I’ve received this “open letter” from Russell Glenister introducing Pocketstock and I want to share it with all of you… debate is open.
Why are very few new agencies making a success of selling your images?
My sole objectives with this open letter is to get a debate going across all the microstock blogs and forums and to help raise the profile of my new business, Pocketstock.
I have no issue with any of the organizations I refer to, even though only referred to indirectly, we all have our ways of doing business and making money, some just don’t necessarily help the overall development of an industry or sector.
Firstly, I’d like to take this opportunity to introduce Pocketstock and myself, Russell Glenister. I have been in the stock photography industry for over 25 years. I started out as a lead creative at Tony Stone Images. For those of you not old enough, Tony Stone Images (TSI) was purchased by Getty Images, the industry leader and very much led the gold rush which has culminated in the stock photography industry we see today. I have continued to work in this fine industry for all years since departing from TSI, working with all the major players along the way, usually as part of the supply chain.
Pocketstock is my new business, having sold my last one to the other major traditional stock agency, Corbis, a few years back. Pocketstock wants to take stock photography to a new level, open the market up to a new supply chain, through video education – The Pocketstock Academy, which is being launched as I write this letter. We are just about to start selling content, about to take in footage and music along with the images, illustrations and vectors we already take. We are also in the process of opening our office in USA. We hope to grow quickly.
We want to keep prices up to a reasonable level and have opened up Compass for those who want to see their images sold at higher prices.
Now, I’ve always liked this industry, otherwise I wouldn’t have stayed around for as long as I have – nor taken on this task! I am not someone who doesn’t like change, so the introduction of Microstock has in my view added quality and quantity to a largely flagging industry – too many production houses (image100 was the first to set up a wholly owned content model, much copied over time) producing the same types of images with limited distribution, Getty and Corbis having bought most all the decent producers.
I see an industry that is changing, maturing, settling into a pattern that could determine how things pan out for both supplier and aggregator over the coming years.
I must admit I am worried. I am concerned for the supplier, you guys and I am equally concerned for the aggregator, us. I am going talk a lot about what is and what I feel could happen in our industry. I will name no names, but I am sure you will be able work out who I am talking about. I will leave that to you.
I will start by highlighting the issues and along with some of my suggested solutions, I’d like you guys to give your thoughts too.
Who’s new and making money?
Over the past four years there has been only one major addition to the microstock aggregating business. They have achieved a lot since they started out a couple years back. What this success is largely based on though is low prices. Does that help you make money? How much more traction can they make by offering content below, what I believe is fair, market value?
It’s a tough industry to get into; there are the leaders, four of them. One, way out in front, followed by a rising subscription based agency. These two are a clear distance ahead of another two – one may be on the decline, maybe not?
After this we have around another five or so who make up most of your sales outside the big four, I would imagine.
Aggregator of what?
How do new aggregators get traction then, other than by undercutting on price – that is if they can get the content in the first place? It’s not easy, as it has to a long game, which costs money. When I sold image100 we had 40,000 images, now that number is a drop in the ocean. The new 40,000 (which was a large number 15 years ago), is at least 5 million.
It takes a lot of money to get 5 million images into your collection without going down an API route. It’s not just about images; it’s about getting the right images. You guys have put your images through a lot of aggregators and many of them have made no money – that then means you run out of patience, you wait for the other guys to tell you about their success before you make the plunge with a new agency again. That then makes it difficult for the agency to make money.
But, without support no new agency can flourish.
There are a few agencies offering this service, one or two that are trying control this area, that are getting very greedy. They make it very attractive, except on margin (where they try squeeze the life out of us) for new agencies to get into their API system, they then try control you and of course they are trying control the supply too (that’s you!). API is bad for you. If Pocketstock signed an API deal, which we won’t, you will see such a small amount from each sale, it doesn’t seem worth allowing it in the first place.
Stock Photography is not a financially growing industry; footage will grow, but by how much? We don’t know. There are no more clients today than their were two years ago, so if you:
A Allow your images to be sold very cheaply and you are losing money – the client would buy them from somewhere else for a higher price, surely. Do they worry about spending $8 over $4, let me tell you, largely, they don’t. Cheap images versus higher priced RM and RF from years gone by, drove this market upwards, but it’s going sideways now, so lowering the prices will not bring in any significant increase in buying clients – it’s bottomed out.
B Allow your images to be sold through API, you lose again. Businesses like us will never be able grow if you allow agents to offer your images in their API deals – it’s tempting for new entrants, like us, to want to participate. We haven’t because we are well backed, in it for the long haul and know that we need to develop relationships with the suppliers, not one greedy API supplier, who can then control Pocketstock, others and a large part of the industry too.
C Once these guys have multiple APIs in place, you lose, as the competition is suppressed and from that, pricing and royalties can be controlled.
This is a good time to talk about royalties. Yet again one of the biggish agencies, gets to a certain size and then decides to cut the royalties offered to you guys. Is that the right way to run a business? We think not.
At Pocketstock we usually offer 30% as a starting rate (rising to 40%), but have a special offer on, whilst we build content in the early days, of 40%, because that is what we know we can afford to pay out. We have no intention of cutting your royalty rate, it’s just not the way business should be done and we won’t do it.
If you would like to take up this offer, you must email Tavis@pocketstock.com and get a unique 40% code – all images will then earn 40% royalties forever.
Are they paying?
Now, as I said some agencies offer 50% and then retract that, others just offer 50% and then don’t pay – they can’t afford it. The industry has seen one case in the past year and I can tell you there are others who are likely not reporting correctly too and this number could grow. How can you spot an agency that you should support? Cathy Yeulet of Monkey Business gives a couple insights here:
We all need your support
Finally, we new businesses all need the support of the content providers, no supermarket can flourish without the right food to sell and no stock agency can make a living unless the content providers back them. I know it’s the chicken and egg scenario, without supply we can’t sell, without sales you’re not convinced. However, in my view if you don’t support new agencies you may have faith in, that look to have promise, then you open yourselves up to:
A A stagnant distribution network
B APIs and the reduced margins they give you
C Reduced margins form agencies lowering their royalties, and
D The risk of being controlled by a few powerhouses.
Do you want that? Is this the future? Please debate.