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You Are Here:  Home  >  FAQ  >  Business  >  The Five Truisms of the Photography Business

The Five Truisms of the Photography Business

Table of Contents

Chapter Word Count: 8388
1 Introduction  (1730)
2 Differing Business Models  (735)
       2.1 The Decisive Question  (659)
       2.2 Historical Context  (632)
       2.3 Digital Photography and The Internet  (300)
       2.4 Today's Climate  (1927)
       2.5 An Example  (697)
3 Five Truisms of the Photography Business  (1638)
4 Conclusion (70)

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Feb 27, 2003 to Aug 5, 2013
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1 Introduction

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Thinking Critically and Analytically
(San Francisco, California, USA)
california, people, petes, san francisco, vertical, west coast, western usa, photograph

Back in the late 1990s, the first article I ever wrote about the business of photography was "penned" as a simple response to someone's assertion that the only way for photographers to keep prices from falling was for them to all band together and pledge to one another that they would not undercut or undersell each other. My article argued that this idea was naive, and that basic economic principles (established throughout time) have proven that the best way for photographers to do well is the way any free-market system worked: to allow healthy competition between suppliers. This allows the best performers to rise to the top, and the weakest to die off, keeping the balance of supply and demand in equilibrium. Prices settle where the market dictates based on this equilibrium.

That article was named the same as this chapter; I highlighted the five most misunderstood facts about business and phrased it in terms of the photography business. Almost the entire content of that article is contained here, though it's since been updated and expanded to include references to even more resources to substantiate the case further: that the photo industry is no different from any other in the free-market system that isn't protected by legislation: people compete with each other on price, and there's no way to manipulate the system beyond an extremely small number of competitors.

As I continued to write, I found myself fighting more false illusions about the photo industry that so-called "pros" were advocating, such as their advice not to put your photos on the web, as they'll just be stolen. I was arguing 180-degrees the other way: put them on the web so you will be found, and people will buy your pictures. Indeed, if it weren't for the enormous push-back I was getting from the established pros at the time, I would have left it at that. But I was forced to prove my theories. So, I put all that advice I was pontificating to work in a real photo business. In very short order, I was turning a very healthy profit. And over time, others who have followed the principles I advocated have reported similar results. This lead to a wider distribution of my articles on the web and other publications. By 2004, my reputation had gotten the attention of two publishers who wished to publish these articles in book form, which had gone on sale in mid-late 2005.

While I would love to claim ownership of these ideas and responsibility for making a fundamental change to the history of photography, I can't. I have simply applied the most basic, fundamental business concepts that you can read about in any introductory-level economics course in college. In fact, nothing of what I have ever discussed or applied is "advanced" by any means. As a business, photography isn't like the stock market, where you need complex calculus formulas to derive projections for where market trends may go, or the future prices of commodities. Photography is one of the most basic, quintessential prototypes for how a "small business" works. It's the single-celled creature of the business world, making it the easiest to analyze, experiment with, test, and retest. It's the perfect model for anyone to put into practice—and see results—of the application of introductory-level business ideas.

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Famous Last Words
(USA)
babies, boys, dans, famous, grandparents, horizontal, infant, jacks, last, words, photograph
That doesn't mean the photo business (or any other) is "easy." If business were easy, then everyone would be successful, and no one would ever fail. The challenge with any business is not the fundamentals, it's the ephemeral decisions that have to be made given the conditions. Still, you have to at least start with the right fundamentals. And this is where the bulk of the traditional photographers got it all wrong. The reason why they got it wrong is discussed in this chapter. (Briefly: they didn't anticipate the effects of the Internet.)

In the decade that passed since my first writings, the trend of the photo market has shown an undeniable preponderance of evidence to bolster an even more persuasive argument that the free-market system is alive and kicking in the photo world. "Falling stock photography prices" and "increased competition" and the vast numbers of people who are contributing to microstock stock agencies, all point to exactly the very principles of economics that come into play when the free flow of product is in full motion, unimpeded by artificial barriers on the supply side (such as when suppliers choke off distribution channels in order to maintain market prices), or on the production side (such as when unions control compensation through collective bargaining and government support though legislation).

When you remove barriers, you get conditions that give definition to the the term, "free-market." And in such conditions, one can't depend on (or expect people to adhere to) behaviors that themselves depend on those very barriers. That is, without government mandate or other artificial controls, it's unrealistic to expect workers to "band together," nor can you expect suppliers to cooperate in price controls (unless the number of suppliers is very small). The only thing you can expect to have is precisely what makes a free-market economy work: competition.

Yet, even today, what with all we've learned since the internet has given rise to all sorts of changes in every industry on the planet, all professional photography associations and industry trade magazines still haven't changed their tune about the business models they advocate to their memberships, or "report" in their news analysis in trade journals. They still view the business of photography in the usual way: that it's all about sticking together as a group, or by agreeing not to lower prices (and cursing at those who do). (Again, this is covered in this chapter.)

As a historical (and sociological) study, the reasons for this are interesting (and admittedly very understandable), and many lessons can be drawn from it. The first half of this chapter focuses in great detail about the history of how it started this way, and why it was once a good, working model. (Hint: distribution channels were controlled, and photographers had once been a union.) From a sociological point of view, I could never quite understand why they would continue to advocate a model that can't possibly succeed in today's market. Until, that is, I came across this fine quote:

    "The truth does not change according to our ability to stomach it."
      --Flannery O'Connor

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Barry and Mary and Jack
(Slovenia)
barry, barry goldberg, europe, groups, happy, horizontal, jacks, mary, men, slovenia, womens, photograph
This gave me the epiphany that helped me realize why so many photographers hold on so tightly to their "three musketeers" mantra. It starts with the comfort of camaraderie. It's emotionally powerful, and the cohesion keeps people together emotionally. When it's in your interest (perhaps because they are your dues-paying membership or subscriber base, or because you've been a luminary for so long based on your prior ideas), gulping down a huge dose of "paradigm shift" is hard. Worse, it's dangerous at multiple levels to suddenly change your tune. Alter your message and you could lose your own credibility, and with it, your audience (who, after all, is your financial life blood as well).

Admittedly, this assumes that the leadership of those organizations actually do know that their messages or teachings are dated, which may not necessarily be the case. After all, they have been so married to their ideals for so long, I certainly don't expect the old guard to be so ready to change their spectacles. In a way, they are seeing only the truth that comforts them. And to perpetuate this truth, one needs a villain, which is not hard to find: the unskilled newcomer who's making money easily in a market that took you years to conquer. There's no more gut-wrenching emotion stronger than the feeling that you've lost your income to a less-skilled, junior photographer who (you feel) only got the job because he was willing to work for less, or (gasp), for free. When your stock photo sales go down because a micro-stock agency is selling images for $1/each, there's another party to blame. When your own agency pays you a smaller and smaller percentage of sales because their own margins are getting squeezed (and their CEO is taking in an annual compensation package that can eliminate starvation in a small African country), there's yet another party to blame.

These common occurrences have been powerful rallying cries for leaders and followers alike, who together, can find no fault of their own for their diminishing financial conditions. It's so easy and to blame the "bad photographer" for breaking code and undermining other photographers, or the bad company for looking only to their bottom-line by compromising quality (of images) for simply getting cheaper ones. Leaders and photo industry media pontificate to groups about these things, and pine for the old days, when the photo industry was very different indeed, virtually assuring that their members will hold on and continue to contribute.

Indeed, this is the discomfort of the reality of the free-market system, and you can't deny this truth simply because it's uncomfortable. To that, I'm compelled to add another apropos quip:

    "For me, it is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring."
      --Carl Sagan

Above all else, the main purpose of all my writing is to get you to think critically and analytically about business. Critical thinking is a discipline that challenges you to examine all sides of any issue or postulate. Business changes so rapidly, that what was true yesterday may not be true today, and today's lessons may not apply tomorrow. As conditions change (market place, pricing, technology, economics), different decisions should be made based on current circumstances. Anyone who says, "this is the way the photo business has always worked, and it always will," is viewing the world too simplistically. All too often, people react to business conditions by applying preprogrammed mantras, or by blindly following others. To make sound, intelligent decisions about how and where to spend capital, to predict what people will buy and when, to effectively price products or services, and most of all, to know what do when things go wrong, one needs to see how all of it fits in the bigger picture without prejudice to how things used to be.

Anyone wishing to enter the photography business as a serious endeavor must recognize that there are two polarized views about this industry's business climate, each offering opposing philosophies on how to approach your business. We will examine each view closely, and ascertain from those strategies which may be more pertinent to today's environment. The two paradigms under consideration are the historical model that has traditionally been part of the photography culture, and the free-market model, where most businesses operate in a capitalist economic system. We'll discuss each in depth, but let's start by defining them in terms of how they apply to the photography industry.

blue-bullet.gif The Solidarity Model

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Photographers Banding Together
(San Francisco, California, USA)
california, carnival, cities, people, photographers, private industry counsel, san francisco, vertical, west coast, western usa, youth opportunity, photograph
The solidarity model is based on the presumption that photographers' best chance at succeeding in business is to join with other photographers as a cohesive industrial force, similar to a union, where pay and contract terms are enforced implicitly through a voluntary agreement among all photographers. Here, photographers agree ahead of time what is deemed to be fair and equitable on as many terms as possible (pay rates, license fees, other contractual terms) and won't enter into business agreements with clients that don't adhere to those terms. The theory is that such cooperation will force photo buyers and contractors to agree by virtue of there not being enough viable professional photographers to go to as alternatives. Since only real unions can legally force buyers to comply with such terms, and since photographers are not permitted to unionize, the solidarity among photographers would have to be voluntary. Companies that do not comply with such terms are deemed to be "bad for the industry," and are subject to boycott by those cooperating photographers.

Clearly, since there is no way to force compliance among photographers, or from clients, for that matter, policing the solidarity is also a shared responsibility among those who participate. Uncooperative photographers are "excommunicated" and, on occasion, outed through industry press. The terms of the solidarity—also called "codes of ethics"—are currently written by industry trade groups (made up of the participating photographers), which include subgroups within market segments. Current language for such codes include, "never underbid other photographers," "never bid an assignment below cost," "never work for free," and "never consider your own needs at the expense of the industry."

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Grizzly Bear (3)
(San Francisco, California, USA)
animals, bears, california, grizzly, horizontal, san francisco, west coast, western usa, zoo, photograph
The goal of the codes to is to enforce behaviors that are intended to keep market rates higher and to preserve the jobs and livelihoods of its members. The assumption is that if enough higher-end professional photographers participate in the solidarity, buyers will have no choice but to adhere to the terms, or suffer with lower-quality shooters and their images.

In the end, the theory goes, photographers only need to compete with one another on one aspect: their craft. All other business terms would have been negotiated in good faith in advance by "the industry" and the majority of the photo-buying clientele. This would reduce incidences of workers being unfairly exploited by the bigger and richer employers or licensees.

blue-bullet.gif The Free-Market Model

The free-market paradigm presumes that photographers compete head to head on everything from price to contract terms to all other aspects of business at every level. As individuals focus on promoting their career as best they can, those who are most successful rise to the top, while the lesser successful photographers drop off (change careers, etc.). In the free-market model, the survival of the fittest strengthens the industry as a whole, and the de-facto leaders become the trend-setters for how business is done. As the business climate changes, as technology or other aspects of the environment change, so too do the photographers, or they drop off, making way for others who are more adept at the new climate.

This model needs no oversight or policing, because the free-market system is self-sustaining. Buyers who desire valuable photographers and their assets pay based on demonstrated value at whatever tier of proficiency they desire for their project, since photographers at all tiers are available by design. As better and more qualified photographers rise through merit and strong business acumen, a more stable foundation is established to secure industry terms. Best of all, the system is flexible due to changing technological or economic conditions: when such changes occur, emerging photographers who succeed in the new environment naturally set the stage for those who follow.

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Bryce Canyon Scenics (1)
(Bryce Canyon, Utah, USA)
america, bryce, bryce canyon, canyons, clouds, horizontal, north america, scenics, united states, utah, western usa, photograph
Determining which economic theory can be more advantageous for photographers is highly dependent on outside factors: the supply-demand ratio, and the ability for the photographers to most effectively maintain solidarity among its membership. Simply put, the more limited the number of suppliers, the easier it is to equalize the supply-demand ratio and to police solidarity among members. The greater the number of suppliers, the greater the increase in the supply of images, and the more difficult it is to maintain solidarity among the members.

Neither model is new or unique: the solidarity model is used by unions all over the country today, as well as many European countries with strong socialist governments. The "free-market" model is used throughout most non-manufacturing industries in the United States, ranging from technology to medical care. The predicate question in determining which model is more appropriate for photographers in today's market is based on this question:

    "Is the number of pro photographers large enough, and is their unification centralized enough, so that mass cooperation can be achieved to a sufficient level to sustain market rates and employment terms?"

This begs the corollary question:

    "How many uncooperative members are required before solidarity has eroded to the point where those who "cooperate" are worse off than those who don't?"

An example of this risk analysis is found today with oil producers. Because there are only a few countries that produce and supply oil to the world, they can control pricing by simply cooperating with one another and agreeing not to sell below a certain price. While this form of organized price control is largely effective, it is also brittle, as evidenced by this example: In 1999, the "agreed" price among OPEC members was $28/barrel, but Venezuela was having several economic troubles internally, and the only way they could get out of it was by secretly and quietly dropping its prices to $20/barrel, thereby cornering the market. The lower price was offset by the disproportionate amount of oil they sold (relative to their competitors), hence, yielding a net profit. By the time the news got out, they had already realized the revenue boost they were seeking, whereby they returned to "compliance prices" before getting penalized by the consortium.

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Fog and Cliffs
(Santa Cruz, Galapagos Islands, Ecuador)
cliffs, ecuador, equator, fog, galapagos islands, latin america, santa cruz, vertical, photograph
The point: Venezuela's undercutting the market for their own financial gain caused the other members to suffer. This very practice is the basis for one of the "codes of ethics" described earlier.

If one were to believe that sufficient cooperation can be obtained from the photo industry, then it not only makes sense to participate in this solidarity, but you should be able to build a business strategy that confidently relies on such cooperation. If one does not believe that solidarity is sustainable, one has no choice but to default to a free-market model of competitive strategies against competition because, well, everyone else is.

What makes this question so important—and why so much attention is given to it in this chapter—is that virtually all professional photo organizations (commercial and educational) base their entire business foundations on the Solidarity Model. Their influence on the photo community is strong, and dissenting views are not widely heard (so you're not going to see this material in their curricula), so most people who go through traditional educational programs are going to hear that model, and no other. This is what is called a "captive audience," where the members usually don't have other business experiences on which to base their analysis. That is, emerging photographers look to professionals for guidance, and there is no other source of information they can rely on. Moreover, most professionals today evolved from an era when the Solidarity Model was not only the prevailing one, but it worked. In order to study the topic objectively, one has to do independent analysis. We'll start that here by looking first at the historical context.

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Puppy Hound
(Santa Fe, New Mexico, USA)
america, desert southwest, hound, indian country, new mexico, north america, puppies, santa fe, southwest, united states, vertical, western usa, photograph
In photography, the historical business model was such that individuals couldn't easily represent themselves directly to buyers because of two major barriers: cost and time. First, the cost of production, marketing, sales, and delivery of images were such that individuals couldn't make enough money by manually dealing with each and every client. This was especially true in the days when film was the only medium available to photographers. The infrastructure alone can be daunting: duping and sending film, making prints, producing portfolios, tracking clients, billing and customer service, not to mention the other costs of maintaining business, required considerable capital investment. To be profitable, one had to move enough product to offset those expenses, and do so expeditiously; the speed of business in days before there was such thing as "overnight delivery service" (let alone email and faxes) meant profits were subject to the capacity of resources and time. All that, while meeting price points established by industry rates.

At the same time, photo agencies, media companies and other conglomerates were able to build a scalable infrastructure, where they could streamline processes, keep costs down, and increase volume, all of which boosts profitability. This profit margin was enhanced by the time factor, since they could deal with hundreds or thousands of clients at a time, making the aggregate turnaround time considerably better for all involved. There were enough of agencies to enable competition, but not enough to lose control of the distribution channel. For this reason alone, most photographers had to either work for a full-time employer, or had to have full-time representation by one or more agencies.

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Quito Valley (2)
(Quito, Ecuador)
ecuador, equator, hills, landscapes, latin america, nature, quito, scenics, valley, vertical, photograph
In their course of business, photographers really didn't compete directly with each other for clients; they mostly just tried to get accepted into newspapers, magazines, and photo and ad agencies (which cumulatively accounted for just about the entire photo industry). Getting a job with one of these organizations had never been considered something that fostered a sense of "competition" among photographers. Once in an agency, they just "worked." In fact, the spirit of competition never really took hold in the industry. The problems facing photographers most was not other photographers or even buyers, it was their own employers.

Because magazines and agencies controlled what images to use and where to use them, photographers really had few creative outlets, much less flexibility in their own futures. This caused a backlash among a select group of now-famous luminaries, lead by Henri Cartier-Bresson and Robert Capa. Together, with two other photographers, they founded Magnum in 1947, as the first photographer-owned and operated "co-operative" (agency). The founding principle of this organization was that photographers had their own vision of what they could shoot, and given the latest technology (small cameras), they could go out into the world and capture it in photos. Their assumption—and they were right—was that every magazine would clamor over them. Magnum's success attracted top photographers from all major magazines, which put the agency in control of business terms and other negotiations. This is the critical point here, and is the foundation for how the photo industry views itself today. Magnum became the main go-to repository for news and other life images that were used by newspapers and magazines worldwide for years to come, and they trail blazed the model where the collective had more power than the individual. They proved that by working together as a whole, all photographers could rise higher than they could if they all worked independently.

Indeed, this model persisted for many years. As long as the distribution channel was in the hands of the few, and as long as the photographers remained cohesive in their business dealings, there was never a need to change from this model.

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Peeking Inside the Business
(Rome, Veneto, Italy)
churches, europe, italy, nature, rome, sky, st peters, sun, sunbeams, vatican, vertical, photograph
But change did occur when two fundamental technologies came to the fore: digital imaging and the internet. Digital photography finally had its impact when it surpassed that threshold where high-quality pictures could be obtained affordably by enough people to affect the supply chain. This removed the first barrier for photographers: they were now able to produce a lot of good, quality images to meet demand. But, supply isn't enough—one needs a distribution channel to get that supply to buyers. This is where the internet came in.

Today, the internet allows high quality pictures to be distributed directly, instantly, and inexpensively between buyers and sellers all over the world. As the flood gates opened, the supply of images skyrocketed, causing swift downward pressure on prices. This immediately increased the supply of photographers by several orders of magnitude. The entire market ballooned, but it was the individual photographer who was quicker and nimbler than his agency counterparts to meet and conform to the demands of buyers. Furthermore, individuals could do so at lower prices because of lower overhead. Photographers found it more profitable to sell directly to buyers at lower prices than what their agencies were charging. That is, if a magazine used to buy an image from an agency for $100, the photographer got $40 after "expenses and commissions." However, on his own, the photographer could charge $50 for the same image, and end up with more money. The rate for the image in the open market dropped from $100 to $50. This proves an interesting data point: In 1990, 90 percent of images were obtained from photo agencies, compared with 35 percent in 2000. And the trend is continuing. (Keep this point in mind; it'll come up again later.)

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House (a)
(Havana, Cuba)
caribbean, cuba, havana, horizontal, houses, island nation, islands, latin america, south america, vedado, photograph
It would follow that today's economic model is simple enough: the supply and demand are high. But what does that tell us about which business model is more appropriate for the photographer? One could say that the photographer could have still sold direct to the magazine for the $100 rate—because that was the market rate—and still by-passed the agency. True, but to do so would have required an implicit agreement among all the photographers to do so. Then, there are the market pressures from the buyers who also put downward pressure on prices. Why would they buy from the photographer if they can get the same image from the agency for the same price? If the photographer wants to make the sale, or if the buyer wanted to negotiate for a lower price, there will be a discussion to "cut out the middle man," so that everyone wins. So, he drops his price. How far? As low as he needs to in order to compete with not just the agency, but all the other photographers who are also willing to drop their prices. If none drop their price in solidarity, the prices remain high. So, the predicate question arises again: is the number of photographers sufficient to sustain this level of cooperation?

To answer that question, we must look at economic data to examine how many people are selling images, to whom, for how much, and what those trends are. If the only people selling images are pros who are in complete agreement on pricing structures, this may work. However, if the pool of photo sellers includes non-pros who do not cooperate, this can erode the pricing structure. The more non-pros there are, the less stability the structure has.

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Food (34)
(Galapagos Islands, Ecuador)
boats, ecuador, equator, foods, galapagos islands, horizontal, latin america, sagitta, photograph
Collecting data isn't hard, but it is quite laborious. It begins by knowing what data to collect, and then analyzing it properly. The first question is, "what data is relevant to our question?" Historically, the data researched used only included that which was created from surveys of photo agencies, photographers, studios, schools, and any other source that had established business relationships traditional photo buyers. At one time, these were the only ones taking part in the supply chain and the distribution channel, so no other data was relevant.

But, do those surveys reflect current economic activity? If they are based on older models, one might suspect the validity of the data may no longer apply. So, one must examine two factors: who's doing the survey data? And, does that data meet with statistically viable sampling sizes and methods that reflect today's conditions?

If stock photo agencies are doing this research, they are not likely going to survey people who are buying and selling from non-agency sources. Why should they, if the results might suggest that their own business models may not be sustainable? Who else is there? Trade associations? Well, they are there to represent traditional pro photographers, who not only pay membership dues, but also sit on the boards of these associations. Another potential source is trade press. Of all photo-related magazines, only one, Photo Disctrict News, actually talks about the business of photography, and this very small publication is entirely financed and run by the trade associations and camera manufacturers. There's no incentive for them to conduct economic surveys outside of this group. Lastly, there are economists who have some financial reason to study the photo industry, and there are none. Since I've been doing research in the photo industry, I have yet to come across any bona fide economist who's studied the photo licensing industry. In fact, part of my business as a photo industry analyst includes advising investors on such matters, because they are also unable to find other economists or industry analysts (that don't have a clear biased towards the well-being of existing, established players).

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Courtyard Shops
(Sausalito, California, USA)
california, courtyard, marin, marin county, north bay, northern california, san francisco bay area, sausalito, shops, vertical, west coast, western usa, photograph
For all practical purposes, the only public data available is from photo industry surveys, and because they have a vested interested in a certain outcome (here, serving the interests of its constituents), their data is largely invalid.

So, what we're really looking for is determining what that "representative population size" is of photo buyers and sellers. My specific hypothesis is that the majority of buyers and sellers are no longer associated with the industry as it has been traditionally defined, leaving the traditional photo agencies, and even pro photographers themselves, minor players in the overall economic activity of photo sales. (That doesn't mean they don't have business opportunity; it just means the methods of achieving it are different than they used to be.)

We can test whether this hypothesis has legs by looking at other industry data. For example, a report on the sales of digital cameras from Digital Photography Review, (http://www.dpreview.com/news/0407/04073002camerasales.asp) indicates that 22.8 million digital cameras will be sold in between 2005 and 2006, a 42 percent jump from 2003. If one of those non-professional amateurs (who isn't currently part of "industry survey data") sells an image to someone, he may not be counted in the survey. But if a million of these people do it only once a year, that could account of hundreds of millions of dollars of economic activity that traditional surveys don't take into account. Taken a step even further, a report on CNBC states that over the course of five years, over 100 million digital cameras of at least eight megapixels or higher will be sold. If only one percent of those buyers sells $1000 worth of photography per year, that's $1 BILLION of sales that isn't accounted for in current survey data. This, because "the industry" doesn't recognize amateurs in their surveying methodologies.

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"You will do what I say!"
(Greenbrae, California, USA)
dogs, halloween, homes, horizontal, personal, skulls, slow exposure, photograph
While the market may be considerably larger than what survey data currently claims, we don't know by how much. It's sort of like how physicists know that there is more matter in the universe than what we can see by traditional means: measuring light. They can look at how much light galaxies produce and estimate the number of stars they have, but this measurement doesn't represent the entire size of the galaxy. How do we know? If you look at the rate in which a galaxy spins, it should be flying apart. Every galaxy studied shows this anomaly. So, why don't galaxies fly apart? The only possible explanation is that there must be some additional source of gravity (other than stars) that isn't being accounted for. In other words, dust gas and planets, to name a few, account for a lot more gravity because there is more of them than people thought. And even then, these objects are still not enough. There is even more stuff that can't be measured because they do not produce light (i.e., "dark matter") that's keeping the galaxy in tact. In short, there's a lot more in the universe than once thought. What percent of the universe is full of this material? Estimates are that over seventy percent is full of this stuff.

Could there be a similar phenomenon in the photo industry that current statistical data doesn't account for? We see economic activity that the current photo market surveys can't explain. To wit, the revenues agencies report is rising at a much slower rate than the number of magazines, and even less by the rate of ad revenues from those magazines. Consider this report (http://www.bpaww.com/about_bpa/industry_news/WorldOverview3.05.htm) by BPA, which audits media companies. Here, the topic is an overview of the changing world markets for media and advertising as a result of the Internet. Given those numbers, let's ask the question: if the magazines and their advertisers were obtaining images from photo agencies at (at least) the same proportion they always have been, these agencies would be seeing such astronomical growth, that it would dwarf the entire US Technology sector. Why? Because, unlike media companies, ad agencies, and magazine pages, where there are over thousands of competing companies, there are a precious few photo agencies. And if those agencies were getting the same proportion of business from those companies that they used to, all that revenue would ad up to a huge sum of money.

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Size is Relative
(Chicago, Illinois, USA)
america, chicago, crown fountains, fountains, horizontal, illinois, millenium, millenium park, nite, north america, slow exposure, united states, water, photograph
So, where's the money? Photo agencies report incremental revenue growth, but only in the hundreds of thousands of dollars, to the low millions. They should be getting billions, if not hundreds of billions of dollars—three to six orders of magnitude more than what they're actually getting. This real number, while still yet unclear, is considerably large; we just don't know how large it is. Just like the total mass of a galaxy. And, like the galaxy, what we do know is that its mass is much greater than just the data (stars or industry survey numbers) that we see. For the photo industry, this size is, ultimately, the "potential market" for photographers. If the size of the market is what it is, and the photo agencies had the percentage of it they claim they do, the proverbial photo agency galaxy would be spinning apart. But, it's not. So, where's all that other revenue—or potential revenue—going to? What's out there that we can't see? All that advertising and editorial photography must be coming from someone. Whom? It can't be just independent pro photographers, because there aren't enough of them either—at least, the number isn't growing if you look at the membership numbers released by industry associations. So, again I pound my fist, who's selling (or providing in some fashion) these pictures?! :-)

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Worry about what YOU get
not your competition.
(London, England)
benches, cities, england, english, europe, horizontal, kissers, london, park, people, united kingdom, photograph
Could it be that "non-pro photographers" are somehow involved? That is, the one-off sale (or give-away) here and there by each of millions of people, found randomly by chance from a pot of hundreds of millions of people (you know, the ones who are buying all those high-res digital cameras being reported by camera companies)? Could it be that these people are filling this gap between what photo industry reports as sales, and what we can extrapolate the total potential market size actually is? There is no hard data to prove this, since no one surveys the general population with questions like, "have you ever sold a photograph?" But the empirical data clearly suggests something is going on, and only if the industry acknowledges this possibility and revises its survey methods to find out will we ever have a better, more accurate picture. Sadly, no one but the trade associations has any financial incentive to do these studies, so indirect data like this is all we have. But then, Copernicus had the same argument when he tried to convince the Church that the Earth wasn't in the center of the universe, and that it revolved around the Sun, not the other way around. Did we really need to fly up in a spaceship and see it for our own eyes to believe the other compelling data to support this theory?

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Photographer's Attitudes
A Relationship of Oblivion
(Palau)
black and white, heavy, horizontal, palau, scenics, tropics, weather, photograph
Despite the evidence, industry trade associations claim that the traditional model (solidarity) still applies today. If that were the case, there are two questions that need to be analyzed. Can solidarity be achieved? And, does it matter? If it doesn't matter, there's no point in asking whether it can be achieved. For a discussion on that, see my article titled, To Cooperate or Not? (Wednesday, May 16, 2007).

(Note that since this article was written, I've conducted significantly more research for clients, the most relevant is discussed here.)

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Shelley Alger 8a
(Czech Republic)
alger, czech republic, europe, horizontal, people, shelley, slow exposure, womens, photograph
Let's apply this model to a hotly-debated subject in the industry and view how each of the strategies approach the subject. The issue is a type of contract called, work-for-hire. Here, a photographer shoots an assignment as an agent for the client, which means that, in exchange for his fixed shooting fee, he retains no ownership of the images he shoots, and is entitled to no royalty commissions. Unstated are the potential advantages and disadvantages of such a relationship. We have two scenarios that illustrate each.

blue-bullet.gif Scenario 1

A stock photographer usually derives a large percentage of his income from sales of pictures he's already shot throughout his career. Therefore, he depends on retaining ownership and copyright to the photos he shoots for his future income. If he enters into a work-for-hire agreement, he may get a fixed fee, but he has no future for his business.

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A photographer has no interest in getting into the stock photo business, but wants to use the fixed-fee cash payment from a work-for-hire contract to finance his own studio that he'll use for his portraiture business.

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Conflicting Signs
(California, USA)
california, horizontal, marin, marin county, north bay, northern california, san francisco bay area, signs, stop, west coast, western usa, photograph
Where does the traditional model stand on this? The industry makes several observations. First, if the photo agency hires the non-stock photographer, then it harms the veteran stock photographer who'd been employed for years. Over time, the veterans see their incomes dwindle because their images are replaced by the newer, non-royalty images from the uncooperative photographers. Secondly, the original photographer might have gotten a better deal if he hadn't capitulated so easily; that all he had to do was "stick to the code" and he would have gotten his own objectives accomplished without hurting anyone else. Third, most work-for-hire contracts are unnecessary, because most clients don't really need to own copyright or restrain the photographer from using his images for non-competitive uses. In summary, the industry calls work-for-hire contracts "bad for the industry."

There are many issues raised here, and clearly, some of them have merit. First, work-for-hire contracts are found in many areas of the industry, not just stock photography, and many of the hiring agents do not need the copyright ownership they ask for. The industry says to combat this, photographers need to unite and agree not to agree to such terms. The free-market model recognizes that not all photographers can be simplistically bundled together like that, and that many would find it more beneficial to agree to work-for-hire terms, because the nature of their business model accounts for them. Instead of preaching that everyone should agree to collectively reject such terms, the alternative is to better educate photographers on better negotiation techniques that may apply to individualized business objectives.

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Don't Get Squeezed Out by the Competition
(Ohio, USA)
america, amusement park, cedar point, fun, games, horizontal, north america, ohio, people, sandusky, sandwiches, united states, photograph
Whether it is appropriate to claim that veteran photographers deserve to be "protected" from emerging photographers is more of a cultural and social question. In a heavily competitive environment, seniority has less clout than it does in a more socialist culture. But, market conditions can become indifferent to cultural biases. The industry is big enough that there will always be a supply of photographers willing to unseat a veteran, so the issue becomes somewhat moot. (The only way to truly protect veterans is to have legal protections through law. This would require photographers to unionize, which they haven't been allowed to do since the 1970s.)

Given this, to what degree is it possible, let alone effective, to try to convince members of industry groups to cooperate on a condition like work-for-hire contracts, that isn't universally accepted as being good or bad? It's good for some, bad for others. The market-based model says that veteran photographers who feel their royalties may be vulnerable to dilution should leverage the intangible value of their seniority (reliability, skills, etc.) and accept those contracts ahead of the new photographers who will assuredly take them. Smart veterans will also find ways to sweeten the deal too. Some might say this is capitulating to the agencies, but if the trend is inevitable, it's incumbent upon those who have the most to lose to work harder to retain what they've got.

Whether you believe the Solidarity Model or the Free-market Model is the more effective for building your career, there are certain realities about the industry today that you will have to contend with. I have categorized these realities into a series of axioms called The Five Truisms of the Photography Business. These are not proposals, nor are they subject to broad agreement or voluntary consensus, nor are they terms that you can accept or reject based on your own business models. They are simply factual statements about how the industry works. To what degree you incorporate them in your career-planning is up to you.

1 More people practice photography as a hobby than as a profession.
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Homeless Man (1)
(Havana, Cuba)
caribbean, cuba, havana, homeless, horizontal, island nation, islands, latin america, men, people, south america, photograph
In years past, many hobbyists and serious amateurs rarely sold images into the photo market. Because of the internet, millions of people from all over the world are selling images. Although most are not selling images for a lot of money, their sheer numbers dwarf the total number of "professionals" by orders of magnitude, thereby making the non-pro photographer the main driving force on what happens in the marketplace. One cannot re-educate the amateur or the hobbyist, so it is futile to attempt to shape the nature of the industry by advocating that pros "stick together."

Amateurs notwithstanding, consider the number of semi-pros that have tried to get into the industry, but couldn't because their portfolios were rejected by agencies, or because they had no other representation that could move their images. These people are now rushing in, and selling more than the amateurs who don't even care. In fact, many semi-pros sell more than pros because they're playing catch-up, and, unlike the hobbyist, they are serious about the business. So, instead of just selling images, they are accepting assignments under terms that the old pros would never have taken. Both the hobbyist and the semi-professional unambiguously imply this truism:

    "There will always be someone willing to work under lesser-favorable terms than you."

Whether it's out of ignorance, or because it is a good deal for them, or because they simply have an interest in photography, this is a fact that you cannot change; the law of supply and demand dictates it.

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Seek Protective Barriers
(Havana, Cuba)
caribbean, cuba, havana, horizontal, island nation, islands, latin america, photographers, photogs, south america, photograph

2 Prices are Based on Market Factors, not Clients' Pockets
Historically, assignments and license fees for images were based on "the media buy." That is, an ad campaign may budget for ad space in magazines, billboards, modeling fees, and so on. The price for the photography used to be about fifteen percent of the "media buy" (less production costs). As photo buying and selling matured, it eventually got to the point where you might not even need to ask what the media buy was, you'd just know based on the nature of the client. If the client had lots of money, you charged X amount, smaller companies charged Y amount, and so on. Photographers just got used to pricing product based solely on the size of the company; the deeper the pockets, the more they charged. (The "media buy" calculation is still used in some cases, such as when the "supply" of images is tighter, or the client's needs are more narrowly defined. Again, this is differently defined in some sub-markets.)

Because of Truism #1, the market has shifted in favor of the buyer, and one cannot assume that because the client is wealthy, that pay is higher. How much clients pay is now based more on market rates, not necessarily their ability to pay. "Market rates" do vary, and finding an appropriate fee to charge for any given assignment or license fee is admittedly far more difficult because of the flux in the industry. Clearly, some rates are higher than others, depending on the specialty of the shoot, or the specificity of the need. That means that you and I have to do it the hard way: by negotiating.

3 It is not Anyone's Responsibility to do Right by You.
Photographers often get upset when clients' contracts are clearly one-sided. Yes, publishers try to "grab rights," or claim copyright ownership, or don't compensate the way they used to. Many respond by blaming the offending client, often refusing to work with them, or even attempting to "spread the word" to impose a boycott of some sort.

It's true that there is a real problem with compensation and other "benefits" eroding from photo contracts; it does need to be addressed. However, there are constructive and destructive ways to go about it. The kinds of reactions noted above are the wrong way to go, and are responsible for more misfortunes than just lost opportunities. Photographers also lose face because their collective efforts fail more often than not to achieve the results they desire. (This is because of Truism #1.) When things don't go well—or not as well as they used to—no one is responsible for this other than yourself.

The more constructive solution is to first recognize that you are an independent entity, responsible for your own business interests, and on one else's. One can't succeed in negotiation by simply chanting the mantra, "Just say no," and hoping others fall in line.

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Keep Current with your Equipment
(Havana, Cuba)
caribbean, cuba, havana, island nation, islands, latin america, men, people, photographers, south america, vertical, photograph
You may have heard the expression, "business is business." Like any other industry, successful professionals have a way of justifying their worth to a potential client, no matter how ugly and competitive the market gets. Most boiler-plate contracts that photographers receive are written favoring the client, and are intended to be negotiated (despite what the client might say). The nature of negotiation is to find grounds for mutual benefit: identify those things that you need and those you don't, and counter-propose terms where each party can get what's important to them. The more you understand the basics of business, the more you can understand the other party's objectives, making it easier for you to express terms that should work for both sides.

If negotiation fails, as will happen from time to time, you move on. If this happens to you so often that you can't get work or income, then you've got other concerns beyond whether the industry is "fair." You either need to improve your negotiation skills, or reset your expectations for your terms.

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Find New Revenue Streams
(Sausalito, California, USA)
business, button, photo, business, button, photograph

4 Diversify Your Business
It used to be that a photographer's income was derived from one or two sources, where a "source" was considered either a single client, or a class of client. For example, a wedding photographer was considered to have one source of income: couples who get married. News photographers tended to have a single source, whether it was the newspaper they worked for, or the market segment they sold to. Unless they sold to a cross-section of buyers, they were considered to have a single source of income.

As the market has gotten more competitive, photographers who are not salaried staff employees and have to earn money on their own have found it problematic to earn a living from a single client, or class thereof. Therefore, it's imperative to diversify revenue sources, branching into unrelated areas. For example, wedding photographers have a plethora of "people" images that can not only sell into the wedding niche of the magazine sector, but also in any outlet that needs people pictures. (So be sure to get those model releases signed.) Architectural photographers often find themselves on location with stunning scenery because of the nature of the client's property. So, in addition to shooting the gig, they pick up more pictures, and use those images in other business contexts. Sports photographers, car photographers, just about anyone who has a camera can shoot things that aren't part of the "assignment" or even part of their specialty. When you're doing this, you can pick up a lot of new assets, while the paying client has already footed the bill.

5 Not all Photographers are Equal.
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Homeless Vanness
(San Francisco, California, USA)
california, homeless, horizontal, men, people, san francisco, vanness, west coast, western usa, photograph
The photo industry does not consist of an unskilled labor force, where all members have equal status, get equal pay, or do similar work. They cannot be clumped together as a "class" of worker for collective bargaining. This ties in with Truism #1. When you see more experienced photographers doing better than you, it's usually just that: they're more experienced. This has value, and clients know it.

Now consider how the opposite can happen. Many new photographers come into the scene by working for less (or for free) to get their foot in the door, sometimes displacing the previous shooter who used to do that job. I've displaced other photographers this way, and others have done it to me. Those that I've replaced should have moved on with their careers before I got there; and those who've replaced me usually did so with my blessing: It was time for me to move on. (Many times, I just recommend someone to take my place even though the client doesn't want me to leave.) If your career develops properly, you won't get displaced. Your name, reputation, portfolio and general experience will be justification enough for you to choose which jobs you want, and when you want them.

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Don't Take Pictures
(Cuzco, Peru)
cameras, capital of peru, cities, cityscapes, cuzco, latin america, peru, peruvian capital, signs, towns, vertical, photograph
If you aren't moving fast enough, you'll be nudged—or pushed—sooner or later. If you're that vulnerable to the younger crowd, your career is already in a precarious position anyway, and you should be looking for ways to broaden your horizons. As I get more experience and solidify my reputation, I lose less and less business to others because of who I am, and my clients are willing to pay for that. Just about any pro worth his salt will say the same. Sure, we're all vulnerable, but it's impossible to impose artificial protection schemes to keep our jobs.

The business world is harsh, and it's part of the package when you choose to become an independent, working photographer. Recognition of these realities will not only help you consider your business objectives more realistically, but should help you think about how you should react to any given situation. I apply these truisms to Photography and Business Sense, after which, it all comes together in Marketing your Photography Business.

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