Thoughts on a changing photography market

We supply too many images to (micro)stock agencies, and there are too many photographers to base a sustainable business model on for most of us. The suppliers market seems to be over-saturated.

On the other hand, microstock is rapidly gaining market share as cheap source of images for many purposes. The RF microstock pricing structure facilitates new buyers looking for alternative (and cheaper) outlets, due to the current financial situation. As the marketplace is changing, and microstock as business is maturing, competition grows. For the contributor, this means a rapidly growing challenge in meeting the changing image requirements in quantity and quality. This new – microstock – type of User Generated Content is eating away business from traditional stock agents as well as commissioned based photographers. Microstock has changed the photography business. Possibly forever.

All doom and gloom, or has this cloud a silver lining?

Introduction, mindset and time frame

I consider the current market situation in photography to be unstable. Reading various sources on the internet, in blogs, twitter, and in forums, I notice an increased weariness about the (micro)stock industry amongst contributors, and – to a lesser extend – stock agents. What you’re reading now, is the prelude of a series of articles, setting apart my thoughts on the future or photography, based on my experience, and what I see around me. I’m not a visionary, nor an economist or a marketing expert. Even though I’ve spent a large part of my professional career in Business Development and Innovation, I’m foremost a photographer.

I’ve been active in photography for more than a decade, slowly but surely expanding my business, before diving in head first, changing attributes from “advanced amateur” to “professional photographer” in 2004. Early 2007, I became involved in stock photography. I still consider myself to be starting out, building businesses.

Chapter 1: From past to present

2009 is a strange year. Even though the initial panic about the financial crisis is slowly ebbing away, the effects are still very much tangible. According to the experts, this will continue to influence businesses around the world for at least the next few years.
In microstock, the current events indicate that there are also other important factors affecting the User Generated Content market, affecting the position of the contributor. A generalization:

Supply and Demand

• The demand in images still increasing.
• The supply of images, by us, contributors, is extremely high, and the number of contributors is increasing too quickly to facilitate the growth in demand.

Changing market

• From my own experience, large companies, who were previously hiring a photographer to shoot dedicated images, are now actively looking into sourcing their general purpose image needs from stock agencies.
• Stock agents are adapting their strategy to facilitate emerging buyers market, by adapting their license terms, opening new outlet channels, and creating more segmented collections.
• The difference between traditional stock agencies and microstock sites is slowly disappearing, with a professionalizing microstock market, and a traditional stock industry, focussing more and more on mid and microstock. The image stock industry is maturing rapidly.

The consequences

The increased competition forces the royalty and pricing structures to be under pressure. As the image collection of the major players in the industry explodes, the importance of image requirements in terms of subject selection, image quality and legal indemnification by the contributor is increasing, but revenues are lagging behind. To put it differently: A photographer needs to work harder, producing higher quality to sell his (her) images at a price level that is in disproportion with the needed effort. Because of the average low market share in number of images, an individual photographer has barely any leverage with agents to have any influence on the changing marketplace.

Changing business

I sell images, and make a living out of it. I’m currently selling the majority of my images for “pocket change”, ranging from $0,19 to $300 per individual sale, selling the same images over and over again. A few years ago, my core business solely consisted of commissioned work, with exclusive usage rights to our clients – selling a photo just once. The extremes in image pricing are staggering. A single commissioned image, made me roughly 130.000(!) times more than some of the subscription sales nowadays.
A realistic breakdown of the math, using fictions numbers (expenses and taxes excluded, inflation compensation included):

All in all, the grand total remains roughly the same, In addition to this, the total production costs for stock images (planning, model fees, travel costs, assistant fees, image selection, and not to mention acquisition) are substantially lower than for commissioned work. The comparison shows the net worth of an image has devaluated. Images are sold cheaper, against more lenient conditions. This is compensated by an increase in number of sales. Considering the current developments in the market, there’s little leverage to bring this effect to a halt.

Obserbvations

• Prematurely, my commissioned work seems to be picking up again, the number of requests is still lower than in the past, and the size of the tenders are, generally speaking, smaller. I anticipate commissioned work will not fully recover.
• Trend analysis, innovation and concept development, needed to assess and meet the customers’ demands, require much more market insight (and thus time!) than before. I find this challenge a valuable addition to my business, as it also stimulates creativity.
• The production quantity of images has increased big time, requiring more computer hardware, processing capacity and storage space, as well as a change in workflow.
• I believe that the critical success factors in both lines of photography augment each other, improving skills and quality in both fields.
• Investing time to build a stock portfolio a few years ago was a good decision. With the continuously changing market, it is yet again time to evaluate, and look ahead at the future.
• If it weren’t for revenues through stock, my business would’ve been pretty close to filing a chapter 11. With request for commissioned work increasing again, my business is growing again.
• With stock continuing to make up for an increasing portion of my turnover, I’m starting to miss the frequent contacts with my clients and users of my images.

To sum up

With a supply chain, which is over-saturated, with an aggressive competition between agents, and a change in buyer demands, the business continues to change at a high pace. The channels, through which images are sourced, have already begun adapting, but the majority of photographers is lagging behind. This makes sense, as the stock agents are for the most part rather large enterprises, compared to their suppliers – the photographers. The majority of photographers consist of hobbyists, or pro-photographers with a different core-business than shooting stock, and the few full time pros. Yet, we all need to change. Change is possible, and the changed situation also has a few positive side effects. The days of “business as usual” are over, and I believe that is a good thing, as “business as usual” is a creativity killer, and creativity is a bare necessity for any photographer. The market is professionalizing, and it is likely, that photographers, who refuse to adapt, will perish in this process, possibly bringing a bit of balance back to the supply and demand equation.
Ways to change to a dynamic marketplace:

• Market and target your business
• Build a brand (an oldie)
• Choose between quantity or quality
• Differentiate or diversify your products
• Research the future to predict tomorrow’s customer demand
• Increase efficiency and reduce costs (the open door)

In the next few months, I intend to explore these methods more thoroughly, elaborating on each in a few more articles, and cross linking them, to put them into (my personalized) perspective. These articles will be published in random order.

Disclaimer:

• This article is based on personal experiences, opinion and situations, and may or may not represent the actual situation.
• Some statements are rather bold, and rough around the edges (or too feathered ), and there are of course exceptions possible.
• If you think there are any discrepancies or flaws in reasoning in this article, please let me know
• As future events cannot be accurately predicted as of yet, other opinions are equally valid.
• Care has been taken the sources used are accurate, but I cannot guarantee their accuracy.
• I’m probably my own worst critic, and my views will change over time.

If you have any thoughts on his please share them by leaving a comment!

This entry was posted on Friday, October 2nd, 2009 at 14:34 and is filed under Articles and tagged with Articles, branding, business, change, changing, essay, management, market, marketing, microstock, Photography, Reviewing our agents. You can follow any responses to this entry through the RSS 2.0 feed.