Monday, November 23, 2009

Microstock Creates New Markets? - No, It Devastates Existing Ones

I hear all to often that "microstock creates new markets". Ok, so let's take that statement at face value, and agree with it, but break it down to see what monster has actually been "created."

Dictionary.com defines market in several ways, the most applicable to this statement is "a body of existing or potential buyers for specific goods or services."

To say "microstock creates new markets" makes it appear is if this is a good thing. However, not all markets are good, or even legal. "easy access to Pseudoephedrine creates new meth markets", or "the decline in police patrols created new open air drug markets." The cash-for-clunkers program grew the market for new cars. Yet, that program not only damaged the used car market for buyers who could never afford a new car and now have fewer used cars to choose from (thus raising the prices of those still available) but also spiked the new car market in the early part of the year at the expense of later-in-the-year sales, according to some reports.

(Continued after the Jump)

Microstock didn't come into the market to serve high school children who need school report images, or even the mom-and-pop corner store. They came in like a drunk bull in a china shop with careless regard for the devastation on the existing market. Jonathan Klein, co-founder of Getty Images, on justifying the acquisition of iStockphoto, suggested all the new markets they could go into. Yet, iStockphoto is going to kill off the golden egg goose that was Getty Images. Sources suggest iStockphoto will be spun off in 2010 and go public.

Microstock has taught image buyers that most photography is worth pennies on the dollar of what it used to be worth. Yet, time and time again, normally responsible buyers get burned by the use of microstock and create confusion when the same image they chose is one that the competition is using (or has already used.)

Every time an entrpreneur turns around with some hair-brained idea, they have usually surmised "there's a market for X", and then proceed to demonstrate how they can actually serve that market. Yet, the reality is that the market must be sustainable. The dot-com boom era is a wasteland of non-sustainable markets where billions were lost. The money in the gold rush was not in the actual gold, but the suppliers of the tools and equipment that the miners used. The money in microstock is not in the images, but in aggregating the content of people who don't care about getting paid, and then taking a fraction of a dollar for the image license. The profits in microstock are like end products where the pollution dumped into fragile eco-systems as a part of the process is simply disregarded. Today, countries like China who don't give a hoot about their environment or worker satisfaction are polluting the skies and streams with the post-manufacturing waste, and living wages are not paid to workers there either. As a result, US manufacturing can't compete, and irreversible damage has been done. In the same vein of thinking, microstock photographers have little to no regard for the damage they are doing to the photographic environment, causing immensely talented photographers to close up shop. A few pennies for a book cover or national magazine cover is just enough for a latte, and beyond that, the digital-camera-toting enthusiast couldn't care less.

Stop saying "microstock creates markets" and instead try "microstock markets are devastating existing profitble markets."

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14 comments:

troyfreund said...

Great post, John, and one I heartily agree with. A local coop has taken to using iStock for their newsletter photos and I've written them, asking them to work with local photogs instead...no luck yet. Yes, microstock makes photos available to more people, at the expense of photogs' ability to make a living!

Anonymous said...

Good freelance photogs are making more money than ever. I know because I hire them and they're damn hard to find. And I'm paying more and more.

Good photogs know their local market and bust their tails. They develop relationships and prove their trustworthiness. They have outstanding people skills. They make subjects comfortable. They're there for the right shot. And I know when we bring one in that they're going to deliver above and beyond my expectations.

One thing about democratization of the tools is that people learn how friggin hard it its to do it well. Anyone can take a decent photo of Mt. Hood at sunset. So no photog should get stock proceeds for that. Stock photography is absent of all context. It always has been the easy way to go. And the fact that it's now so widespread and cheaply available has increased the need to stand out by getting the exact correct image. A good photog should be working, not living off of calendar art.

Stock is all well and good, but it's clip art, and it's not what photogs do. Save the art photography for craft shows. Prove yourself as a freelancer and you'll never want for work.

Doug Pruden said...

The problem is not isolated to a few industries, but is a global manifestation. I have seen it in the Canadian petroleum sector (produce lots of cheap natural gas and saturate the market so that nobody can make a profit except the big engineering operations). I do not think any of these companies started out with that model, but greed has created the resulting mess. If everybody is in the business to become a millionaire on the backs of other peoples' work, nobody benefits in the long run. It is capitalism at its very worst.

Anonymous said...

Well now, wait a minute here. You're upset that istockphoto is cutting into your profits, and yet you have a page about "web design essentials." How about newspaper and phone book profits? If everyone is supposed to stop posting their photos and selling to istock, how about photographers stop using the Web and advertise in phone books and newspapers so those jobs aren't lost? And maybe you can go back to using film instead of digital so that film manufacturers aren't put out of business? Sounds like to me you're all for taking advantage of technology except when others doing it hurts your bottom line. I don't want to get flamed, so I'm not posting my name, but I doubt you'd address that argument anyway.

Ron Niebrugge said...

Great post John, couldn't agree more!

lens_hood said...

Well said John. However the milk has already been spilt on this one. I’m not sure what if anything can be done on this race to the bottom.

As a good friend commented recently: “There will always be a need for good photography and good photographers, the question is whether or not they will be able to make a living”.

To that point I believe going forward we will see less and pro’s actually making shooting a full time vocation. It is certainly not a job I’d recommend to anyone at this time.

Fotografi said...

Micro stock is completely a new market, is a reality that every photographer and agency has to face.
Unfortunately a great part of my archive is completely out of business.

Travel suffered a lot, too many good amateur photographers that post on microstock site. You can only survive with stories. I opened an little photo agency on photoshelter and i will focus on stories. It's clear to me that I have to take the buyers to my photo agency and that I have to find stories with some value to try to pubblish. Exactly I'm not speaking of survive but to find a new ways to use my archive.

David Sanger said...

Competition has always been a central part of the American economic system. With a glut of images on the market it is not surprising that prices are dropping precipitously.

Much as we traditional photographers may rail against it as unfair, unjust and unwanted, microstock now comprises close to 70% of all commercial stock licenses (per Pickerell's estimate) with annual gross revenues nearing $400 million.

Whether we like it or not, this is the new environment and wishing micro would go away is not terribly productive.

Diversification, specialization in specific niche markets, and developing added value for photo buyers are the only ways to compete.

AdvRdr said...

Cable is killing off broadcast television.

MP3's have put the cd/tape/vinyl manufacturers in the hurt locker.

The milk man and block ice business is history because of the electric refrigerator.

Typewriter manufacturers, and repairmen, bemoan the personal computer.

Spark plug producers weren't real happy about new engines that go 100,000 between plug changes.

Change happens -- not always for the better -- deal with it!

photoshooter said...

Jim Pickerell said...

Microstock has created a new market for photography, but I also agree that it has devastated an existing one. The real question is how can traditional photographers co-exist with this new market?

Microstock is not going way. There are tons of people who will pay a little for a photo. Previously they either stole the photos or were unable to find anything they could afford. Based on Getty’s published figure of two years ago, and interpolation of market trends, I believe total sales in 2008 of what Getty calls “Creative” imagery (not counting editorial sales) was about 1.5 million images. iStock had about 25 million sales. Double both those number and you have roughly the world market for Creative imagery. (I really don’t like that word because editorial imagery is creative too, but there needs to be some way to separate imagery sold for more commercial purposes from the editorial market. This is what Getty has come up with.)

The problem with microstock is not that it makes images available for personal web sites, power point presentation, student reports and religious uses at prices the user can afford. The problem is that it makes those same images available to commercial users for the same low, low, low prices. The problem is licensing uses based on file size instead of use. None of us would really have a problem with microstock if it sold images for small, very narrowly defined personal uses to that 95% or more of microstock customers, so long as they charged traditional rates for commercial uses. We would all make more money and all the creators would be happier.

There is nothing in economic theory that says everything has to be priced the same no matter how it’s used. But that’s how royalty free started and that’s the pricing model microstock adopted. When you rent a car you don’t say, “I’ll pay for a day, but I’m going to use it for a month.” You pay based on the value you receive. When you travel by air you don’t buy the cheapest ticked and then say, “OK, not I can fly anywhere any time I want on this airline.” Most things are priced based on the value the customer receives, but not stock photography anymore.

However, changing microstock now is wishful thinking. We’ve traveled so far down this road that there is no turning back. Photographers either have to find a way to adapt to this new model, or find another way to make a living. Adapting may mean finding a way to make some imagery available to that mass of new customers at prices they can afford. It may also mean only working for those people who will pay a reasonable fee for the value they receive. That’s concentrating on assignments, not stock. But, it is my understanding that the assignment business isn’t in all that good of shape either.

Readers also need to recognize that there are a handful of people (http://www.jimpickerell.com/articles2/admin-article-view.asp?id=2129) making good money selling microstock. Certainly the vast majority of microstockers aren’t making much money at all, but then there are only a handful of traditional shooters today earning much using traditional RM and RF stock strategies.

I wish I had some better answers, but trying to hold onto the old strategies is not a solution. We’re almost through the first decade of the 21st century and what will work now is not what worked in the 20th century.

Sean Austin said...

It would only be fair to add that digital has been the keyholder that let microstock in the gate. The benefits that we're reaping from digital workflows are also the ones pushing microstock into the powerful position it now occupies.

John - could you have a contest on the blog (maybe with copies of the updated book as a prize) where we have to guess which blog entry of 2009 had you most infuriated while typing it? :)

Sean

Tim said...

Refering to AdvRdr's comment, this kind of view is often sited - that change happens and it puts people out of business.

I'm not saying the photographic industry is special, and that we should be protected like rare pandas, but it is different to most other industries in that photos (good ones) can't be mass produced. Those millions of images on the stock sites are taken by hundreds of thousands of (mainly) amateurs, at great expense and investment in time.

What microstock has done, is render a previously viable industry, inviable and for no good reason other than picture aggregators want to cash in on the gullibility and naivety of people who can't be expected to know any better.

On the other hand, while microstock won't go away, I'm pretty confident that the more professional designers out there (and the wiser clients) will, and indeed are, starting to eschew the cheap, generic eye-candy that tends to plague corporate sites and diminish uniqueness.

They are also starting to see that microstock might look cheap, but since the T&Cs of the likes of istockphoto stipulate one download, one use, it starts to get expensive once you need to use the same image across different platforms. This is where pro's can get a foot back in.

I know that if I spend a day shooting for an "average" client, I can give them images costing between £25 and £55 which are unique, specific and exclusive to them, and which they can use as they need without recourse to me. If they're not a high-volume buyer of istock credits, that makes me far cheaper. It's just that many designers and their clients haven't figured it out yet. But they will...

Anonymous said...

"What microstock has done, is render a previously viable industry, inviable"

Tell the people that were making zero before microstock but are now making thousands per month that the industry is no longer viable.

Thinking that all microstock shooters make just enough for a daily cup of coffee shows you don't know very much about the microstock industry.

Anonymous said...

Dear anonymous, do you know the legend (propaganda) of Alexey Stakhanov ?

http://en.wikipedia.org/wiki/Alexey_Stakhanov

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