This is a guest post by Luis Alvarez of Stock Performer.

The supply of stock photography knows no limits! Today’s stock agencies offer huge image libraries and grow ferociously each month. Is stock photography becoming a commoditized product? What can photographers learn from other commoditized industries and be more successful?

At Stock Performer, we talk about this regularly with our users and we wanted to contribute to the conversation. This article aims to explore the commoditization of stock photography and compare it with other commoditized industries. Such comparisons help photographers generate revenue in today’s highly competitive market.

What is commoditization?

Let’s start off by looking at The Business Dictionary’s definition of Commoditization

Almost total lack of meaningful differentiation in the manufactured goods.

Commoditized products have thin margins and are sold on the basis of price and not brand.

This situation is characterized by standardized, ever cheaper, and common technology that invites more suppliers who lower the prices even further.

 The Business Dictionary (link)

Basically, a commoditized product is an oversupplied product which is difficult to distinguish from another in its category, thus pushing prices down. Think of all the isolated portraits on white! Or business people group pictures! Handshakes anybody!?

Cereal is a great example of a commodity product. There is very little difference between producers. Copyright Alexey Ivanov

Is stock photography commoditized?

From the definition above, it seems so. But let us look what some business leaders in the industry have to say:

Content is increasingly ubiquitous. So power resides with the consumer, not the provider.

Jonathan Klein, CEO of Getty Images (2007) (link)

We’re seeing a commoditisation of the market

 Gary Shenk, CEO of Corbis, said in an interview with BJP (2009) (link)

Photographers need to understand that the stock photography market is flooded

Phyllis Giarnese, Stock Photography consultant and former creative director at Getty Images (2009) (link)

As of today, the main agencies have millions of files on offer. Supply is very high. Here is an overview:

Ask yourself: what differentiates images on sale at one agency compared to those on sale at others? Especially considering that many of those images are identical due to non-exclusivity?

Based on these quotes and information one can safely conclude that the Stock photography market is commoditized.

What other industries are commoditized?

For our article we explored the following three industries: Smartphone manufacturers, Airlines and Specialty Coffee retailers. Here is a very short summary why each of these markets are commoditized

• Smartphones (hardware not software): Many smartphone manufacturers are finding it increasingly difficult to create differentiating factors on their hardware. If you disregard the operating system, you will notice that there really isn’t much difference between a Nexus, HTC or a Motorola. They lure customers by giving them the most hardware features at the best price. Read more here and here.
• Airlines: Remember the times when flying was luxurious? Well that’s over. Passengers now want to fly from A to B at the best price and they have plenty of airlines to choose from. Airlines end up competing on price as they cut down all the frills. Budget conscious customers force airlines to live on low-margins. Read more here and here.
• Specialty Coffee: You can get a good coffee at Starbucks, McCafe, Dunkin Donuts and a number of other places. There were about 500 such outlets in the US in 1989. In 2006 there were 24,000! Customers have a large choice but suppliers cannot always differentiate themselves enough to impose a higher price for a cup of coffee. Read more here.

And despite the challenges and bankruptcies faced by the players in these industries, some are very successful. For example:

• Smartphones? Apple
• Airlines? Easyjet, Singapore Airlines
• Specialty Coffee? Starbucks

Despite the strong price competition and lack of differentiation amongst smartphone manufacturers, Apple successfuly charges a premium for its products. Copyright Norman Chan / istockphoto

How do they succeed? How can they compete in the tough conditions of commoditized markets? What can we learn from them?

How companies succeed in a commoditized market

When looking at the companies in our case study we realized that it is possible to succeed in a commoditized market. If they did it, photographers can do it too. What are the key elements of their success?

• They cut costs to live off low-margins
• They focus on a specific market segment and are the best at it
• They innovate constantly to either differentiate their products and charge higher prices or to cut their costs and offer lower prices
• If premium, they provide great full customer experience, from selecting and buying all the way to owning the product

Read more on strategies for commoditized markets here, here or here.

While airlines like Lufthansa undergo difficult cost cutting programs, EasyJet’s efficient operations make it successful. Copyright Sung Kuk Kim / istockphoto

How can you become a more successful stock photographer?

The strategies mentioned above are essential for success in today’s commoditized stock photography market. With some adaptation, you can follow them and increase your success and money.

Based on our research, a successful photographer strategy should follow these guidelines:

Cut costs and increase your margings

• Review your workflow and reduce all cost points.
• Pass the price pressure on to your suppliers, make up artists, models, etc… Find new ones to work with at a better price.
• Partner with other photographers to share ressources and equipment.

Focus your talent on a segment and be the best

• Invest your time and ressources into your specialty area. You can never be the best at all areas, so choose your strength and compete on it.
• Niche: produce content which is rare but with a healthy demand. Such content can be sold at agencies with higher prices.
• Premium: Invest in high value productions. Get experienced and qualified models, rent out excellent locations, ensure your pictures offer high value. Competition is lower in this segment. Sell them at agencies with higher prices and increase your margins.
• Basic: Produce basic images, isolated on white or similar, but in a cost-efficient way and in large quantities. Sell these on agencies with lower prices and generate revenue on quantity.

Scale production to better cope with low margins

• Outsource parts of your workflow to allow you to produce more than you would on your own.
• Get an assistant and produce more without compromising quality.
• Find new markets to sell your work and generate new income streams. Your images can also be sold outside the stock agencies, think about art sites, prints, mugs and more!

Innovate wherever you can

• Use any skills you have to innovate.
• You might have the skills to build hardware cheaply or to program software to automate parts of your workflow.
• Innovate to develop creative lighting or post processing techniques which set your images apart.

Choose a strong agency well suited to your style

• Your success depends on your agency’s success. Partner with an agency which provides good revenue, innovates and has a good customer experience.
• Choose an agency well adapted to your type of work. If you are a premium photographer, sell on higher priced agencies, because you will sell. If you shoot more basic items, then compete on price on lower priced agencies.

A cup of coffee is more or less the same everywhere, and yet coffee shops like Starbucks can justify their high prices. Do the same with your photography! Copyright Brian Jackson

Conclusions

Just like Starbucks, Apple and EasyJet have strong competitors, you too have to fight against tough competition.

You can choose to go the Apple way and produce innovative, high value imagery and sell it at higher prices, or go the EasyJet route and establish a very efficient production workflow creating simple but great images at a low price.

The stock photography industry has commoditized, pick your strategy, react and work hard!

We’d love to hear your opinions. Please join the conversation writing a comment here, on our Facebook or Twitter pages.

Microstock Expo is back, bigger and better than ever! And by “ever” I mean “last time”.

The big news is that Bruce Livingstone will keynote. We’re super chuffed to have the Godfather of microstock opening the conference!

The other big change is that, following popular demand, we’ve expanded the program to cover not just photography, but also vidoegraphy and illustration. There’s now three sessions which split up into the three different media types (and sometimes a fourth for agency topics).

Quick Facts

Dates: November 16-17, 2013, with a Photowalk and Opening Reception on Friday 15th.
Location: andel’s Hotel, Berlin, Germany (same great venue as last time)
Price: Tickets start at €249 +VAT for April – May, then rise. Use coupon code MD2013 for 20% off.
What: Two+ days of business, technical and inspirational knowledge from the experts of our industry.

What’s New

Masterclassses! We’ve re-jigged the workshop to make it more interactive and instructor-led. To mark the difference we’ve renamed it ‘masterclasss’, and replicated it to video and illustration too.

More Portfolio Reviews! We’ve done the same with the portfolio reviews. There’s now one for photos, one for video and one for illustration. The portfolio review was the most popular session last time.

Product demos! This time we’ll also have hardware manufacturers exhibiting their products in the enlarged and enhanced exhibition. So far RED Digital Cinema and Wacom have already confirmed, and others are still in negotiation. Come and demo a RED camera for yourself!

More for agencies and service providers too! The exhibition now features real booths for better communication with attendees. The awesome PitchFest is returning with higher expectations for entertainment value in the pitches! And the Agency Workshop returns, rebranded to the Agency Masterclass, featuring educational sessions from the industry’s leading experts in today’s key industry topics.

More great sponsors! Shutterstock has given us amazing support with this event taking the Platinum sponsorship spot. It’s been great working with them again.  Depositphotos and ProImageExperts lead a who’s who in microstock list of other generous supporters helping make this conference bigger and better for us microstockers.

Register Soon!

Tickets are at the cheapest price for April and May, after which they start rising. If you use the coupon code MD2013 you’ll get an extra 20% off.

Get your tickets now and don’t miss this amazing event!

Register Now!

And don’t forget to Like us on Facebook to keep updated with speaker announcements, program updates and all conference news.  See you in Berlin!

Meet Elnur Amikishiyev, one of the world’s most productive microstockers.

Elnur currently has over 64,000 photos in his Shutterstock portfolio placing him in the top 10 Shutterstock portfolios by size.  At Depositphotos he has over 76,000.  He added over 25,000 photos to his Shutterstock portfolio in the last 12 months alone.

What makes Elnur’s amazing productivity even more impressive is that he does it while maintaining a demanding full-time job as a finance manager for BP.  Not only that, he’s extremely active in three Russian-language microstock forums, regularly speaks at industry conferences and runs a Russian-language Facebook group about microstock.

Microstock Portfolios

Elnur shoots primarily still life, but also has a healthy dose of travel and model shots in his portfolio.  Much of his portfolio is the low-hanging-fruit of stock photography – basic items isolated on white and simple travel landscapes – but Enlur more than makes up for it by doing it well and in very high volume.  He acknowledges that his RPI isn’t as high as most contributors shooting business lifestyle, but argues RPI is almost irrelevant and it’s overall income that matters.

He distributes widely, supporting new and small microstock agencies, and contributing to some non-microstock agencies too.

Top microstock portfolios: Shutterstock, Fotolia, Dreamstime, iStockphoto, Depositphotos, 123RF, BigStock

How Does He Do It??

Elnur works with a small team of people he contracts directly to help with processing, keywording and distribution. The shooting is done by himself and an assistant photographer.  He’s fast, very systematic, and puts a lot of effort into ensuring his processes are efficient.

His travel takes him away from home a lot so he has set up remote access to his computers so he can keep his microstock business running while away. He makes good use of software utilities to automate much of his workflow, and delegates much of the repetitive work to his employees.

Most of all, he consistently works hard.

Personal Information

Microstock Expo 2011, Berlin. (left to right) Giorgio Fochesato, Josh Hodge, Pavel Orekhov, Elnur Amikishiyev, and Tyler Olson

Elnur is based in his native Azerbaijan, specifically in the city of Baku, though his travel for BP takes him to many different places for long periods of time. He speaks Russian in addition to his native Azeri, and thanks to extended periods in the UK also speaks English perfectly.

At Microstock Expo in 2011 Elnur was asked why he continues with his day job when he has a great career as a full-time microstock photographer.  His answer, in typically detailed form, was that what he learns from his job at BP helps his microstock business, and that the pressure of running two careers simultaneously keeps him sharp and focused.

Elnur Online

Elnur previously maintained an English-language microstock blog, About Microstock, but it hasn’t been a priority and so hasn’t been updated for a long time.

He also sells photos directly via his Baku Photos website, which he admits fell victim to his microstock success, though he’s committed to reviving it.

He’s active on Facebook with a personal account (allows subscriptions) and business page, on LinkedIn (only for his BP job), and a little on Twitter (mostly in Russian).

Speaking

Elnur speaking at the 2009 STOCKinRUSSIA conference. Copyright Pressfoto.ru

Elnur spoke twice at the STOCKinRUSSIA conference, the second of which was where I first met him.  I was already familiar with his blog and his microstock success, but his presentation was very clear and entertaining.  I later invited him to speak at Microstock Expo where he outlined how his microstock business fits in with everything else in his life in the Lifestyle Design session.

Elnur’s presentations are humorous for both his jokes and the sheer scale of his numbers.  And there’s always a lot to learn from his processes and strategies – the business that has him generating many thousands of commercial images each month while maintaining a demanding day job.

Arguably the dominant agency in microstock video, Pond5 started accepting direct submissions of photos last year.  Most microstock agencies launch with photos and illustrations and eventually add video once they’re well established, but Pond5 proves possible – perhaps even smarter – to go the other way.

Their established base of video-buying customers also buy photos, so unlike most new opportunities for microstock photographers, Pond5 can deliver instant results.

And who can go past 50% royalty rates?!?!

Pond5 Background

Pond5 is based in NYC, launched in 2006, and is headed up by CEO Tom Bennett (LinkedIn), and Dana Tower (LinkedIn) who is ex-VP of Marketing at Getty Motion and ex-Director of Market Development at Corbis Motion. (“Motion” is a broader, more accurate term used at traditional agencies for what we in microstock call video or footage)

Pond5 didn’t add photos until 2011.  At that time they established a partnership with 123RF to instantly get their collection to a respectable size – around 7 million photos at the time. They’ve since opened for direct submissions of photos, and switched partners from 123RF to YAYmicro, Pixmac and FeaturePics. The Pond5 FAQs tell you how to have Pond5 remove duplicates if you already have content with those agencies when you upload directly to Pond5.

While it’s often disputed by competitor agencies, Pond5 is the leader in microstock video licensing in the eyes of most non-exclusive video microstockers.  As a result of both their selling power and their set-your-own-price policy, they have attracted the largest collection of stock video footage, or “motion”, of any microstock agency.

Pond5 Details

What’s Different about Pond5?

In addition to being video specialists, Pond5 also has audio (which, of the top microstock agencies, is only available at iStock), After Effects templates, and 3D projects. This makes it the most complete single-site microstock agency in terms of file formats (Envato being the non-single-site exception).

The set-your-own-price policy has worked well to attract videographers who want the convenience of microstock distribution without the low prices.  They’ve retained that policy with photos, including the option to have the reviewer suggest a price for you.

Extended Licenses are absent at Pond5, which is perhaps the only negative aspect from the contributor perspective. There’s no specified reproduction limit, product resale rights are not formally available, and the standard license includes 10 seats. These do not compare well.

Verdict

License issues aside – and let’s face it, for most of us, they are – Pond5 looks very attractive for microstock photographers.

If you haven’t uploaded to Pond5 because you don’t shoot video and only have stills, now is the time to submit!

Pond5 know what they’re doing in microstock and have an established buyer base.

By setting your own prices and earning the super-high 50% royalty rate, you’ll earn much more from a direct sale than through any of their partner programs.

They’ve also made it easy to submit.  Simply post a hard drive with a release spreadsheet, or FTP your files in the usual manner.  And importantly, submission is straight forward at Pond5 with release management and bulk matching tools.

The only thing standing between you and regular royalty payouts from Pond5 is the simple step of sending your files.

You can register with Pond5 here.

With so many new microstock agencies launching each year, surviving more than 12 months is starting to become what sets the good apart from the not so good.

Having been in business since 2009, the Spanish-born microstock agency Photaki is approaching veteran status.

But having enough profits for the agency itself to survive doesn’t mean it will be profitable for contributors to submit.  Hopefully this review will give you the information you need to make a well-informed decision for yourself.

Photaki Background

Like the majority of microstock agencies, Photaki started out as a collection of online images before switching to the microstock business model.

The original collection consisted of photos of the local area pooled by a group of photographers in Malaga, Spain, way back in 2001.

In 2009 it switched from Rights Managed licenses to a fully fledged microstock agency and changed the name from AndaluciaImages to Photaki.

The team is small and multi-skilled, allowing them to achieve a lot without spending too much money.  And that’s important when your strategy involves undercutting the market on prices and paying super-high royalties.

Traction has been slow since Photaki launched as a microstock agency, and that’s how the team likes it.  Steady and sustainable growth is their objective.

Photaki Details

Cool Features

If you have 150 approved files and 70% or higher approval rate, you can set your own prices.

Photaki allows buyers to browse photos on a map, which is not something we haven’t seen before in microstock, but it’s not common and very useful for photo buyers in the travel industry.

Most microstock agencies will allow new contributors with very large portfolios to submit all their files at once by posting in a hard drive or DVDs with a release spreadsheet. Photaki have formalized this program to encourage more microstockers to contribute.

Contributors get a sub-domain portfolio which can be customized (change colors). While not so useful for those committed to stock, it’s popular with the ‘less stocky’ contributors that seem to like and do well at Photaki.  Photos from Flickr can also be imported for display (not for sale) in the portfolio.

Issues to Consider

Photaki have worked hard to clear up the issues that arose from switching to the microstock business model and changing the primary language of the site to English.

Most of these issues have now been resolved, so while the site isn’t as slick as some of the big-team microstock agencies, it’s functional and ready to get on with the business of selling photos.

The biggest issue for me is the inclusion of unlimited print runs and multiple seats in the standard license.  The cheap licensing of the microstock business model works because buyers get only very limited rights.  Including Extended License rights in the standard license makes it easier for agencies to sell while eliminating the lucrative Extended License opportunity for contributors.

The translations of the license agreements into English – which came way too long after the English-language website was launched – are full of grammar errors and confusing language. As a buyer this would concern me. As a contributor I wonder why they haven’t had a native English speaking lawyer properly draft these most critical legal agreements.

Low prices are great for customers and high royalties are great for contributors. But neither is helpful for an agency, especially when combined. Competition among microstock agencies is fierce, so having healthy margins – not to mention the motivation of healthy profits – makes the difference between languishing and sustaining meaningful growth.

One of the key ideals of Photaki is that small microstock agencies prevent the dire consequences of oligopoly, hence it’s in the interests of contributors to support them. It’s the classic “help us to help you”.  That makes sense, but clashes with the strategy of under-cutting the top agencies on price.

Verdict

Photaki is clearly a serious microstock agency worthy of consideration for adding to your microstock distribution.  The business has demonstrated longevity and the ability to resolve problems with the business.

The need to support small microstock agencies for the health of the market is a fair argument, but I recommend we request two critical issues be addressed before we support Photaki as our agent for market balance.  These are the inclusion of Extended License level rights in the standard license and the poor translation of the license agreement.

If you’d like to join me, leave a comment below with a link to one of your microstock portfolios (so Photaki can see what’s at stake). State that you’d like to see the rights and license issues addressed (and/or any others) before you submit your portfolio.