Mystery Shopping in the Stock Photo Industry

Starting discussion @ the Stockphoto Network, very interesting, regarding the Stock Artists Alliance's (SAA) Investigative Shopping Project:

[...]
Last Sunday I was a panelist in a discussion group at PACA's (Picture Archive Council of America) Annual Meeting.

While I had the floor I took the opportunity to state my abhorence for Royalty Free stock photography. I gave them the standard reasons why each RF sale is a nail in our coffin: that if they continue to sell discs of 100 images for $300 or $500 per, it will only reinforce the notion in the minds of buyers that images are worth only $3 to $5 each.

I cited SAA's study of RF licensing.... we did some "secret shopping" with the cooperation of both a photographer & an art director, then followed the sale from invoice to client to the photographers sales report, which showed that despite a photographer's RF contract promising 25% of gross that the photographer actually only gets 6% (well, in the case we followed).

I explained that the 6% margin coupled with the downward spiral that RF pricing is forcing on all indsutry segments, RF is going to kill-off independent photographers. (Naturally, they gleefully imagine hoardes of work-starved desperate photographers running to them for under-paid but steady, salaried, WFH jobs to pump out wholly-owned content for their disc mills.)

They didn't believe me, I was stunned!!

So I unloaded my big shot, aimed right at their bank accounts, and told them all (the PACA audience is stock picture company owners and senior management) about the study that concluded that the stock industry has lost out on a four billion dollar opportunity annually by selling RF disks rather than licensing the same images as rights managed stock.

"That's right," I said, "according to a recent study commissioned by Getty Images your industry would be a six billion dollar business annually rather than the curent two billion dollar volume if not for Royalty Free. There's four billion dollars a year out there that *you can't touch* becuase of your short-sighted rush to profit, and you're killing the photography industry as a side effect."

I was backed-up by Jeff Schewe, noted photographer and former president of APA National and Betsy Reid, Executive Director of Stock Artists Alliance.

They still didn't believe me. Objections from the floor citing the frequent abuse of statistics came from all corners. I was only reporting the findings, not twisting them.

They clearly didn't like my message.

[...]

Cheers,

Joe Pobereskin

Indeed it´s not Mystery or Secret but "Investigative Shopping" by the Stock Artists Alliance (SAA):

SAA's Investigative Shopping Project
Starting in late 2003, SAA began conducting an ongoing study of stock image distribution through investigative shopping for stock images worldwide. We are tracking sales and royalty payments and in general observing the licensing process across a broad range of companies and distribution channels through licensing inquiries, "window shopping" on their websites and purchasing a variety of licenses from locations around the world. We offer the results as we find them and it is up to individual photographers to determine how these may be interpreted in relation to their own business plan. We also offer the stock distributors the opportunity to reply to our observations. As our reports are based on the results of one or perhaps several contacts or licenses made, they may not be generally representative of other people's experiences. Following is a synopsis of observations made to date.

SAA Investigative Shopping Project: Archive

Feb 2004 - Getty's UK Pricing Substantially Higher than US and ROW We observed that Getty Images as a rule has significantly higher prices for a UK based buyer to license Rights Managed images than for a buyer in the US or the rest of the world. This held true regardless of in which territory the images would actually be used. So. the higher price is NOT related to the place where the USE would occur but rather to the place where the BUYER was located.

For example, in pricing out a small intranet use, a US based buyer would pay $120 for use in either the US or UK. Conversely, a UK based buyer would pay 330 pounds for the same use in either the US or UK. We tried other pricing formulas and the prices stayed significantly higher in the UK across the board except for editorial use. We also tried these formulas in France, Brazil and New Zealand and all countries except the UK had reasonably comparable prices.

Why are UK buyers up-charged so much? When we queried the UK sales team on three separate occasions, the representatives explained the difference as consistent with higher cost of other goods such as cars, CDs and shoes in the UK. They all pointed us to RF. RF however remains the same comparable price in the UK and the US and is evidently not affected by these economic forces.

We then followed up with Getty management and received the explanation that specific regional pricing is partially based on local economic and market conditions and that pricing is subject to continuous review to achieve fair and equitable pricing in all regions.


Jan 2004 - Getty RM Pricing High for Small Commercial Uses.

We costed out a small commercial license on the Getty Images site of Powerpoint presentation usage for one month in US.. Among the RM brands on the Getty Images site, license fees ranged from $290 to $395.

We speculate that while smaller commercial licenses represent significant revenue potential, it would seem that high RM pricing for such uses would discourage buyers from using Rights Managed images and encourage the use of Royalty Free images which are priced from $35 to $99 for a 1MB file. This is consistent with our experience in a follow up call to the London sales office in which the Getty representative recommended we consider RF rather than RM for this type of license.


Dec 2003 - Easy Cancellation of Getty Images License.
We licensed an image from Getty Images via their web site and cancelled it within the one month period allowed. The cancellation process, from a buyer's perspective was exemplary. Our request was promptly processed and the personal service was courteous and professional.


Nov 2003 - 3rd Party Distribution Splits: Foodpix on Getty Images.

We licensed a Foodpix image from the Getty website in order to determine what share of gross revenues the photographer was making due to the sub-distribution split. SAA paid $120 for a license which netted $30 to the photographer, so it appears that Getty Images' commission is 50% of the gross license fee, the photographer then splits the balance received by Foodpix, and thus nets 25% of the gross license fee.

The photographer was unable to obtain this information by inquiring of PictureArts (Foodpix) directly as it was described as "proprietary". SAA also contacted Foodpix with the results of our license and asked for confirmation of the commission paid to Getty as a "sub" distributor and were again told that the terms of their sub-distribution agreement were proprietary.

Premium Pricing of 3rd Party Brands on Getty Images Website.
Pricing out Rights Managed images on the GettyImages.com web site, we were surprised to observe that several 3rd party brands costed out substantially higher than the Getty RM Brands for the same usage.

For example, in the UK, the cost for the lowest intranet use was 330 UK pounds for a FoodPix image versus 275 pounds for a Stone image. This pricing differential was confirmed with a telephone call to the UK sales office. In the US, the same use costed out at $395 for a Foodpix image versus $310. for a Stone image and $290. for images from the other Getty RM brands Taxi, TIB and Photographer's Choice.
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