Wednesday, January 28, 2015

Talenthouse: Predatory Parasite on the Creative Community?

Talenthouse would like you to believe that they are the “home for all creatives and art lovers.” But it seems that based on their business model and their predatory terms and conditions, Talenthouse exists for one reason: to suck the lifeblood out of the creative community.

Talenthouse solicits major corporations to pay fees to Talenthouse to provide those corporations with content sourced from the creative community. To source that content for its clients (Coca Cola (NYSE:KO), Adidas (ETR:AG), Universal (NYSE:GE), Microsoft (NASDAQ:MSFT), Proctor & Gamble (NYSE:PG), etc), Talenthouse operates “contests” designed to entice creators to create and submit creative works. Talenthouse members vote to select the “winners” of the contests. But in reality it seems, Talenthouse's clients select the winners. It doesn't matter, because the contests are a sham, just a carrot on a string, or more accurately – a fa├žade for one of the most horrific rights grabs in history.

Talenthouse’s marketing materials promise their corporate clients “ready made content.” After collecting fees from their clients, Talenthouse posts “creative invites” specifying the type and subject matter of the content that their clients require for use in advertising and branding campaigns. Talenthouse’s business model is designed to help their clients to avoid any responsibility to pay for the expenses involved in creating content for use in their advertising and branding campaigns. Under the Talenthouse model, all responsibility for paying for those expenses falls on the creators.

Thousands of creators dedicate their time and money to creating and submitting new works meeting the specifications of Talenthouse’s clients. None of these creators receive reimbursement of those expenses. I would estimate that over well over 90% of the entrants to Talenthouse contests never receive a dime for creating their works. Only a handful – the winners – receive any form of compensation. That compensation -- the “prizes” received by the winners, amounts to a small fraction of the fees typically paid by Talenthouse clients for creative content. By sourcing content through Talenthouse, advertisers obtain creative work for pennies on the dollar.

After thousands of creators around the world submit their works to the contests, Talenthouse’s clients dive in and feast on a bounty of cutting edge, original, creative works, harvesting the contest entries to commercially exploit in their major corporate advertising and branding campaigns.

But that’s not the worst of it. Talenthouse makes every attempt to trick entrants into believing that creators will retain copyright ownership in their works.

In once place in their language, they write:

“When you submit a work to Talenthouse as an entry, you grant Talenthouse a limited license to use your work. You always own the copyright in your work.”

One more time: Talent says “you ALWAYS own copyright in your work.”

Those few entrants who are not lulled into complacency by that statement, and who proceed to read the fine print, will find the rights grabs:

“If you are selected as a winner, then in exchange for a prize, you may be required to license or assign your work to the host providing the prize.”
From what I’ve seen to date, in most or all circumstances, the statement “you MAY be required to license or assign your work to the host..” actually means: “you WILL be required to ASSIGN YOUR COPYRIGHT OWNERSHIP to Talenthouse’s clients.”

But even THAT is not the worst of it.

Buried even deeper in the terms and conditions is this gem:

“Upon the Promoter’s and/or Sponsor's request, winners agree to sign ANY AND ALL LEGAL FORMS” deemed necessary to license or assign all right, title and interest in and to the Work, including without limitation, ALL COPYRIGHTS associated therewith, in exchange for the Prizes set forth above.”
Hmm. Legal forms? What legal forms? Where are they? What additional, hidden terms will be forced on creators who submit their works to Talenthouse contests? Nobody knows. In the current Talenthouse contest “hosted” by Microsoft and Reuters, Talenthouse failed to post the “legal forms” and when asked, Talenthouse refused to reveal those hidden terms.

So we must ask, publicly - Talenthouse – if you won’t disclose your corporate clients’ (in this instance, Microsoft and Reuters) hidden terms, exactly how are we supposed to know if we’re comfortable with those terms before we enter? Yet again, that’s not the worst of it.

In another one of Talenthouse’s recent contests, “hosted” by Talenthouse client AirBnB, Talenthouse posted one of their client’s legal forms applicable to the contest. The handful of entrants to click through to open that document and read the terms will see that the legal form posted by Talenthouse states:

“…any images submitted will be solely the property of Airbnb.”
Under these terms, AirBnB claims copyright ownership of every image entered in the contest, whether the entry wins or not.

So we must ask, publicly - Talenthouse, if “any images submitted will the solely the property of your client AirBnB, why are you telling all entrants “you ALWAYS own copyright in your work?”

Apparently, when Talenthouse says “Our mission is to liberate all artists” what they actually mean is “Our mission is to liberate all artists from their copyrights.”

When Talenthouse says of creators -- “We are dedicated to helping them harness the power of their art to inspire, transform and illuminate,” what Talenthouse actually means is “we are dedicated to helping our corporate clients to exploit your creations in their advertising, in order to sell more products and services.”

Make no mistake about it - Talenthouse is in the business of selling your copyright to their clients.

But all is not lost. The concept behind Talenthouse is good. Its just the Talenthouse terms that are egregiously evil. Talenthouse and their clients need not steal the copyrights of creators. If Talenthouse is, as they claim, comprised of good people trying to do a good thing, they simply need to change the terms of their contests, and to require that their clients do the same.

  1. Usage of contest entries should be limited to the promotion of the contests. Period.
  2. Contest winners should NEVER, EVER be required to assign copyright ownership to Talenthouse’s clients.
  3. The “prizes” provided to winners should not allow Talenthouse clients to make use of winning entries, except for the purpose of promoting the content.
  4. If Talenthouse clients desire to make use of winning entries, those clients should pay a fair fee to the winners, on par with market rates for the desired usage.
  5. The winners should receive reimbursement of expenses associated with creating the works.
  6. Lastly, any terms and conditions applicable to contest entrants and winners must be disclosed to entrants prior to the time of entry, rather than hidden until the contest is over.
With this handful of fixes, Talenthouse will transform from what we see as an evil, predatory, parasitic, copyright pimping creative industry slumlord into a positive force in the creative community.

It is that simple. Really.

Or, should we continue? Lets.

(Continued after the Jump)

Talenthouse has announced a parternship with Microsoft and Thomson Reuters Foundation that, if their past contests are any the same, are demanding a copyright transfer to anything you enter that they want - not just winning entries.

With much fanfare, it is suggested that Talenthouse has a contest "…to empower photographers with a series of career opportunities as part of this year’s Trust Women Photo Award." Somehow, empowering women by demanding they give up their rights at an event that is, according to the Talenthouse website (HERE - "... dedicated to the advancement of women’s rights..." doesn't seem right. Now, before anyone suggests that the matter of "womens rights" as it is referenced here is not the same as the broader sentence "...dedicated to the advancement of women’s rights and to the fight against human trafficking...." you would be incorrectly dismissing the value of the rights to photos. Economic challenges are among the many reasons women throughout the world find themselves being taken advantage of and otherwise mistreated. What better than to leave the rights to ones' photographs with the creator, allowing them to earn a living? Talenthouse, Microsoft, and Thomson Reuters Foundation are either intentionally - or, as one might hope,unintentionally - seeking to disenfranchise women from their rights.

Talenthouse writes:

Photographers and photojournalists are invited to submit images capturing the lives and stories of remarkable women around the world, who are achieving incredible things in their communities.
So, any photographer (male or female) that submits the images is subject to an all-rights grand and demand, and whenever Talenthouse and/or their partners want copyright, must transfer copyright, even if they don't win?

What's interesting is that the conditions for entry into the Talenthouse Airbnb contest state (HERE):

DISCLAIMER: When you submit a work to Talenthouse as an entry, you grant Talenthouse a limited license to use your work. You always own the copyright in your work. Talenthouse never owns the copyright in your work. If you are selected as a winner, then in exchange for a prize, you may be required to license or assign your work to the host providing the prize. If you do not want to license of assign your work in exchange for a prize, an alternate winner will be selected and you will retain copyright to your work.
So, Talenthouse says "you always own the copyright in your work. Talenthouse never owns the copyright in your work." No, "always" is not true. And, while "talenthouse suggests they never own the copyright in your work" the fact remains that you agree to transfer/assign your copyright, and if you don't, someone else will be the winner and only then "...you will retain copyright to your work."

Not so fast. Read further down:

7. Grant of Rights. By entering the Contest, entrants irrevocably grant the Promoter and Sponsor, its subsidiaries, divisions, affiliates, designees, clients, sponsors, licensees, and advertising and promotional agencies, an unlimited, worldwide, perpetual, non- exclusive, royalty-free, unconditional license and absolute right to edit, post, publish, store, copy, transmit, publicly display, and exhibit, the Work (in whole or in part) in connection with the Contest and/or the promotion of the Contest. Upon the Promoter’s and/or Sponsor's request, winners agree to sign any and all legal forms deemed necessary to license or assign all right, title and interest in and to the Work, including without limitation, all copyrights associated therewith, in exchange for the Prizes set forth above.
Let's focus on that last sentence:
Upon the Promoter’s and/or Sponsor's request, winners agree to sign any and all legal forms deemed necessary to license or assign all right, title and interest in and to the Work, including without limitation, all copyrights associated therewith, in exchange for the Prizes set forth above.
Ignoring the entire paragraph except this, (the entire paragraph still applies, and is horrendous) any any all images entered, upon request of the sponsor, are required to be transferred to the sponsor.

So, the AirBnB contest, which, by the way, involves the storied Chiat Day advertising agency, could easily hire a photographer to shoot work for AirBnB. Unfortunately, they are using Talenthouse to produce spec work around the world, for free. Remember spec work? That's where you cover all the expenses and shoot for free and maybe make money.

Contests pit corporations making money against the hopes and dreams of photographers who want to get exposure and succeed. The only winners here are Talenthouse and their sponsors. It's a facade for a rights grab. It's horrible. Talenthouse is a creative parasite leeching the talent from entrants and leaving them with no ownership of their work. In the end, it may be that Talenthouse is contributing to the "starving artist" station in life and they will have to be providing an actual "house" to their talent who will be homeless if they look to Talenthouse for creative support.


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Friday, January 2, 2015

The Liability of Bartering for Photographic Services

If I were Shantanu Starick I would be a bit worried about the taxing authorities in my home country right about now.

Starick achieved a degree of notoriety for the two years he set as a goal to spend zero actual currency, and instead exchanges his photographic services for good and services in return, hoping to visit all 7 continents. So far? 5 out of 7.

One BIG problem?

EVERY good and service he received is taxable, and he must pay taxes on them at their fair market value. It gets worse in that he's travelled to several different continents doing this, all of which have taxing authorities that want their piece of the pie.

First, let's agree that it's not fair that you cannot donate your services to a charity - with, say, a fair market value of $1,000, and get that value in return as a charitable donation. If your deliverable was a CD of images, and nothing more, you could only deduct the actual cost of that CD. Even Picasso couldn't get a deduction for a painting's value beyond the cost of the canvas and oils. However, when you barter something with someone, your receipt of goods or services is deemed to be income by not just the Internal Revenue Service in the US, but, unfortunately for Shantanu, the Austrailian taxing authorities.

For reference: IRS Website - Topic 420 - Bartering Income
Bartering is the exchange of goods or services. Usually there is no exchange of cash. An example of bartering is a plumber exchanging plumbing services for the dental services of a dentist. You must include in gross income in the year of receipt the fair market value of goods or services received from bartering.
For Mr. Starick's reference:

Austrailian Taxation Office - Home>Non-profit>Income, sales, fundraising & donations>In detail>Other income
What is the tax treatment of bartering transactions?
Barter transactions are assessable and deductible for income tax purposes to the same extent as other cash or credit transactions.
(Continued after the Jump)

The good folks over at PetaPixel posted this article - Photographer Shares How He Spent Two Years Living on Photos Instead of Money - and they didn't pass any judgement, per se, on the project.

I can offer you some insights on this project - it devalues photography. Period. The value of a wedding is anywhere between $2,000 and $5,000, with many brides paying far more, and yes, some paying much less. I can't think of how the many brides and grooms he bartered with provided him with even $2k in services during his time with them. There's also a big problem with that. If he bartered with a company and provided them with $10,000 in services for an ad campaign, he may well have to pay taxes on that income and he won't have any receipts to show expenses related to the providing of those services, and so he'll pay taxes on the fair market value. Further, and I know his hippie parents would be proud (his characterization of them, not mine - watch the video) he wants this mindset to spread far and wide.

Bad idea.

The next photographer will come along with a mortgage to pay and a family to feed, and the NYC restaurateur will want to barter the night's meal for photography! "No appetizers or alcohol, and pasta only, the Filet Mignon is not on *your* menu misseur! Mon Dieu!"

So the bar owners in NYC that gave him their apartment for two weeks, and an "all you can drink" tab at their watering hole? He will have to pay fair market value for 14 days of lodging in NYC (at, what, about $500/night depending upon where their apartment was) and the bar tab - that'll all be taxed as income he received. The restaurant in NYC that let him eat for free on day 5 of his lengthy stay? He'll have to pay taxes on the fair market value for each of those meals.

Oh, and here's even a bigger headache - EVERY recipient of photographic services is required to report as income the fair market value of his photography. So, if that same restaurant that provided him with 20 free meals which they might have grossed $400 for could very well be required to pay taxes as if they received $1,000 in income. So, An IRS agent who covers New York City would call up a New York City food photographer and say "hey, how much would you charge to do a chef's portrait and 8 dishes done by the chef?" And if the answer was $1,000, that could be what they would have to report as having received a barter income - just like the income from multiple diners in their place of business.

It also comes across that he hasn't spent a dime on anything else. As such, it's also worrisome that in the past two years he hasn't expended any money for, say, liability insurance in the event he has an on-shoot accident, or gear insurance in the event something is stolen, or health insurance - good thing he looks healthy, but, well, one never knows when they'll trip down a flight of stairs and be laid up. Heck I'm guessing he'll have to make sure his arm cast is molded around a camera grip so he can barter with the ambulance EMT's for their Facebook and LinkedIn portraits, and the hospital he's laid up in for staff portraits, surgery documentation and facilities images during his stay. I'm guessing though, they'll just rather get paid the $20k or so for what that short simple stay will be than barter for his photography.

Just sayin'.


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Wednesday, December 31, 2014

The Pathetic and Paltry Time Magazine Assignment Rate & Rights Grabs

What's good for the goose is clearly not good for the gander. "Purchase" is not "license." According to Time's own website (here) " We license Time Inc.’s peerless content, brands and products to partners in new businesses and emerging markets."

DEFINITION: Peerless
adjective
1. having no equal; matchless; unrivaled.

Synonyms:
unmatched, unequaled; unique, unsurpassed.

* source: Peerless, at Dictionary.com

Yet, that "peerless content" which Time wants contributors to produce is not something that they are purchasing like a computer or plane ticket. The software they pay a fee to license from Microsoft and Adobe, while seemingly purchased, is not, it's licensed. They may have "purchased" a physical CD of the software, but they do not have ownership of the software to use across multiple platforms unless they obtain a broader license to the work, and pay an appropriate additional fee.

As reported in PDN Pulse (here), Karen Myers, who is Time's UK’s Director of Corporate Communications, said “...Contributors need to bear in mind that commercial realities dictate that we will be using the content that we purchase in many different ways..." yet Time's website Terms & Conditions (here) make it abundantly clear (regarding the intellectual property on their website) they "own, solely and exclusively, all rights, title and interest in and to the Web Site, all the content (including, for example, audio, photographs, illustrations, graphics, other visuals, video, copy, text, software, titles, Shockwave files, etc.)."

Time UK has been, and it will remain, licensing content from contributors. They will not be "purchasing" ownership of it any more than I can take that Norman Rockwell I want to buy and (once I do) make posters and lithographs off of it. Yet that is what Time UK (and as has been suggested by others, this is a trial balloon for US contracts) wants to do.

This smacks of what occurred in the late 1990's, when Time unceremoniously foisted upon contractors, contributors, and freelancers, a new egregious contract. Many of the seasoned team of photographers, stood their ground and refused to sign, only to be replaced by those who looked up to them as standard bearers - "peerless" photographers, to coin Time's characterization. The "new team" stepped in to fill the void, crumbling what ground those photographers were standing on. You can, no doubt, see those who were undercut by the newcomers sitting back and saying "what goes around comes around..." and not missing a wink of sleep as the downward spiral continues.

(Continued after the Jump)

How Far Down Is That Spiral Going?

In 1980, the Time Magazine contract indicated a rate of $350, and in about 1990 it was $450. In 2000 and on through to about 2011, it's $500. It's about $550 in 2014.

In 1980, $350 was worth, well, let's set that as the baseline, and say $350 is worth $350.

Would the 1980 photographers taken an assignment for the "Peerless" Time Magazine for $191? No, they would not.

Here's how Time Inc's (NYSE: TIME) assignment rates have worked, throughout the years.

First is the middle line, which tracks the rate as paid. The top line is the rate had it kept up with inflation alone. The bottom line is the buying power of that rate, over time.

How did we arrive at these numbers? The US Department of Labor has a calculator (here) that allows you to compare buying power, over time. It's a fact that essentially everything increases in cost over time. That loaf of bread in 1980 was about $0.50 and now it's $1.50. Gas? Of course - more expensive too. As such, your ability to buy something has been reduced, over time, unless you get a "cost of living adjustment" in your income stream.

If Time were paying an assignment rate of $1,000.00 it would have just kept up with inflation relative to their previous $350 assignment rate from 1980.

Has their per-page ad rate gone up? Yes.

Have their employees received cost-of-living salary increases? Yes.

Where is the equity in paying those that produce that peerless content that brings in readers? Absent.

Know that if you're a photographer now that accepted the $500 back 10-15 years or so ago (when it should have been about $750), you were undermining the photographers who tried to take a stand for better pay then. Now, when you try to take a stand, make no mistake about it, there will be photographers who will fill the void, and you can join the ranks of past Time Magazine contributors saying "what goes around, comes around - trust me, I have experienced the financial pain that proves it."

You either stand together, or fail separately. Your choice.

----------------
Related:
The REAL 'New Frugality'-Time Style, 7/25/09


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Monday, December 22, 2014

Dumb Hookers and Photographers

How much money are you losing when you're not paid when the services are rendered, or even on time?

There's an old saying:

"even the dumbest hooker knows they get paid up-front."

Setting aside the disparagement some of the purveyors of the oldest profession in the world, the sentiment of being paid up-front is obviously a time-honed position.

Consider this - A common credit card has a 17% interest rate on charges.

Why Interest?
Q: Why do people charge an interest rate?

A: It's "the cost of money."

The concept is - if a financial institution loans you money to buy a house, they're not able to use that same money to invest in stocks or other investments that will, over time, increase in value.

Therefore, when a bank loans you $300,000 with 30 years to pay it back at 5% interest, and with you paying a monthly mortgage of $1,654, at the end of 30 years, they will have earned $229,910 in interest and you will have paid a total of $595,639 for that house.

If you were to buy $10,000 in photo equipment, and not pay it off in a year, you would have to pay $1,838.92 in interest if the interest was "compounded monthly" as compared to $1,852.58 if the interest was "compounded daily." As such, the difference between "compounded monthly" and "compounded daily" is $13.66. How does that work? What happens is that "compounded daily" means that on day 1 you owe $10,000.00. At the end of day 1, approximately $4.66 in interest is accrued, and so on day 2 you owe $10,004.66. Compounded monthly, you wouldn't owe any interest until the end of the month, but then you would owe $141.67 in interest.

(Continued after the Jump)

Now, consider the value of your own money - that which you earned. If you earned $5,000 for an assignment, and you get paid that money up front, you could, in theory, immediately invest it in one of the safer investments - bonds - with a 4% return. So, at the end of the year, it would have $5,204 in value. Thus, it should be painfully obvious that if that client waited a year to pay you, you would have lost the ability to make that investment, thus, losing $204. Simple math tells you that if they waited 6 months, you'd have lost $102, and in 90 days, you'd have lost $51.

So, when that client tells you "we pay in 90 days" what they're saying to you is "I know your bill is $5,000, but we're going to pay you in 90 days, and you'll have lost $51 in earning value during that time, so you'll only have earned $4,949.00."

Consider that most clients and vendors should be on a 30 day pay cycle, that same $5,000 has a per-month value of $17.00. That's like a client disavowing a parking garage expense or a two-person fast food meal, "just because…"

Here's the rub - when you incur a $5,000 expense your credit card company wants it paid back in 30 days, or you pay interest. $70.83 at 17%. Where's your $70.83 when a client doesn't pay you in 30 days?

So, on that $1,000 assignment, where's your $14.17 when that client doesn't pay in 30 days?

It compounds. If you're a photographer that does three $500 a week assignments, that's a gross revenue of $78,000. That's 156 assignments a year. The difference between getting paid in 30 days versus in 60 days is, at $7.08 an assignment, an $1,104.48 loss in the power of your money, or doing just over two of those assignments for free.

There are many "standard" payment cycles, all built into your business model and what works for you.

Most wedding photographers take a deposit when the contract is signed and the full amount a week before the wedding, or upon delivery of the proofs (I'd recommend a week before the wedding.)

Many commercial photographers expect a deposit when the contract is signed (so they can start booking air/hotels and incurring other expenses on the clients' behalf) and the balance due on receipt of final images (but before first usage of said images).

Other photographers are on a 14-day, 21-day, or 30-day schedule. Some require clients to pay on the spot with credit cards.

In the end, it's important to recognize the value of your money, and get it as soon as possible.


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Tuesday, July 22, 2014

FUSEVISUAL - 5 Questions | 5 Answers | 5 Images

For almost a year now, the website FUSEVISUAL has been doing insightful interviews of a number of photographers from around the world. Recently, I was interviewed (here), and found myself sharing a number of things with my interviewer, Cameron Davidson, I hadn't intended to. I've been following the site for some time, and while some of the photographers I know (Renee Comet, Robert Seale, Seth Resnick, Chris Crumley, and Susana Raab, many I don't. Cameron (whom I have known for many years) takes a surprisingly in-depth look at each of them, and it's refreshing.

The concept is simple - 5 questions and their answers, along with 5 images. The idea, of course, is to draw in viewers to see, as the founders write "to deliver a site that uniquely showcases visual communication experts", but the mission is to not only share the answers and images, but also to make a difference through charitable contributions both in the United States, and Haiti. Their "Give" page details these charities, and encourages others to get involved.

So, go check out FUSEVISUAL, not because I'm featured there, but more importantly, because they're doing good and you just might learn a thing of two (or a dozen) about how other creatives have mastered their craft, as a part of your journey to master yours.

(Comments, if any, after the Jump)

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Friday, April 4, 2014

House Judiciary Committee - Orphan Works and the PLUS Solution

On April 2, 2014 - Congress' House Subcommittee on Courts, Intellectual Property, and the Internet held a hearing titled Preservation and reuse of Copyrighted Works about orphan works, and asked for insights into matters regarding the need to preserve copyrighted works.

Testimony was heard from the Library of Congress, Gregory Lukow, Chief, Packard Campus for Audio Visual Conservation, The Library of Congress (testimony PDF); Mr. Richard Rudick, Co-Chair, Section 108 Study Group (testimony .doc file); Mr. James Neal, Vice President for Information Services and University Librarian, Columbia University (testimony PDF); Ms. Jan Constantine, General Counsel, The Authors Guild (testimony .doc file); Mr. Michael C. Donaldson, Partner, Donaldson + Callif, LLP (testimony PDF); and Mr. Jeffrey Sedlik, President and Chief Executive Officer, PLUS Coalition (testimony PDF). Much of the testimony was about preservation, and the questioning of the need for new laws related to orphan works was discussed at length over the course of two hours.



Jeff Sedlik's PLUS Coalition testimony proved to be most relevant to visual artists, given the presentation of PLUS as a solution to the problem of orphan works. Prior to the hearing, Sedlik spoke with the committee chairman, Rep. Howard Coble (R-NC) (as seen below).

Below is a video that combines Sedlik's testimony from the hearing - it's well worth watching to better understand how orphan works will return to the fore, and what is being done to solve the problem.

(Continued after the Jump)

Disclaimer: I sit on the boards of the American Society of Media Photographers and the National Press Photographers Association, both of whom have provided substantial funds to support the development of PLUS. Each organizations' initial funding of PLUS pre-dates my role on the boards.

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Thursday, March 13, 2014

CalumetPhoto - Chapter 7 Bankruptcy

While rumors have been swirling for much of the day on Wednesday, the story about whether or not the storied camera store chain CalumetPhoto has filed for bankruptcy have come true.

Calumetphoto.com LLC has voluntarily filed for Chapter 7 bankruptcy, listed as case #14-08908 in the Northern District of Illinois United States Bankruptcy Court. The filing is dated March 12, 2014 and the first meeting is scheduled on April 22, 2014.



CalumetPhoto, in recent months, has been pulling back from their participation in activities they have, in the past, normally sponsored or been involved in, and there have been grumblings amongst store management as well as serious concerns raised by some equipment manufacturing representatives and vendors as well. While many companies file for Chapter 11 bankruptcy in order to reorganize, sources tell Photo Business News that while CalumetPhoto tried this route, ultimately they found themselves in Chapter 7 bankruptcy, which is the phase companies end up in when Chapter 11 does not work, and the company has to liquidate.

CalumetPhoto, founded in 1939 grew to almost 3 dozen stores nationwide, and, in recent years, most notably acquired the Penn Camera camera stores in 2012 in the Washington DC region after they had gone into Chapter 11 bankruptcy. After shedding 5 of the 8 locations, the remaining 3 were intended to continue to fulfill the various government contracts that Penn Camera had acquired over the years, as a hopeful source of ongoing revenue for the beleaguered company.

(Continued after the Jump)
According to court documents (see below) CalumetPhoto lists assets of less than $50k, and estimated liabilities in excess of $1,000,000, and 585 debtors:



All CalumetPhoto stores in the United States are closed, and classes have been cancelled and their @calumetphoto twitter account is now non-existent, yet there were posts on their Facebook account up until mid-day Wednesday. The overseas CalumetPhoto stores in the EU remain operational. According to Seng Ng, the Director of Finance for CalumetPhoto U.K., when asked how this will affect the UK store, responded "not at all" continuing "we share the same name but are two distinct entities." Their website remains operational and stores there are open.

Late in the day Wednesday, visitors to the Calumetphoto.com website found it non-operational, as below:



Reports from current and former employees and individual store management have reportedly been detailing the trials and tribulations of their times at CalumetPhoto and the state of the company has reportedly not been well.

The PDF of the court filing can be viewed here, as a PDF.



-------------------

Update: At about 10:30am Eastern time, CalumetPhoto posted this on their Facebook page:


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Tuesday, March 11, 2014

Getty's Flickr Agreement Ends Like Titanic

Getty Images, a Carlysle Group (NASDAQ: CG) company, today, announced a "notice to terminate" their relationship with Flickr as a source of images. What was launched in March of 2009, when Getty's editors were characterized by Flickr as "...inspired by the quality and creativity of our members...." (Building the Flickr Collection on Getty Images, 1/21/09) has now ended.

The parallel between the launch of the largest ship in the world, and it's eventual sinking because of poor stewardship is similar to Getty and Flickr, where arrogant captains in both settings think they know what they are doing. Getty, arguably the largest stock operation in the world, as the Titanic, ran into the immovable object that is the iceberg in the form of Flickr. Now as the executives of Getty stand amidst the musicians entertaining the unknowing on the aft decks, the ship is taking on water. It's only a matter of time before she breaks apart and sinks to unfathomable depths.

Of course the agreement didn't end before Getty sifted through, what they characterize as their having "...assessed over 90 million images, selecting 900,000 from 42,000 contributors as part of our Flickr collection." Interestingly enough, using the $0.15 per image valuation factor Getty is said to use to value their collection, that's only a valuation of $135,000 over the course of 5 years. I am sure that they paid editors more than that to cull through all the images, so I'd count that as a bad business decision. Given they have two years to make up enough money to generate the $1,200,000,000 for their 2016 loan, the Flickr deal seems to have generated content that is a few zero's short of solving their problem. Consider that they had an existing pool of 9,000,000 images, which was a massive library of content for them to consider, and they still were only able to select 900,000 images. With that pool of images exhausted, and the relationship now terminated, they now have to look at the normal ingestion rates of images into their systems, and there does not seem to be any mathematical way that they can bring in enough images to satisfy the $1.2B loan that is coming due.

(Continued, after the Jump)
What's amazing is that, if you consider that they looked at 90,000,000 images, and they only came up 900,000, that's only a 1% success rate for a salable image from Flickr. Compare this to their stated production levels at the 2014 Sochi Winter Olympic Games - "our photographers captured 1,004,849 images, of which 52,362 were distributed to the world..." and you get a 5.2% ratio. Now, to be fair, I'm sure Getty wanted to report a figure higher than a million, so they likely counted the many times a photographer producing 12-14 frames per second used their camera's maximum capture speeds, so it's reasonable to consider that a 2 second burst producing 25 images would only produce 1-2 selects of the best image, however, they're boasting the numbers, so when you celebrate by the numbers you are subject to criticism by those same numbers.

We here at Photo Business News, in 2008 reported, in The Curious Case of Getty and Flickr (7/11/08) about much of the problems that the Getty deal with Flickr was for photographers. With Getty last week having culled through what they believe to be all the salable/valuable images, announcing their image embedding feature ( Monetizing Getty's 35M Image Archive via FREE Editorial Uses, 3/7/14) put them in competition with Flickr, which has a slideshow/embedding feature since 2007.

Getty announced:
Statement by Getty Images re Flickr


Getty Images and Flickr have worked together for five great years, celebrating the originality of photography enthusiasts worldwide. Getty Images curators have assessed over 90 million images, selecting 900,000 from 42,000 contributors as part of our Flickr collection.

Getty Images has provided notice to terminate our existing agreement with Flickr. Our original agreement reached its end, and while we continue to be open to working with Yahoo!/Flickr, we do not have a new agreement at this time. We will continue to work with the tens of thousands of contributors and license the existing content.

Innovation and evolution are at the core of our work at Getty Images and we are continuously developing new technologies and tools to enhance our crowd-sourced imagery for our contributors and customers. We recently launched Getty Images Moment, our new iPhone app designed for contributors, as well as global content partnerships with EyeEm and Samsung. We look forward to announcing further developments in the coming months. Watch this space.
These developments are not surprising, however, they do indicate a continued flailing about as the Getty leadership team, who clearly not only don't get it but are also playing catchup in many other areas where they are behind. It's only a matter of time before Carlysle's investment turns out to be as ill-fated as the Titanic. Strike up the band for one more melody. Don't bother watching the crew scurry about for the lifeboats. Don't say you weren't warned.

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Monday, March 10, 2014

Copyright Office Roundtable Discussion on Orphan Works - 2014 Edition

The United States Copyright Office brought together stakeholders from across the spectrum of intellectual property producers and consumers to discuss various ways to approach the issue of orphaned works during two days of roundtable discussions Monday March 10th and Tuesday March 11th, 2014, held at the Library of Congress in Washington DC.

Almost six years ago, we here at Photo Business News wrote Orphan Works Act = Thieves Charter? which delved into what the bills that were proposed to be law were espousing. We followed that up with Orphan Works - History In the Making, and we even wrote about the problems with the bills then, espousing the need for a solution to orphaned works, just not the one that was being proposed, in Orphan Works 2008 - A Wolf In Sheep's Clothing. We even produced a piece titled Orphan Works - A Unique Set of "Myths" and "Facts" in an attempt to dispel some of the myths surrounding orphan works as proposed.

While the problem has not changed, the public and the stakeholders are much more engaged on the matter now, and the discourse seems to be taking a more reasoned approach. The Association of Research Libraries, for example, has changed their position from a call for orphan works legislation to an approach that utilities fair use. Here, they note "Unlike any option that will require legislative action, fair use is already the law...certain rightsholder groups are sufficiently fearful about misuse of their abandoned property that seemingly no search will be sufficiently diligent for them."

One thing is clear, this time around, the provisions of the bills that we will likely see in the next iteration will be better and more clear than what was in the 2008 bills. Below are a series of images from the roundtable discussions on the subject.

Over a hundred people came together to participate and listen to participate in a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Karyn Temple Claggett Associate Register of Copyrights and Director of Policy and International Affairs listens to remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Eugene Mopsik, Executive Director of the American Society of Media Photographers, Left, makes remarks during a roundtable discussion on Orphan Works/Mass Digitization as Jeff Sedlik, CEO of the PLUS Coalition, right, looks on, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Jeff Sedlik, right, CEO of the PLUS Coalition makes remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Mickey Osterricher, general counsel for the National Press Photographers Association makes remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


(More photos, after the Jump)
Douglas Hill, right, managing partner of Rights Assist, makes remarks during a roundtable discussion on Orphan Works/Mass Digitization as Colin Rushing, General Counsel of Sound Exchange, looks on, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Rob Kasunic, Associate Register of Copyrights and Director of Registration Policy and Practices, U.S. Copyright Office makes remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Nancy Wolff, right, counsel for the Picture Agency Council of America makes remarks during a roundtable discussion on Orphan Works/Mass Digitization as Mickey Osterricher left looks on, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Over a hundred people came together to participate and listen to participate in a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Eric Harbeson of the Society of American Archivists makes remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Karyn Temple Claggett Associate Register of Copyrights and Director of Policy and International Affairs listens to remarks during a roundtable discussion on Orphan Works/Mass Digitization, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.


Maria Matthews, manager, Copyright & Government Affairs at Professional Photographers of America makes remarks to remarks during a roundtable discussion on Orphan Works/Mass Digitization as Charles Sanders of the Songwriters Guild of America looks on, Monday, March 10, 2014 at the Library of Congress in Washington, DC. The roundtable discussion, held over the course of two days, is being held by the US Copyright Office to gather insights for future legislative solutions to orphaned works. Photo: © 2014 John Harrington.



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Friday, March 7, 2014

Monetizing Getty's 35M Image Archive via FREE Editorial Uses

Much has been said about the decision by Getty Images to make available to editorial online outlets, over 35,000,000 images, for free. Well, free in the sense that you're not spending any money to use the images. However, in exchange for this, you agree to allow Getty to track all the visitors to your website. How many come, their IP addresses, how long they stay, and so on and so forth. Make no mistake about it either, this isn't "free forever", Getty is looking to get into the big-data business, connecting image viewer data with data analytics from other sources. Once they reach a critical mass of users, they will essentially be able to sell advertising alongside and beneath their images (note the big white space between their name and the social media links in all the samples everyone is sharing) and they can also sell animations, where before the image appears, an ad is displayed for a few seconds, just like the lead-in advertising on videos just like YouTube. The revenue from repeated views here is far and away greater than the few cents Getty makes from web page usage. Getty's big splash is akin to Steve Jobs keeping secret the iPhone and then getting hundreds of millions of dollars in free advertising to promote it when it launches.

Getty has made clear that their current contributor contracts allow for this, and that no compensation is due the rights holders of those images. These images are put forth as a part of a marketing effort, and so to that end, those who created the images are out of luck.

Getty has said that they are tired of suing their userbase, and creating angry factions of the online community like those at organizations like "Extortion Letter Info" where lawyers gather together to fight off Getty's demand letters.

Could there be something else that's a problem for Getty? In 2010 we reported on a copyright problem where the methodology used by Corbis, on the advice of lawyers, was found to be flawed, and countless registrations were deemed invalid (see: Corbis' Copyright Registrations - Images "Not Registered" Court Finds). Could it be that Getty does not want to face this same house of cards that could be stirring within their registrations? Could it be that all (or almost all) of their registrations are invalid? Or, perhaps Getty just doesn't bother to register their work, and as such, the teeth that people think they have are actually toothless and decaying gums that have no bite to follow up their bark?

A search of the US Copyright Office shows for a search of their database under "Getty Images" shows their last registration as 2008, specifically images related to the images of Brad Pitt and Angelina Jolie's twins. Here's a listing from the Copyright Office as of March 7, 2014:



They have a total of 172 registrations. On the other hand, we here at Photo Business News register regularly, and a search of the Voyager database shows 229 records for our registrations alone. Consider the tens of thousands (or even hundreds of thousands) of images Getty produces worldwide each day, and receives from contributors, and unless there's some secret registration system they are employing, or they are doing it under a different name, then there's a bit of a problem for Getty in that they're not registering their work. That's a problem if that's the case. Oh, and the notion of a "database registration" doesn't really hold much water either when it comes to photographic registrations.

(Continued after the Jump)
So, if your copyright registrations have no teeth and thus you are not getting your day in court, and you're engaging in toothless fights with hundreds of infringements, why not allow people to use them and get analytics out of them?

The fact is that there are millions of images sitting dormant and otherwise generating no money on web pages, even when they're rights-managed images at a web resolution, someone forgets the image is there, forgets to renew, and so on and so forth. Royalty-free images, of which many many rights-managed images are competing against, generates a one-time fee of about $1.00. Then, that image sits there for months and years. Now, most every blogger wants good SEO, and they work hard to link-bait people into driving traffic, whether to sell ads, or generate notoriety. Now, you have thousands and even hundreds-of-thousands of bloggers generating millions and millions of pages using free Getty content. Once a critical mass is created, Getty will begin selling ads.

In addition, because it may well be that Getty doesn't have registrations for all the images that are being infringed, the removal of the iframe and copyright management information ("CMA") is a DMCA violation of upwards of $2,500 per infraction, that, wait for it, does not require a copyright registration to be awarded. So if someone strips out the iframe or copyright information from an image Getty can easily collect $2,500 or so per image. Have a look at this:
17 U.S. Code § 1202 - Integrity of copyright management information
(a) False Copyright Management Information.— No person shall knowingly and with the intent to induce, enable, facilitate, or conceal infringement—

(1) provide copyright management information that is false, or (2) distribute or import for distribution copyright management information that is false.
(b) Removal or Alteration of Copyright Management Information.— No person shall, without the authority of the copyright owner or the law— (1) intentionally remove or alter any copyright management information,

(2) distribute or import for distribution copyright management information knowing that the copyright management information has been removed or altered without authority of the copyright owner or the law, or

(3) distribute, import for distribution, or publicly perform works, copies of works, or phonorecords, knowing that copyright management information has been removed or altered without authority of the copyright owner or the law,
knowing, or, with respect to civil remedies under section 1203, having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title.
Now, that means that the removal of CMA allows the copyright owner access to civil court, and does not compel them to enter federal court, which, in turn, requires a valid registration certificate before you can have your day in court. Now, on to section 1203:
17 U.S. Code § 1203 - Civil remedies
(a) Civil Actions.— Any person injured by a violation of section 1201 or 1202 may bring a civil action in an appropriate United States district court for such violation.
(b) Powers of the Court.— In an action brought under subsection (a), the court—

(1) may grant temporary and permanent injunctions on such terms as it deems reasonable to prevent or restrain a violation, but in no event shall impose a prior restraint on free speech or the press protected under the 1st amendment to the Constitution;

(2) at any time while an action is pending, may order the impounding, on such terms as it deems reasonable, of any device or product that is in the custody or control of the alleged violator and that the court has reasonable cause to believe was involved in a violation;

(3) may award damages under subsection (c);

(4) in its discretion may allow the recovery of costs by or against any party other than the United States or an officer thereof;

(5) in its discretion may award reasonable attorney’s fees to the prevailing party; and

(6) may, as part of a final judgment or decree finding a violation, order the remedial modification or the destruction of any device or product involved in the violation that is in the custody or control of the violator or has been impounded under paragraph (2).
(c) Award of Damages.— (1) In general.— Except as otherwise provided in this title, a person committing a violation of section 1201 or 1202 is liable for either—

(A) the actual damages and any additional profits of the violator, as provided in paragraph (2), or

(B) statutory damages, as provided in paragraph (3).

(2) Actual damages.— The court shall award to the complaining party the actual damages suffered by the party as a result of the violation, and any profits of the violator that are attributable to the violation and are not taken into account in computing the actual damages, if the complaining party elects such damages at any time before final judgment is entered.

(3) Statutory damages.—

(A) At any time before final judgment is entered, a complaining party may elect to recover an award of statutory damages for each violation of section 1201 in the sum of not less than $200 or more than $2,500 per act of circumvention, device, product, component, offer, or performance of service, as the court considers just.

(B) At any time before final judgment is entered, a complaining party may elect to recover an award of statutory damages for each violation of section 1202 in the sum of not less than $2,500 or more than $25,000.

(4) Repeated violations.— In any case in which the injured party sustains the burden of proving, and the court finds, that a person has violated section 1201 or 1202 within 3 years after a final judgment was entered against the person for another such violation, the court may increase the award of damages up to triple the amount that would otherwise be awarded, as the court considers just.
Well, Getty's 2011 contract outlines how they get to handle intellectual property claims:
1.11 Right to Control Claims. Getty Images shall have the right to determine, using its best commercial judgment, whether and to what extent to proceed against any third party for any unauthorized use of Accepted Content. You authorize Getty Images and Distributors at their expense the exclusive right to make, control, settle and defend any claims related to infringement of copyright in the Accepted Content and any associated intellectual property rights (“Claims”). You agree to provide reasonable cooperation to Getty Images and Distributors and not to unreasonably withhold or delay your cooperation in these Claims. Getty Images will not enter into any settlement that will compromise your ownership of the copyright in Accepted Content or that prohibits your future conduct with respect to Accepted Content without your prior written consent. Getty Images will pay you Royalties on any settlements it receives from Claims. If Getty Images elects not to pursue a Claim, you will have the right to pursue it.
So now Getty gets to go after people who remove copyright management information, and collect on each of those in civil court. Faster and easier than federal court, and much cheaper.

Now, enter object recognition. A company like Stipple monetizes images with their own embedder that means that if I as a photographer take a photo of a celebrity wearing Prada boots, using a Gucci purse, and an Old Navy dress, provided I include that information as tagged in the image, I can generate revenue if someone clicks through from that image to a site like Amazon that would sell them, and I collect a few percentage points in revenue from each sale. A $400 purse could garner $4 - $8 in income from a single click/sale, so it encourages photographers to manually tag them. A company like Samsamia tags images using fashion image recognition semi-automatically. Other software automates object recognition so that no one needs to manually tag them - it's done automatically. If Getty controls the iframe where all this is happening, on hundreds of millions of images around the world, they could generate tenfold amounts of income.

As such, Getty has just co-opted the entire blogosphere as free distributors of their advertising vehicles. Getty's minions are now doing their bidding like the Wicked Witch of the West sent out her flying monkeys, yet the monkeys had to be fed. Getty's minions are doing all the work for less than peanuts. Consider that a magazine produces editorial content in order to generate readers who will view the paid advertising adjacent to it. It spends a great deal of money producing that content, and then charges advertisers. This upends that model, where the editorial content is being produced for free, in every known niche of interest globally, and Getty gets all the income from the ads and also a much broader audience for commercially viable images to consider.

This is why they're allowing the New York Times to use their content online for free, which at first blush seemed like a bad idea. But, in the end, they are essentially taking over the advertising that appears in the newspaper. They are not satisfied to take over the ads adjacent to the editorial content, they will now own the ads within the editorial content. You can't pay to get monetizable links within a New York Times editorial story - that's as sacrosanct as the space inside a baseball diamond to sports fans, even moreso. However, Getty, provided the NYT opts to use the images for free, has now given up control of the visual part of their editorial content, ceding it to Getty.

Imagine you're a Getty ad sales rep - and you can say "we can offer you an ad inside the New York Times' editorial space." In fact, it's even reasonable to assume that, say, the pharmaceutical CEO who testifies before Congress on a particularly polarizing point, and who could never dream of being able to immediately place adjacent to the article about his testimony, a rebuttal or company link for more information on the company's perspective, could now, within seconds of the story appearing, buy an ad that would appear below his photo, or as a 5 second preview before his photo appears, providing a rebuttal to the article. In fact, a company could buy such a rebuttal ad space wherever images from that testimony appears, worldwide. I even see a point where the Getty sales team sees news events of this nature on a schedule and makes initial outreach to the marketing departments for those companies, pre-selling ads to appear beneath or over the photos just like magazines put out a schedule of topics in the comping year so when the big travel issue comes out all the travel companies have already bought space in those issues. As such, I suspect, respected news outlets will not cede this space to Getty's free offering, unless they're getting a piece of it that equals or exceeds what they would get for the ads adjacent to the editorial content. The NYT may well continue to pay for their uses so as to keep their editorial pages within their control.

Everyone seems to see this as Getty's way to combat copyright abuse. This is a naive as a day old bambi. It makes Getty appear as if they are giving up, giving in, and supporting blogs and being helpful. They are not. They are positioning themselves as the world's largest advertising resource so that the Carlysle Group (NASDAQ:CG) , which owns Getty, can turn around and sell Getty to Google or Yahoo. The pitch is "this is the YouTube of still photography - free photos and revenue from wraparound and play-over ads...". Look at how Google snapped up YouTube for that reason. Free videos propagated globally and Getty just sits back and counts the validated eyeballs and collects all sorts of data about them. It's the same with still photos now. Further, As crazy as it sounds, when Carlysle bought Getty, they did it in fast-and-loose-80's-style leveraged-buyout fashion, using a loan secured by Getty's assets to buy Getty and made Getty responsible for paying the loan back. Getty doesn't have that kind of money sitting around, and they've got a $1,200,000,000 loan coming due in about 2 years.

So far, the contracts that Getty has with it's contributors allow them to do this as marketing, for free, without compensation to the contributors. And, just as with Getty monetizing the metadata of an image from Pinterest without being obligated to share that income with the photographers (because Getty's contracts don't require it because a metadata income stream isn't from an "image license") and from what I have heard, there are no plans for photographers to earn any part of the advertising that is adjacent to (or precedes the viewing of) their image. Getty's telling photographers "oh, this will drive people to our site and the commercial sales will give is a reach we haven't before." This sounds remarkably like "we'll loose a little on each use, buy make it up in volume."

The real losers will be the content producers - the photographers. Of course, Corbis and the rest of them will look at this and wait, and all the while Getty's images will get embedded deeper and deeper into the internet's archives and the rest of the stock agencies will be playing catchup. Considering that 20% of Getty's archives are generating about 80% of their income, this isn't a problem, monetizing the rest of the 80% sitting around, making them all a sort of homing pigeon. However, Getty's own internal valuations are at about $0.15 per image, so if a photographer with 100,000 images decided to pull out, the monetizers look at that and say "oh well, too bad for them, that's about a $15,000 loss for us. Moving on. Next."

Welcome to the new world order of stock photography.

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