Is it time to institute a system of floor prices for the use of rights-managed images for editorial purposes? Is there any price so low — $50, $30 or $20 — that the image creator would prefer not to make the sale?
Given where pricing based on usage seems to be headed — particularly for editorial usages — it is time to start asking these questions. It is time to consider whether there is any possible solution to the problem.
Making It Up in Volume
When I started in the stock photo business, the theory was that stock agencies always acted in the best interest of their photographers, because it was in the agency’s best interest to get the maximum they could for any given sale.
The idea that they would make it up on volume, by selling huge quantities at much lower prices, was not a major factor driving prices.
At that time, the road to increasing volume was to have better quality images. Agencies would sometimes negotiate lower prices, but at a 50/50 split if they cut the price, they were cutting their fee by the same amount.
Today, as a result of buyer consolidation, there are fewer customers and many purchase a significant number of images on an annual basis. In addition, there is competition from microstock. These pressures have driven agencies to reduce prices for editorial use to microstock levels in the hopes of capturing sales.
Photographers who want to license their image based on how the image will be used need to ask themselves if they want to make a sale at any cost — even at microstock price levels. Is there some minimum price below which they would rather not make the sale?
Some photographers may say, “Sell my images for whatever you can get. I want to maximize the number of times my images are licensed.” Others may counter: “I do not want to allow my images to be used, unless the customer is willing to pay a certain minimum amount for such rights.”
Giving Photographers a Say
Either way, photographers ought to have more say with regard to the fees charged for using their images. With current advances in technology, that is not as difficult as it sounds.
Many photographers are currently receiving so little for magazine, newspaper and book uses that many would be willing to risk losing some sales for the chance to guarantee that they would receive a more reasonable payment if and when their images were used.
How could such a system work?
The biggest problem areas today are magazine, newspaper and book uses. Therefore, I would recommend continuing to allow agents total flexibility to negotiate rights for commercial uses. The floor prices I am recommending would be limited to editorial uses, at least in the beginning.
To illustrate what I have in mind, the table below presents a sample schedule of floor prices for the use of an image in a consumer magazine based on the circulation of that magazine (assuming the photographer receives a 40 percent royalty). Newspapers and book uses would have different numbers.
Thus, if the magazine publisher wants rights to print 250,000 copies of the magazine, then the photographer would be guaranteed to receive at least $136 for the usage of his image. The agent might negotiate for a higher fee if the image were used larger than a quarter page, or if it happened to be very unique in one way or another — but the photographer would never be paid less than the $136 for that usage.
If the buyer were one of the agent’s very good customers, the agent would have the freedom to license the image for less to that customer, but the agent would still pay the photographer his $136 floor price for the usage.
Let’s say that the agent decides to sell the image to the customer for $250. The agent pays the photographer $136 for the usage, and he keeps $114. If the agent charges more than $340, the photographer gets 40 percent of whatever fee is paid. Obviously, the agent has a huge incentive to hold the line on pricing.
Floor prices should be published so photographers represented by the agency know the minimum they will receive if one of their images is licensed for use in a magazine. Each agency can have a different set of numbers, but if the numbers are published, the agency’s photographers can make rational decisions as to whether they want to submit more work to the agency.
Photographers should also be able to compare the floor prices of various agencies to determine who offers the best deal. It should be recognized that going with the agency with the lowest floor price does not necessarily mean the photographer will make more sales. Having the right image to fulfill a customer’s needs is still important, and the agent may price the image higher than the base price depending on other factors (size of use, uniqueness, etc.) related to the use of the image.
Each agency would probably have a single set of floor prices. But they could easily offer additional options to photographers and image suppliers. Photographers might be allowed to price their images at 1.2 times the floor price, or 0.8 times if they think they will make more sales by offering a lower price. But it would be the photographer’s decision.
Photographers should also have the choice of giving the agency full freedom to negotiate any price they want for use of their images or to opt out entirely from editorial and book sales and to only make their images available for commercial uses.
Would Agencies Go for It?
Making such a system reality is not as complex as it sounds. Most agencies already have different price schedules for various image partners. Giving image partners a little more choice in how their images are priced could make many of those who are increasingly dissatisfied with their relationships with primary selling agencies much happier.
The work of individual photographers could be coded to fall into one of several groups, which might include: (1) unavailable for editorial use; (2) standard floor pricing; (3) floor pricing times 1.2; (4) floor pricing times 1.4; (5) floor price times 0.9 and (6) floor price times 0.8.
I’m sure most of you who have read this far are thinking that agencies will never go for this. That may be true at the moment– but agencies are not gaining customers by lowering prices. At best they are holding even on the number of units licensed, and because they are charging less their gross revenue continues to decline.
Maybe — if they charged the people who really need the images a more reasonable price based on value received — they could earn the same amount of money they have been earning while licensing rights to fewer units.
Just cutting prices does not seem to be increasing rights-managed sales, so maybe it is time for agencies to do what RM photographers want: offer a premium product at a premium price. The agencies also need to take into consideration the growing number of photographers that have stopped producing new images of the type needed by the editorial market.
Before rushing to adopt this strategy, photographers needs to think carefully about the kind of imagery they produce. If there are hundreds or thousands of similar images on microstock sites that can be purchased for a fraction of the photographer’s floor price, the agency will probably make few sales.
In such a case, the best strategy for the photographer may be to let the agency sell for whatever it can get, or maybe put the images on microstock sites and try to benefit from the volume rights-managed sellers seem unable to get.
On the other hand, if the subject matter is truly unique, when customers need that subject matter they will pay your price.
An advantage for agencies is that their sales people would be able to tell their customers, “I’d love to be able to sell that image to you for $50, but this particular photographer hasn’t given me the contractual right to do that. However, I’ve got this other image I can sell you for the price you want to pay.”
At this point the agency looks like the good guy who is on the buyer’s side; it is the photographer who expects too much. But if buyer really wants to use the photographer’s image, he or she will need to find enough money to pay for it.
Time for a Change
Historically, agencies have always been allowed to set prices at whatever point they need to make the sale. But we have reached a point where the amount the photographer earns for many newspaper, magazine and book uses simply isn’t worth the trouble.
Maybe the agencies will not accept images from photographers unless they can license them for all purposes. For many rights-managed sellers, that would not be the end of the world. They are earning so little now that it really doesn’t make much difference whether they sell or not.
It could end up that the agency is selling at the floor price most of the time, but that still would be a lot better than the low prices they are getting now.
Maybe photographers will find this idea unacceptable. If only a handful are willing to go along with such a strategy, then introducing it would not be worth the agency’s trouble.
Agencies could easily determine the number of photographers who favor the strategy by preparing floor price charts for the three types of use and surveying their photographers. The concept would not be implemented unless a large percentage of photographers agreed to risk losing some sales in order to hold the line on more reasonable prices.
It is certainly time to consider some adjustments.