it. Potential buyers, including [What Digital Camera], simply contact the photographer through Flickrmail and negotiate a mutually agreed fee.
    Flickr users have sold their pictures in this way for years, and many have made thousands of pounds this way. What will happen now (if you tick the box to allow it) is that if someone wants to use your picture they’ll have to go through Getty. They’ll have to pay much more to use it, and Getty will take a whopping 70% cut. You will be prohibited from selling these images yourself, and once in the system it will be very difficult to withdraw them later if you find that the deal is not the pot of gold you expected.
    This arrangement will inflate the price of images on Flickr purely for Getty’s benefit, but the photographers themselves, who get just 30%, may not be any richer than they’d have been by selling direct. Many publishers, WDC included, will baulk at paying twice as much for pictures just so that Getty Images can take 70% of it.

To me this exemplifies again the new economics of creative work, with the internet providing a vastly greater supply than demand for stock photos, deflating their value. But at the same time, a clever and highly capitalized middleman it finding ways, however objectionable, to retain relevancy and maintain revenues. For photographers, the same trend continues here as in book publishing, music, etc. More and more people get a piece of the pie, but the pieces get smaller and smaller.

No comments: