Updating Rights-Managed Stock . . .

By Ron Rovtar
Managing Editor


Tim McGuire is frustrated with the stock photography business.

In fact, the Seattle photographer is so frustrated he seriously suggests something he would never have contemplated just a few years ago.

McGuire thinks stock photographers and distributors should look at simplifying the whole rights-managed model -- even if it means being more flexible about usage limits and prices.

Though many photographers oppose tinkering with an approach that dates back more than a half-century, a growing number like McGuire wants to see rights-managed bear its fangs and compete directly with royalty-free.

These shooters have watched their rights-managed revenues decline over the last ten years, partly because of the acceptance of royalty-free for many common image uses. They believe price is only one of the reasons royalty-free appeals to many stock buyers and that rights-managed sellers could woo many buyers back by making some shopper-friendly changes.

In a move that could make matters worse for right-managed sellers, Adobe Systems announced that it's new Creative Suite 2 will let users buy and import royalty-free images over the internet without exiting the popular suite of programs that includes Photoshop, Illustrator, GoLive and InDesign. This will further simplify royalty-free purchases, giving overworked designers and advertisers yet another reason to ignore rights-managed stock.

"Rights-managed" and "royalty-free" are, of course, the two dominant sales models in stock photography.

Rights-managed images are licensed on a use by use basis, letting distributors track publishing histories. Buyers can have distributors check for uses by competitors and companies whose product might create an embarrassing association. In addition, rights-managed files tend to be deeper with greater selections of commonly-used images and many images of less-used subjects.

Royalty-free, including the new subscription services, offers no usage protection. For example, two computer makers recently used royalty-free images of the same model against the same background in competing back-to-school ads. In another case, a technology company was upset to find that an image it used in a brochure had been prominently displayed in an erectile dysfunction ad.

Though there are concerns, royalty-free appeals to many buyers for three reasons. First, it is usually cheaper, though prices for some high-quality royalty-free products are rising. Second, it is much easier to purchase over the internet with no complicated forms to fill out. Third, it is flexible, with almost no usage restrictions.

These are clear advantages, especially for images used in everyday communications like local ads and small brochures. As a result, royalty-free now accounts for more than half of all stock sales. Rights-managed still holds the lead in revenues collected, but this could change with time, which is why people like McGuire want to do something now.

McGuire wants photographers and distributors to consider a simple, time-based licensing model.

Under this model, a license buyer pays a single price to use an image for a specific company in a specific industry for a specific amount of time. Other than the company, industry and time restrictions, there would be no meaningful usage restraints.

McGuire is not talking about some of the multiple use deals offered by a few large distributors. These deals can cost tens of thousands of dollars.

The photographer is thinking of everyday sales of non-exclusive licenses which typically sell for under $1,000.

Such a plan, McGuire points out, would let distributors keep usage records, but would dramatically simplify the online licensing process, which many buyers see as a barrier to using rights-managed stock. Because usage records would be kept, distributors could still offer lucrative exclusive licenses for the images.

"I really think we need to do something like this," McGuire asserts.

But, even if McGuire's suggestion seems a little radical for some, licensing rights-managed stock could still be significantly improved with a number of smaller common-sense changes.

Distributors could make many more sales for web usage simply by offering options better tailored to the medium. And all buyers could be encouraged to call distributors about rights-managed sales. Online price calculators are woefully inadequate for all but the simplest rights-managed transactions and few people use them anyway.

Additionally, prices for minor uses could be adjusted to attract royalty-free buyers without undermining prices for more significant uses. And the buyer of every rights-managed image license could be called near the end of the license term. This would relieve buyers of needing to track all their image licenses and would likely result in the sale of numerous license extensions.

Finally, standardizing the definitions of common stock industry terms and legal jargon would make buyers feel much more comfortable with complicated license purchases. This final improvement is being addressed, with an industry-wide glossary of terms due out late this spring or early this summer. All stock distributors should be encouraged to adopt this important standard.

When it comes to using stock photography on the web, Roy Hsu has an unusual perspective. As a photographer, he sells rights-managed stock photography through distributors like Veer and Workbookstock.com. As a freelance art director working for a number of large New York ad agencies, he is a stock buyer. But, since much of his ad agency work revolves around web sites, Hsu often finds himself choosing royalty-free over rights-managed. In fact he says about 80 percent of the images he uses are royalty-free.

"The electronic world doesn't fit under the simple categories used by many rights-managed companies," says Hsu. "A lot of the people working at the stock agencies really don't understand how the electronic world works."

Some of the confusion stems from common web practices that simply are not issues for print applications, he says.

"A web page can be up for three months, then archived for three years," notes Hsu.

It is the electronic equivalent of printing a quarterly magazine, but leaving it on the library shelf for several years. In the case of a periodical, no distributor would consider charging for shelf life, but, when it comes to the internet, an archived page is still technically a live page, so distributors want to be paid.

Web site owners don't see this as fair pricing and don't want to be saddled with the extra time and responsibility that comes with tracking, removing and/or replacing images every time a page is archived. Using royalty-free is really the only viable answer, Hsu says, at least until the rights-managed sellers come up with workable solution.

In addition, some distributors offer very limited pricing options for web uses, Hsu points out. Some, he notes, make no pricing distinctions between images used at different sizes, which is a common industry practice for print uses.

Gettyimages' online calculator, for example, offers no options based on the size of an image on a web page. Home page versus inside page is the only price distinction offered by the Getty calculator for web applications.

Whether licensing stock for the web or for print, many buyers shun online calculators.

A number of distributors have pointed out that few people use or like them. But their very presence may scare away potential shoppers who figure the image-seller would probably list a phone number on the page if it really wanted a phone call.

In a check of six top right-managed distributors, four displayed no telephone number on the price calculator page. Of those, two had no contact info whatsoever, one had a small link to a contact information page and another asked potential buyers to provide licensing details in an e-mail box and promised to have an account person contact the buyer "as soon as possible."

Of the remaining two distributors, one had the phone number in a large hightly-visible font, while the other displayed it in a small font. It should be noted that all of the six had contact information elsewhere on their web sites.

"It's difficult to automate (a rights-managed stock transaction) and make it user friendly," says Peter Dean, a British agricultural photographer and owner of Agripicture.com an agricultural stock web site.

"Most of these problems can be wiped out if you put a human somewhere at the customer interface. It is a lot easier to explain what RM is and why we do it. It's quicker and easier to give a quote on the phone, especially for multiple images," says Dean.

"The week before last, we licensed 34 images for a DVD movie. It was quick and easy by phone, followed up by an FTP (an internet file transfer) after resizing. I would like to bet the service we offered was as quick as buying royalty-free, if not quicker."

Dean is not opposed to automation. In fact he thinks it can be useful for regular clients who buy numbers of images for similar uses and sometimes necessary for buyers in significantly different time zones.

"My idea is to have a system for bespoke (previously negotiated) price calculators designed for particular clients," he said. "These clients could have a very simple, automated system requiring very little effort to download high resolution images at various sizes." The system could generate an invoice that would be sent to the client, Dean said.

"My thinking is that if technology is to employed . . . it should be employed to give the client a better experience and not a worse one," asserts Dean. "At the end of the day, although technology can do a lot, it can also do a lot to get in the way."

The issue of competitive pricing of stock images for minor uses, is also one Dean has dealt with in his business.

With current rights-managed pricing, royalty-free has a virtual stranglehold on small projects. A check of several online calculators returned license fees of $340 to $370 for 1/8-page, inside brochure usage with print runs of under 1,000. Clearly, the vast majority of license buyers would see this as much too high for all but the most upscale small projects. In some cases, the price for a single rights-managed spot image would be as much as the printing costs.

Dean suggests that rights-managed could, in many cases, compete with royalty-free on price if distributors were motivated to provide competitive prices for small print runs, PowerPoint presentations and other small uses.

But, motivation may be the big problem here.

"Distributors are resistant to promoting lower priced rights-managed when they already have royalty-fee, which often makes them a higher percentage of the transaction," notes McGuire.

"This is a place where rights-managed photographers may have a conflict of interest with their distributors who sell rights-managed and royalty-free," McGuire adds.

However, Dean says it is possible. His company recently sold a client a rights-managed license to use an image on three envelopes.

"What I can't emphasize enough . . . is that we have no problem selling licenses 100 percent rights-managed," says Dean. His company has no royalty-free product.

Calling license buyers at the end of the image license period could soon prove to be a must for distributors as they start using services like PicScout, which searches the internet for copyright infringements.

Distributors who use PicScout say many infringements involve images left in place with expired licenses. This puts distributors in the uncomfortable position of having to confront regular customers. The risk of angering paying customers is not one distributors take lightly.

Still, policing all infringements of rights-managed images is necessary in order to maintain the integrity of a product that offers a valid publishing history as a selling point.

Routinely calling buyers at the end of image licenses is a good way to turn a potentially negative customer interaction into a positive one. Some, but not all stock sellers, already make such calls.

"Buyers are responsible to make sure they don't exceed the term of the license. But, the licensor is missing an opportunity if it doesn't track and follow up," says Chris Ferrone, president of the Picture Archive Council of America (PACA) a trade organization comprised of stock sellers. Ferrone is also president of Retrofile, a mostly rights-managed collection, and a managing partner of MattonImages, LLC, which operates a web-site representing major royalty-free suppliers.

Not only does calling ensure that clients don't mistakenly violate licenses, but it makes it easy for clients to renew the license and it allows the distributor an opportunity to see if the client is seeking any additional images, says Ferrone.

"We maintain a schedule of RM images' license expiration dates for just this purpose," he adds.

Finally, there is the problem of inexact industry jargon.

Who really knows what "collateral usage" means in any particular case?

Or, consider a buyer who wants unrestricted usage rights for a particular image. Buyers sometimes call this a "buy-out." However, a photographer or distributor hearing that term probably thinks the buyer wants to purchase the image's copyright. These are two very different things.

The stock industry is not unusual in having its own terminology, but inconsistent usage of some terms can leave buyers unsure about what exactly is being bought. This increases the chances buyers will make a mistake in licensing an image and it undoubtedly encourages some to shy away from rights-managed transactions.

Fortunately, the PLUS Coalition has been working more than a year to standardize several common photography industry practices. An extensive glossary of terms, more than 1,000 in all, will be a major result of this effort, according to Jeff Sedlik, president and CEO of the coalition.

A range of communications industry entities are involved in the project, including image buyers, distributors, photographers and others. Hopefully, such participation will insure that the final results will be adopted widely when they are finished in the next three to five months.

But, regardless of what is done to improve the rights-managed shopping experience, it may always be at least a little more complicated and expensive than royalty-free, says Ferrone.

"The thing is that managing a rights-managed collection requires extra work so the cost of rights-managed is going to be higher," the PACA president asserts.

"There is no question that it has difficulties next to the RF model," Ferrone asserts. "It's always going to be less complicated to buy royalty-free."

Probably true, unless we consider McGuire's idea about doing away with most of the details and just licensing to a company in a particular industry for a period of time. It might make a lot of photographers and distributors uncomfortable, especially at the beginning, but . . . .

Tim McGuire Images is at: http://www.timmcguireimages.com

Gettyimages is at: http://www.gettyimages.com

Agripicture.com is at: http://www.agripicture.com

the Picture Archive Council of America is at: http://www.pacaoffice.org

Retrofile is at: http://www.retrofile.com

MattonImages is at: http://www.mattonimages.com