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."

1. having no equal; matchless; unrivaled.

unmatched, unequaled; unique, unsurpassed.

* source: Peerless, at

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.

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

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