Stock Photo Costs

In the past week I’ve had two unusual moments of revelation and insight into the stock photo business.

Cost of Producing Stock

The first came as I was trying to explain the business to an investment analyst. I was making the point that there comes a time when a photographer can no longer afford to produce stock images because his costs are greater than his income.



It turns out that the analyst was under the impression that a “stock photo” was one that had been produced, and paid for, while the photographer was on assignment for someone else. Thus the image was “expense free” to the creator. And, in theory, the only “additional costs” the photographer might have to make the image available for secondary licensing would be the cost of packing it up for shipping it to his stock agency.

Assuming that was the case, then the revenue the photographer would make from the additional licensing of his images would be pure profit, over and above his normal cost of doing business. Why, then, wouldn’t photographers be happy with whatever he could earn from the additional licensing of their images no matter how low the return-per-license or the total generated from stock licensing.



I’m old enough to remember a time when this actually was the way most stock photos were produced. Every image was shot and paid for while the photographer was on assignment for someone else. At the very least fees from assignments covered the photographer’s overhead costs and provided a modicum of profit. At that time the revenue generated from the sale of stock images enabled the photographer to improve his standard of living, but was not critical to the continued operation of his business.

Later some photographers began to recognize two things. First, that there was a big demand for certain types of images, and secondly that the assignments they were getting were not generating many of the types of images that certain customers were clamoring for. At this point a few photographers started spending some of their time and a little of their capital (for film and processing) producing this other type of imagery.

For a number of years the demand was much greater than supply and photographers started earning significant revenue from their stock images -- in some cases more than from their assignments. This encouraged them to spend more and more time and money shooting on speculation to produce stock, rather than doing assignments. In addition, more and more photographers observed the success of their colleagues success and turned to producing stock images on speculation.



This worked fine for everyone as long as the demand stayed greater than the supply. But, since there was absolutely no system to control supply their came a time when supply not only exceeded demand, but relative to the demand escalated out of sight.

At this point it is worth considering Getty’s supply/demand situation. Between November 2003 and February 2006 the number of RM images on the Getty site increased by 129% and the number of RF by 163%. Meanwhile, the number of RM images licensed increased by only 14% and the number of RF images licensed by 19.5%.

The economics of the business are changing radically and costs of production need to somehow be recovered.