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Strategies for Successful Stock Photography, Part 1 |
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Written by Richard Weisgrau
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Friday, 17 February 2006 |
 Stock photography has become a very lucrative business over the past thirty years. During that time, stock photography inventories went from being selections culled from assignment outtakes to being specially produced images. That transition ran a parallel track to another transition. The cost of producing stock went from resting on the assignment client to resting upon the photographer. Keep that thought in mind. It has a lot to do with a point I am going to make a bit further down the page.
Here’s a scenario I want you to think about. I want to sell automobiles. I go to the manufacturers, and I ask them to make a special deal for me. I want them to produce the autos at their expense. Then I want them to give them to me on consignment, i.e., I don’t have to pay for them unless I sell them. I also insist that I be able to set the price, and that they can have no control over the prices I sell the autos for. Then I tell them that I will give them 40% of whatever price I get for any sale. How many automobile manufacturers do you think would accept my deal? If you answered none, you were correct. The manufacturers have costs to recover as a result of their production. They have no idea how many autos I can sell or at what price I can sell them. They can’t risk going into production without some reasonable prospect that their costs will be recovered, not to mention recovering a profit in addition to costs.
Now, substitute yourself, as a stock photographer, for the automobile manufacturer, and substitute the stock agency for my role in the above scenario. Do you see my point? If not, read on.
All businesses have three critical operations: production, marketing, and sales. A good business plan sets production based upon the prospects for sales as a result of marketing. If all you do is produce and have no control over marketing and sales, how do you know how much money you should put into production? You don’t. You are speculating! Speculation is fine, if you can afford it. I buy an occasional lottery ticket for a dollar or two when the jackpot is millions of dollars. I can risk a couple of bucks in hope of gaining a couple of million. But how much can I risk by producing stock photography? There is no formulaic answer to that question. Finding the answer is dependent upon your understanding of your own business reality. Do you have the money to risk in a speculative venture?
The photography stock market is just like the financial stock market. Being speculative, there are winners and losers. In the financial stock market one almost sure winner is the broker because it gets paid a commission or a fee on transactions regardless of whether the buyer or seller profits from the transaction. The stock photography broker (we used to call them agents) is in a similar situation. Granted the broker has marketing costs. But the broker has no production costs. It only has to recover its administrative and marketing costs to break even. If it fails to recover the photographers’ production cost, it has nothing to lose except the photographer. Can it spare most photographers? You answer that one!
Stock photography has become very lucrative for a small segment of its players who have either made millions of dollars by selling agencies to the two big conglomerates, or they have made it by going public and accumulating stock options to be cashed in when the moment is right. Get their money off the top and can regulate marketing expenses in accord with sales volume. Photographers who create the product don’t fare as well.
Digital technology has enabled a growing number of photographers to enter the stock photography business, and it enables those photographers to produce stock imagery at a faster pace. It also reduces the cost of production materials. Whether it saves time is a mute point because photographers generally have the time to get the work done. Reduced production costs usually mean more production will occur unless the producer is mindful of the effect of the supply demand equation, which photographers have generally proven to ignore. Now, add to those elements the fact that the number of Internet outlets for licensing stock photography is increasing. Some of those outlets do not limit the number of photographs a photographer can offer. The result is that much of the increased production is reaching the marketplace. So the supply continues to outpace demand. That is the core stimulus for an economic downturn for the photographer because photographers’ costs increase while their individual share of the sales decreases. Prices do not increase enough to compensate for the shift. Growing costs and lower sales means that some stock photographers, perhaps many, end up in financial trouble.
If you have been an astute observer of the stock photography business over the past decade, you will know that what I described above has already happened on a large scale. What you may not be observing is that it continues to be happening, but it happens in a manner that photographers mistakenly see as advantageous. For example, as the two giants of the stock photo business have cut back on the number of photographers they represent and the number of images they will accept from any photographer, other entrepreneurs have created stock licensing services to take the works of those photographers that are rejected by the giants. These new services also allow almost any photographer to participate, and they do not restrict the number of images that can be put online. So the giants seek to decrease supply, and other forces seek to increase it, and they are successful. The result is more and more images and more and more photographers in the stock photography business without a corresponding increase in overall sales volume. That means on average each photographer earns less and pays more for increased production costs.
So what might the solution be for photographers? That will be the topic of some of my subsequent articles at this Website.
Go to Part 2
(c) 2006 Richard Weisgrau [contact] [bio]
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Last Updated ( Friday, 03 March 2006 )
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