Dreamstime: The Anatomy of a Stock Photo Agency Gone Mad

Several months ago I saw two industry graphs put out by a government agency.  One showed the increase in the demand for images since 2008.  It was going almost straight up.  Year after year.  The other represented jobs in the industry and the earnings of those who create images.  It was going straight down at the same rate.

It occurred to me someone had to be working quite hard to strip photographers of their ability to earn a living for these two conditions to exist side by side.

It’s quite obvious the demand for images is soaring.  Anywhere you look, someone is promoting their product, service or cause.  And the hook to get you interested in it is always an image.  Yet as the demand increases, photographers are working harder, investing more and more into their businesses and earning less month after month.

Why is this happening?  Well, you don’t have to look any farther than the deal Dreamstime cooked up with Google to find out.  In an announcement to their contributors – that apparently contributors were suppose to be thrilled about – Dreamstime hammered out a deal where Google would pay a licensing fee of $2.00 per image and then people using Google display ads could use those images.

The first problem here is $2.00 per image license?  Really?  That won’t even buy a loaf of bread, let alone cover the cost or producing a professional quality photo.  The second is once Google has licensed the image for $2.00, each person running a Google ad gets to use the image without the creator of the image getting paid a royalty.   So the deal also cuts the creator of the image out of future license fees for a lousy couple of bucks.

The insanity here is mind boggling.  And I honestly have to ask myself if they are stupid, insane… or just plain evil.  The action doesn’t just hurt contributors… it hurts every photographer in the business by lowering the overall value of our work in the eyes of the public (a little like pouring toxic chemicals into a pristine river.  It eventually contaminates the river and the ocean it dumps into)… and it hurts Dreamstime.  It also hurts those who need quality photography for their advertising as the quality of images drops in direct ratio to the diminishing return on investment.

By hammering out a deal to license stock photos once and allow the company that licenses them to re-license use of the images (whether charging or including them in the price of the ad) to anyone running a display ad with no further payment to Dreamstime or the creator of the image is cheating both out of untold license fees they could have and should have earned.  The people who will no longer be paying to license these images are the exact client demographic stock photo agencies license work to.  It also cheats ALL stock photo agencies, and ALL photographers out of income because few of Googles advertisers are likely to pay for an image via any source when Google is providing it free… compliments of the photographers that got suckered.

Why do I think it was just plain evil?  Consider this.  What person who can afford to run a display ad can’t afford $2.00 to license an image to use in it?  I mean really???!!!  There was no good reason to hammer out the deal in the first place.  It benefits no one and does great harm to the industry.

I suppose it is unfair to pick on Dreamstime.  They aren’t the only ones in the industry who have gone mad.  In fact the entire industry has become quite cannibalistic.  There was the under the table Google Drive deal between Getty Images (or was it iStock, same thing now days) to provide images to Google under similar terms, also cheating photographers out of any commission they should have earned from the image on subsequent uses.  But in this deal, photographers got the grand sum of $12.00 per image.  Dreamstime has taken it to a new low.

We need look no farther than what Dreamtime employee Malina Tudoroiu told Peta Pixel in regards to the deal to understand just why it is that when the demand for images is out the roof, photographers are going out of business.  She said:  “There’s nothing unusual in this deal, except of course for the famous name…”

So this is business as usual at today’s stock photo agencies.  Hammer out “great” deals that cheat everyone concerned out of their royalties and devalue the industry as a whole.  And it is this type of insane, short term gain with long term destruction, type of business logic that is dragging the entire industry into the mud.

 

“Hey! Someone stole our photos!”

This morning when I opened my email, there was a frantic email from one of my clients saying “Hey! Someone stole our photos!”  She attached a link to the website of one of her direct competitors where I indeed found several of the same images she used in her marketing.

The problem is that they aren’t her photos.  That is they weren’t photos we shot ourselves for her marketing.  They were stock photos her ad agency had used to “save money.”  Worse, they weren’t rights managed stock photos, or even the standard royalty free stock photos, they were the cheap microstock photos.

Why does that make it more of a problem?  Because under a rights managed licensing system, you, the copyright holder and agency know if the images has been used before, and where the image has been used if it has.  You can decide if a conflict was created by prior use, and you can license rights that prevent the image from being used in a conflicting manner in the future.  Under the royalty free model, you have lost that protection.

Microstock takes is down a few more steps… into the garbage dump.  Not that you can’t find nice images on microstock if you are willing to spend the time sorting through the chaff, but they are licensed so cheaply and in such volume that you have NO control over where that image might appear.  And due to the dollar an image pricing model, many of those places could seriously harm your reputation (low reputation companies, trashy blogs, adult products and services, etc).  The high volume licensing also serves as a liability.  Microstock agencies and their contributors are unable to police illegal uses of the images as it is simply not economically viable to search the records for each use found and there are estimates that for each legitimate use of an image, there will be found dozens if not hundreds of illegal uses. In short, your marketing image could easily have been used by thousands, if not tens of thousands of other companies and individuals for any purpose.

I discussed this issue with both the client and the agency at the time they elected to use the stock images rather than doing a “custom” photoshoot.  They dismissed my argument (above) as self serving.  It may be, but it is also true, and they are now taking steps to do a shoot to replace the images, and, of course, re-create all of the marketing materials that the images were use in.  I don’t see the savings there.

The need to control where your image is used goes beyond stock photography.  It can seem to clients who are not old hands in the industry that the business practices of professional photographers are a “hassle” to them and we need to simply dismiss such “silly” things as registering our copyright and licensing our work.  Yet, it usually benefits the client more than the photographer that we hold the line and stick to professional business practices.

A well known architectural photographer I know told me her clients frequently object to her registering the copyright and licensing the images to them. They simply wish to have the images given to them without such encumbrances.  She points out to them that if she does not do so, then they have little to no recourse when someone steals the images for their own use.  How often does that happen?  With almost every client, she says, and each time she has worked with her attorneys get the offending images removed for the benefit of the client.

It may seem that cheap unencumbered images are a god send, but they are indeed the opposite.  While the current mantra is that it is good for you to let your images, copy and other materials be ripped off for the “exposure” you get, anyone who has worked hard to build a brand knows that is a major disaster in the making.

The best economy is to work with professionals who understand the risks and liabilities and follow business practices that will help you protect your investment and branding.  The photos you use in your marketing are your image, they are how the public perceives you.  You can’t afford to dilute it through loss of control.

Please !

Stock photographers take another hit

Stock photography has taken some interesting turns in the last decade, each one tightening the screws on photographers a bit more until it has become unwise and unprofitable for a good photographer to work with any of the existing stock photo agencies.

The latest hit came from Alamy who has announced that they will be funding their expansion by cutting royalties to photographers 10%.  The math on this isn’t very clear, but it works out to a loss of income of considerably more than a straight 10% cut in royalties.

Downward pressure can only go so far before it either breaks the machine, or springs back.  I believe this day has arrived in the stock photo market.  I do not currently know of one agency at this point who has not given the shaft to the photographers to which they owe their lifeblood.

It is interesting to see how the game is playing out.  Microstock pushed many of the bigger players, and ones who gave photographers a fair deal, out of business by accepting low quality images from amateur photographers and licensing them for pennies.  The price was so cheap that it couldn’t help but disrupt the industry.

Now the microstock companies are seeing their pricing was too low and are significantly raising prices, with two of the agencies approaching pre microstock prices on the images they license… while cutting rates to contributors at the same time.  Nice game, but eventually the margins cross and with some agencies paying less than 15% of royalties the zero line is near.

Both buyers and contributors lose here.  For example, iStock who initiated the race to the bottom by licensing images for 10 and 15 cents is now charging as much as $270 per image.  That is more than most royalty free stock agencies charged before being driven out of business by the pennies on the dollar pricing of microstock.  Those old royalty free stock photo agencies paid photographers a 60% or better commission on the images they licensed.  We now have a situation where buyers are paying more, and photographers are getting less.  Much less!

Quality images are expensive to produce.  Diminishing returns result in the more professional photographers pulling out, and all contributors cutting back on production values to maintain some modicum of profitability, and a severe decline of image quality.  Add to this the liabilities of the crowdsourcing business model where the agencies don’t know and refuse to even speak with their contributors and it will prove a wise move for buyers to also shun the stock photo agencies.

A growing number of photographers have pulled out of the stock photo agencies and have moved to direct licensing of stock.  I think we will see this becoming a trend.

For photographers who are looking for a way out, the following may be solutions for you:

Stockbox Photo
Ktools PhotoStore
PhotoShelter

These are a starting point.  There are many other options for licensing your own stock.

What’s wrong with this picture: The state of the stock photo industry

What’s wrong with this picture?

Stock photography pricing

Well, let’s see…  for one, we have a situation where photographers are being expected to produce high quality work and let anyone from individual bloggers to multimillion dollar corporations to license the work that drives their marketing and profits for pennies.

What does the photographer gain in return?  Enough money to:

  • park his car for two minutes
  • buy 1/3 of a postage stamp
  • enjoy 1/10th of a cup of coffee
  • buy a half a stick of “penny candy”
  • pay for under 1/8 of an inch of seamless background paper

I’m afraid I am having difficulty finding any one thing this royalty rate will pay for… other than a stock photo which should be licensing for hundreds, if not thousands of dollars!

How the industry came to this sad state of affairs is fully explained in an article in the British Photography Journal entitled: “Stockpiling trouble: How the stock industry ate itself.”  Written by the former founding executive director of the Stock Artists Alliance, this article provides very knowledgeable insight into how the stock photo industry has consumed the very foundation it depends on to survive.  It is a must read for any photographer, whether you shoot stock or not.

Unfortunately this is not limited to stock photography.  It seems to be the new business model that has emerged in a number of industries: a parasitic model where profits are temporarily sent skyward by feeding off the people who produce the product, and off of the very foundation of the the industry as a whole.  This works only in the short term and only for the owner who sells out and cashes in before the signs of erosion become too visible (as in the case of iStock and the Huffington Post).

I do disagree with the article on the overall premise that stock photography is dead.  It is far from it and clients are still very welling to pay fair prices… I still find I have art buyers would would rather license directly through me at fair prices than run the risk of finding out that cheap microstock photo has been used in way that will harm their brand..

As with all cancers, the stock photo industry is actually consuming itself and it doing so could quite well solve the problem for us.  The big agencies are finding they can’t survive on the low prices they put into existence either and they are passing down increasingly worse terms to their contributors in an effort to stay afloat.  As they do this, the contributors are leaving the game.  I know a couple of the heavy hitters who are now weary of spending more and working harder to produce a higher volume of work for less money each month.  One stopped shooting microstock completely about a year ago.  The other is now licensing his new work directly where he can demand fair prices. Another stopped giving his work to one specific agency after they introduced some new unacceptable terms.

Thanks to ANOTHER bad contract put out by Getty, photographers are up in arms against Getty and many are moving their work elsewhere rather than accept the terms. iStock exclusives went on the warpath a short while back  when iStock cut what are already the lowest percentage rates on royalties even further.  Fifteen percent of nothing is about as bad as it can get.

I’m also noticing ads popping up on the new with the microstock agencies advertising for “contributors.”  This would indicate that even  the amateurs wanting to break in are seeing through the favorite microstock lie that all you have to so is invest more money into your shoots, and shoot higher quality work in return for pennies and you will get rich.  It is pretty easy for anyone to look at the numbers and see it ain’t gonna happen!

It can seem that the big bad corporate giants hold all the cards and there is little a photographer can do other than bend over and take it.  This is a complete reversal of the truth.  Without the photographers who create the work, they have nothing to “sell”.  They have no business at all.

The solution is to have nothing to do with the stock photo agencies until they once again realize the value of the people who create the work they depend on and work to protect our earning power… and our ability to finance the cost of creating it.

There are a number of ways any photographer can move to direct licensing of work.  A number of outfits such as PhotoShelter provide photographers the means to license stock themselves.  And while it can seem a tough haul to get on the map, one photo license at a fair price can equal well over 7000 “downloads” at a microstock agency.

If you feel there is simply no way you can cut ties with your stock photo agency, at least take a moment to write them a letter expressing your disapproval for the lack of respect and devaluation of your work.  And take some time to learn healthy business practices and pass them on to your associates.

Tide Turns Against Microstock

A couple years ago I noticed that one of the microstock stock photo agencies was promoting that they licensed photos for as low as 14 cents.  Of that the photographer would get only a small percentage.  I was outraged and went to one of the major independent microstock forums and posted my concern over what was being done to the industry.

You would have thought I just assassinated the President by the reaction.  A firefight of great magnitude was kicked off, with one microstock photographer leading the charge against me, saying where did I get off suggesting my work was worth more…  I should be willing to be in the trenches shooting for peanuts with the rest of them and get off of my “high horse.”

Last night I noticed that the same photographer who was attacking me has numerous posts on his own blog complaining about the unfair treatment of photographers by microstock agencies, particularly iStock  and one linking to an interview with Yuri Arcurs, the number one top selling microstock photographer.

The interview, conducted by photographer John Lund, may be the final nail in the microstock coffin.

The truth is that microstock has always used deception to gain contributors.  They have one or two photographers who have done exceptionally well at it and held them up as examples of “how well you can do if you just invest more in your shoots, quit your day job and upload more.”

It banked on the many thousands of people who wanted to become photographers and didn’t know the business practices of the industry and would be suckered by the empty promises.  I was flamed when I spoke out against it simply because  new photographers WANTED to believe the lie they were being told.

Yuri is quite candid in the interview and I thank him for it.  The truth with which he speaks has opened the door to solving the problems in the industry.

From a brief email exchange I had with Yuri about the time of my rant a couple years back I knew he was more than a little disenchanted with the direction of the industry when he confided that he was having to invest more money into his shoots and upload more work just to keep his income from falling.

Where others interpreted his efforts to step up production as proof the business model would pay off if only they worked hard enough and invested enough in their shoots, I knew it was merely an effort to keep from losing any more ground.

He has now told the world the real scoop in his interview with Lund:

“my return per image has decreased with almost 1 USD a year since 2009. My return per image topped at 9.1 USD in 2009, and in 2010 it topped at 7.10 USD. It is continuously falling and I expect it to top at 5.6 USD in 2011. My total income, however, is not falling, but this is only due to my working and producing like a mad man. I have doubled my portfolio in 2010, but this is, of course, not sustainable. I can’t continue to increase production like this forever, so something has to change.”

How true.  The microstock business model is “more for less.”  It doesn’t work.

He was also asked if he believed a photographer entering microstock today had a chance of being successful.  The answer was “NO”.  Yuri explained that entering in 04 when he did, the game was different.  In the present, the odds are completely against it.  Here is what he said:

“Lund: Is it too late to get into the microstock game now?

Yuri: The short answer would be yes. If you plan to be successful in this industry it’ll cost you an enormous amount of money, you will have to work 24 hours a day for several years, and you will have to be exceptionally skilled. You will also have to be more than just an extraordinary photographer and you will have to know the industry of stock photography very well.”

The answer begs a question: “If I have to work THAT HARD to establish myself, wouldn’t I be better off devoting that time and energy to enter a market that pays what the work is worth?”

Some time back I took a look at that and the stock photo industry as a whole.  I concluded that it had become cannibalistic and that the only solution was to start licensing my work directly. Apparently Yuri is thinking along the same lines:

“Refined shooters will move to exclusivity and I will start selling primarily from my own site.”

He also predicts that buyers will soon become quite disenchanted with microstock if things don’t change.

Quite a bit has to change here.  Microstock has always been nothing other than a cancer that consumes its host and itself.  That day is almost here.  The contributors who once believed the lies are up in arms about the utter lack of respect (and fair payment for their work) of photographers.  The forums are ablaze with contributors objecting to business practices that do not support the cost of production of their work. Microstock is losing the one thing they depend on to survive: their contributors.  The better photographers are seeing the return on investment simply isn’t there and the newbies can’t contribute the quality of work that microstock tells the buyers they have.

And the buyers are finding that using microstock can be a fatal mistake.  Examples include the person who licensed an image from iStock only to learn that the person who uploaded it had stolen it, the magazine who used a microstock photo on the cover only to have to reprint the entire edition when a billboard promoting an adult product using the same image when up in town, or simply the lack of effectiveness of using an image that looks just like every other image as a part of their marketing.

Microstock crept in due to the refusal of traditional stock to adapt to the markets and changing technology and open the door to talented contributors.  This is unfortunate and it will take a long time and serious cooperation among photographers and photographer associations to repair the damage that has been done.

The web has changed how business is done drastically.  Old licensing models don’t work.  They need to be refined to fit the new medium.  The failure to address the issue is why we see rampant copyright abuse and expectations that images used on the web be free.  And the closed door practice of the photo industry backed up hundreds of thousands of hopefuls looking for a way in who eventually decided selling their work for peanuts was preferable to nothing at all.

Change for the better will require some of the following changes:

1. Experienced photographers need to adopt a more open door policy and be willing to share their business knowledge with those seeking to enter the profession.  There is plenty of work for all of us, but only if we all understand the value of our work and how to license it.

2. Serious discussion and evaluation of the licensing models needs to be undertaken by the major photography associations and a workable model evolved for the web.  Low circulation blogs and websites, combined with the tendency for electronic images to remain online for long durations don’t fit well with the print licensing models.  Failure to address this threw the door open wide to the microstock opportunists to create a market by essentially giving the images away for nothing.

3. This evolution could well lead us back to the “dark ages” of stock photography licensing.  That is the rights managed system.  Under it the blog with a hundred readers a month pays far less for the use of an image than a fortune 500 company using the image as a part of an international advertising campaign.  This will also protect the earning power (and thus the ability to produce more images) of photographers by preventing a company or designer from licensing an image once and then using it repeatedly in different campaigns without paying additional royalties.  Many will object to this I’m sure, but it is preferable to the alternative… no images of any quality.  It also has the advantage of knowing where your image has been.  Clients will no longer have to fear seeing the images used in a multi million dollar ad campaign also used by a competitor.

4. Microstock photographers will need to put serious pressure on microstock agencies to start using licensing methods that are fair, and demanding fees from their clients high enough to support the cost of production.  As long as photographers allow their work to be licensed for a dime and used without restrictions, the abuses will continue.  The race to to the bottom on stock prices has reached an end and everyone lost.  Should one now decide to emerge that respects the photographers that provide the work they depend on, and creates a business model that licenses the work for fair prices and in a manner that protects the copyright of the photographer, and works to protect the earning power of its contributors, it will emerge the victor.

I would like to close this with a thank you to Yuri Arcurs.  I have long respected the quality of your work and your open door policy toward other photographers coupled with your willingness to share your success.  It is open communication and cooperation that will put the industry back on track.  My thanks are for speaking the truth and opening the door to the changes we need to see to protect the industry we all love.  And also a thank you to John Lund for conducting the interview.  John has provided some of the most useful info on the evolving world of stock photography that I have seen.

To my readers, please take the time to read the original interview with Yuri.  He isn’t totally damning the industry, but he is saying it needs to change.  You need to read his exact words undiluted by my comments and form your own conclusions.

Hold the Cell Phone to the Other Ear, Baby!

Okay, so the title should really be “How much is that cheap photo costing you?” but the one I chose in its place paints an accurate picture as well…

We’re talking about a cheap, cheap, cheap form of images called microstock. Microstock photographers can see as little as 20 cents or less per image license so they have to make up for it with quantity, quantity, quantity…  Thus, “Hold the cell phone to the other ear baby,” as the microstock photographer works to milk several hundred  “unique” images out of an 8 hour photoshoot.

About a year ago I wrote a post illustrating how several websites had used the same microstock image as an integral part of their branding and how in an age where marketing noise is at an all time high, this is the wrong direction to get noticed and get more business.

What I wrote then has now been proven out by a scientific study.

The New York Times reports that Jakob Nielsen, a Web site consultant and author of a number of books on website design and interface developed some eye-tracking software to track what visitors look at.

A study he recently completed reports that stock photos on websites are completely ignored by visitors. The “feel good images that are purely decorative” are ignored, as are the generic stock photos of people.

In contrast, the study found that when the photos were of real people related to what the article was about, or actual photos of the product being sold, that the images captured and held the readers attention.

The Times concluded with the following words:

Mr. Nielsen concludes with some advice to those using the Web to hawk products or content: “Invest in good photo shoots: a great photographer can add a fortune to your Web site’s business value.”

I would take it one step farther.  I believe the generic microstock photos of the smiling woman with the headset, or the business handshake, or worse, the groups of office professionals giving the thumbs up sign do more harm than good.  The first problem is they make you blend in with the crowd.  Many of these images and their look alike clones have been licensed hundreds of thousands of times.  Cases exist of direct competitors using the same image!

But the more damaging part is that the cheap microstock images cause your company to be perceived as equally cheap and common. While it is true most consumers don’t know that the image cost less than a buck, they do know that it looks just like every other image they have seen.

Yes, this is self serving.  But it is also true.  Cheap microstock images are costing you far more in lost income than it would have cost you to hire a photographer to do a shoot that produced images that related to you, your product and your services in a way that made you interesting to your clients.

Go get the business your competitors are throwing away!