There's been some low-level buzz about flickr possibly getting into the stock photo business, creating a quiet stir. To this, I have uncharacteristically little to say about it, other than, "what took you so long?"
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Where I have a lot more to discuss is how this is only the beginning of what is going to be much bigger stuff to come, and most of it isn't what people expect: that stock photo agencies will move into the consumer arena. There are stumbling blocks though, and how photo company executives overcome them will determine who comes out ahead.
The premise for this entire business model comes from the growing evidence that user-generated content is shaping more of the future for many types of online businesses, whether it's the glorified garage sale that is ebay, the sales of music and videos by consumers on content-sharing sites, or the enormous growth of blogs and other self-publishing efforts by individuals (who monetize their own content through advertising revenue as well as selling of their services). The companies that succeed will be those who can monetize raw content from crowds of people, and profiting through the economy of scale from their collective assets and infrastructure. I assert that the photo world is on an intractable course towards user-generated content, and anyone that doesn't include consumers, at least as a part of their business model, will be buried by those who do. This is essentially at the heart of what flickr is "considering."
The speed and effectiveness of this progression is dependent on when executives can overcome three main obstacles, which I'll describe soon. I'll illustrate my encounters with people that lead to these observations, and along the way, share the increasing evidence that consumer-generated content is clearly where the photo industry is leading.
In 2000, I wrote an article called, "The Five Truisms of the Photography Business", and Truism #1 is "There are more people who have photography as a hobby than as a profession." While an obvious statement on its own, it has enormous weight when you consider how the internet has brought down the barriers that have kept consumers out of the photo business in the first place. Now that they're here, they have fundamentally altered the photo industry, whether intentional or not, and whether other photographers like it or not. I brought this up during a heated discussion on the EP (Editorial Photographers) discussion group, where I was trying to dispel peoples' skepticism about the internet being a viable platform for business. Believe it or not, most photographers and photo interest groups were more than just skeptical--they were actually advising photographers not to attempt business on the internet for fear their photos would be stolen. ("Having an online portfolio is OK, provided you don't put up too much," was one quote from some prominent members of the EP group.) My article tried to make it clear that this problem would not only be offset by a huge boost in business, but avoiding the internet would be career suicide. All new, emerging photographers will be gravitating towards the net because that's where business is. While an established pro can rely on existing businesses and relationships for a while, they will eventually have to move in that direction, unless they are truly a rare and unusual anomaly.
But, this lead to severe resistance, which was my first lesson about the photo industry culture: photographers are resistant to change to the point of denial, or oversimplistic and unrealistic business views.
This article came up for discussion in photo.net, which lead me to Phil Greenspun (the founder), who was not only a great photographer, but a computer science guy who didn't have the ball and chain of the photo industry culture holding him back--meaning, he was open-minded about the opportunities of the internet. I, too, came from the computer science world, so we started out with a lot in common. He was more optimistic about the possibility of expanding his hugely popular photo discussion forum into a virtual stock agency. At the time, photo.net had 600,000 members and a millions of images from user submissions. More importantly, there was sufficient anecdotal evidence that real photo researchers were using the site to find images and license them directly from users. (Phil had a personal policy that anyone could use any of his full-resolution images in exchange for a $25 contribution to an animal shelter he supported.) In those days, it was a bold new world to consider whether there was any way to really monetize any of this, but I argued there was. Photo.net, I suggested, would be be a perfect platform from which to build this business: rather than affecting anything it was currently doing, we would simply insert an addition module that would allow users to indicate whether a photo could be licensed, and for how much (plus, ordering forms to submit and fulfill orders). Photo.net would take a 10% commission, leaving 90% for the photographer, which, at the time, was unheard of in the stock licensing world.
And this lead me to my second lesson about photo industry culture: they tend not to have very broad business experience beyond their own areas of expertise.
I got far enough along that I was more convinced the business model would work, I just needed to find people who could share the vision. So, my next stop along this path was shutterfly.com, an online photo finisher that was on my side of the country. Although the company's main focus was to provide printing services, surely, these people would see the opportunity I was proposing (to introduce stock licensing into their business model) because they were more of an internet-based business than photo.net was (which was more of a social and discussion group). I also thought that it would help that one of the main investors of the company was Jim Clark, one of the founders of Netscape, the one-time internet high-flier that almost single-handedly started the tech bubble with its own IPO. I also served on a board of directors with him for a brief time at a company I was involved with back in the early 1990s (Network Computing Devices). Surely, I thought I was dealing with a visionary with broad business experience, and who had a sense of both photography and the opportunities of the internet.
So, in 2001, I had submitted a proposal for a business model where they would inject new features onto their website to allow users to make certain images for sale, either in print form, or for licensing. My criticism of the existing site was that already allowed users to buy other people's prints (so long as they made them "public") but the other person got no renumeration for it. "There's no incentive for people to upload more pictures, or for more people to join," I said. Indeed, even though I had a successful business selling my own prints and licenses, I would have gladly uploaded my entire collection of images to shutterfly and let people buy them there if it would relieve me of having to deal with this on my own. But, if I can't make any money from it, why bother? If they were to do so, their growth would have expanded ten-fold from their printing fees alone, and that doesn't even take into account the side benefits of moving into the licensing arena.
I never heard back from them, but two years later, they had hired someone to do almost exactly what I proposed. Sure enough, photographers could set their own prices, and even build their own web "space" just as I described. But it suffered major mistakes: it was way underfunded, understaffed (one person), and worst of all, photographers had to apply and be accepted into the program. They also limited it to event photographers (mainly weddings), as it was shutterfly's vision to capture the entire wedding industry (where photographers would upload their images and let clients buy prints directly on the site). Woo-hoo. Let's see the money rolling in from that. (Not a bad idea unto itself, but it was missing the real goal of the business by an entire galaxy of space.)
I'd since lost track (and interest) in shutterfly, but I did manage to meet with a product manager that worked there sometime later through a mutual friend, and she filled me in: "the management wants to be the premier photo finisher that dominates the market, and any idea that diverges from that focused mission is not considered."
And this was my third lesson for why the photo industry doesn't move well: tunnel vision.
And therein lies the three primary problems that plagues most of the photo business giants today. It doesn't mean that things won't happen, it just means things are slow to happen. Which brings us back to today's market and what's clearly and unavoidably around the corner. The flickr "news" (or, non-news as yet), is just the tip of the iceberg.
Truism #1 is the most solid rationale justifying the inclusion of consumers into the existing business segment. And it's more than just photography. Companies like myspace.com and other social websites, already exceedingly popular and profitable as they are, are allowing the sales of user-generated songs for this very reason. Similarly, YouTube has proven that user-generated content--even stuff that is pretty awful--has enormous monetary value. What makes anyone think photography is different? It not only isn't different in its viability as a business model, but it's better because the monetization potential goes beyond just consumers--businesses license images far more than they do songs or video. And, when Microsoft acquired images from everyday people for use on its Vista desktop, it was yet another in a never-ending series of proofs that consumers are an undeniable force in the photo business. It is inevitable that someone--whether it's flickr or other photo-sharing sites--will eventually figure this out and engage in some form of business that monetizes user-generated photography.
Why flickr should do it now is for the same reasons that cable companies are moving into the telephony business, and how telephone companies are moving into video delivery: they have the resources, they have the infrastructure, and they have the assets. All they need to do is build a business around it. For flickr to do it is obvious. Not doing so while they are on top of the game would be suicide.
One could say the same for other photo sharing sites, but there are even more companies that can benefit from this. As you're looking so closely at the consumer sites, turn around and look the other way at the pro (agency) sites. I also believe it will invariably happen that major photo agencies like Getty and Corbis can (and should) move into the consumer market. Consider what would happen if major stock agencies expanded their businesses by opening the flood gates and letting everyone in. By removing the barriers that require photographers to "submit images," and having a separate portion of their sites be entirely open, much like other photo-sharing sites are, they would give more options to buyers, and provide more opportunities (and greater incentive) for photographers to join at all levels. Getty owns iStockPhoto.com, which is a microstock agency that sells images for much less, but this is not a consumer-based, social networking style photo sharing site like flickr is. That major agencies have entered RF and microstock businesses is not addressing the issue at hand.
Social networking sites that utilize photography has far more upside potential. How they implement this from a policy perspective is an open question, but easily a manageable one. That is, they wouldn't need to dilute their higher-end photo assets with the fray at the bottom, nor would they want to cannibalize their higher-tier photo talent by treating consumer photographers equally. But they would clearly want to have a major business interest at the low end, and provide a graduating model for moving up the ladder to higher-tiered placement. In essence, I see this as a hybrid of the microstock and the more full-service stock house that Getty and Corbis currently are.
From a business perspective, this would turn companies growth prospects from bounded to unbounded, a major problem they currently have with their shareholders. People would join in droves because their upside potential would exceed the minimal returns from the nickels and dimes from microstock sites, plus the opportunity for swimming upstream towards full employment as a staff photographer (if that were to be a career objective). Tthe benefit to the company would not only begin with a boost of image sales, but they would also encroach on the turfs of the consumer sites like flickr and shutterfly.
I would argue that, given the existing infrastructure of each set of companies, Getty and Corbis can move more quickly and efficiently into the flickr/shutterfly space than it would be for the other guys to get into the licensing business. In fact, given the top stock photo sites' existing photographer base, the winners will probably start out being the ones with connections to the cream of the photography crop, so long as they move quickly.
If you're thinking "that'll never happen," then tell me how it's a whole lot different than cable companies serving telephone service, and phone companies delivering video.
Sooner or later, someone's going to see this, and as soon as that happens, the race to the other team's goal post will begin. (As soon as one moves, the other will absolutely have to.) I recently posted a blog entry that explained why we aren't going to see an IPO from Corbis anytime soon: because they don't have a vision statement that will lead them into the future. Similarly, we've seen Getty's stock plummet because their existing business model continues to be eroded as well. (It should be noted that Getty's recent "jolt" from the low-40s to around 50 is due to an announcement that outside investors are buying a substantial chunk of stock with the intention of shaking up management--that is,replacing them.)
Coming full circle, this can only happen if the executives can overcome the three barriers described earlier: fear of change, narrow business sense, and tunnel vision in products and services. Whether these executive (and their companies) do it is unknown, but what is known is that it's the only viable path for anyone that wishes to compete at the top end of the photo market. Companies in both the consumer and professional realms will eventually encroach on the other, just as the telephone and cable companies are doing now. There may even be a time where one cannot discern one from the other insofar as basic business models. (The content may vary considerably, but that's inevitable too; every company with similar products must still have differentiation.)
As I've been arguing since I got into the photography business, Truism #1 states that more people have photography as a hobby than as a profession. Therefore, the basic fundamental principles of economics make it inevitable that photo businesses will have to expand into a hybrid of consumer/pro-photo sharing/licensing models. Not doing so will be career suicide.
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