The microstock market seemed to produce mixed results in June. Some photographers are reporting rises and others are reporting drops. A lot of microstockers send me their earnings in private and it really helps to get a feel for what’s going on. There’s also always an informative earnings thread each month over at Microstock Group.

Jack’s Results

Jack’s supply of images ran dry after the first week of June as he overloaded his retoucher with other projects. Subsequently he didn’t add much to his portfolios and his earnings growth slowed as a result.

Observations

• Daily earnings show a mildly sudden drop in sales a week after submissions stopped
• RPI and STR at the top few agencies are rising rapidly during the first few months

My Results

My earnings were down at all agencies this month, though the total earnings charts below shows the trend is consistent to this time of year.

Observations

• The axe still hasn’t dropped – each agency still produced historically reasonable results
• Cutcaster earned $8.48, more than two other agencies
• I had one Extended License sale at each of Shutterstock and Fotolia
• Still no sign of stock shoots for me, not that I’m happy about it

iStockphoto saved June from being a slow microstock news month.

Microstock News

iStockphoto changed how the quantity of downloads for both individual images and contributors are displayed on the website. Rather than displaying the exact figure, it now shows an approximated number. While they weren’t specific about the purpose of this move, they indicated it was intended to limit the ability of people and computers to extract and use the information.

The Photos.com and Jupiterimages Unlimited pipe was removed from StockXpert and connected to iStockphoto as announced last month.  The partner program was turned on and iStockphoto contributors were given the opportunity to opt in or out.

Towards the end of the month iStockphoto announced the Premium Collection was launching and with the new name: The Vetta Collection. They simultaneously announced the introduction of localized search results and their expectation to hit $200 million in revenue for 2009.

Veer Marketplace opened to contributors with lots of positive feedback about the interface. The new Corbis microstock venture is already open to buyers with content ported over from SnapVillage.

Ex-iStockphoto executive, Garth Johnson, was recruited by Fotolia to head up contributor relations as Senior Vice President of North America.

German Telecom entered the microstock market with Polylooks, providing an interesting case study. Deutsche Telekom already have a buyer base and technology resources. If they can make a successful microstock agency out of Polylooks we may see other companies with the same assets enter the business.

David Mail, the programmer behind ProStockMaster, released his microstock agency Pixamba.

More portfolio milestones fell with iStockphoto passing 5 million and both Dreamstime and Fotolia passing 6 million.

We often hear photographers complain that the only people making any money in the stock photography business are the agencies.  Or variations of the theme. Personally, I don’t understand the complaint. To me it makes total sense that agencies are more profitable than photographers.

Look at the three parts of the stock photography business.

1. Creating Stock Photos

Digital photography and Internet distribution have made creating stock photos easier and cheaper than ever.  These technologies have broken down the barriers, opening the market to photographers of all levels from all around the world.  iStockphoto reports over 60,000 contributing photographers and Shutterstock’s website currently reports over 170,000 photographers.

This army of photographers creates a lot of photos.  The bigger microstock agencies take submission of around 400,000 each month, approving 200,000 – 300,000 for addition to the portfolio.

Lots of photographers are creating lots of stock photos. The quantity of supply is a reflection of the difficulty level relative to the other parts of the business.

2. The Technology to Sell Photos Online

This part is getting easier and cheaper thanks to software advances and new cloud technology. Various providers now enable photographers to quickly and easily start selling photos online via their own website for less than $100 per month. Agencies need to build a system themselves, which is also getting easier, but still a significant investment.

The technology aspect of the stock photography business is not a significant barrier for individual photographers, but very much so for stock photo agencies.

3. Attracting and Retaining Photo Buyers

This is the most difficult part.  For both individual photographers selling photos directly and a new agency building a buyer base, it’s difficult to attract and retain buyers.  They must make buyers aware of the service, develop enough trust for them to transact, and leave them pleased with the value and service.  Most stock photo buyers know that they have lots of options for fulfilling their photo needs in today’s market, so they have high and rising expectations.

For a photographer to sell photos at a high volume and/or price via their own website is not easy.  There are many great services which help, but it’s difficult for a photographer to compete with agencies unless they specialize in an uncommon subject or are an in-demand brand.  That’s not to say that it’s impossible.  Some photographers do it very successfully.  However, it takes a lot of time or a lot of business skills, both of which mean time away from the camera.

It’s not easy for agencies to achieve a high sales volume either. The evidence is the high failure rate of agencies at all levels of the market. The few that succeed do so by fulfilling the two most difficult of the three parts. They build the technology and deliver photo buyers. We photographers do the relatively easy part – supplying the stock photos – and so we take the smallest portion of the reward.

We All Choose

As stock photographers, we all choose whether to have agencies represent our photos or not.  With so many options for selling photos, nobody is forced to use an agency.

Successful agencies have, by the definition of ’success’, built up a large buyer base.  If it were easy to do, then there would be more agencies and more photographers would sell photos directly via their own websites.  As it is, it’s very difficult to do, requires a lot of investment, and carries a large element of risk.

When we choose to send our images to an agency, we’re effectively renting access to the buyer base that they’ve built.  We enjoy the luxury of not having done the hard work to build the buyer base, not having invested our own time and money, and not having undertaken the risk to build it.

Reward follows value. There are 60,000 or 170,000 photographers creating stock photos, but only a handful of successful agencies. Creating a successful agency requires many times more energy than creating successful stock photos, so agencies get more reward.

An Alternate Perspective

If you’re frustrated with your agency and think they’re not delivering value, try an alternate perspective:  You’re a photographer and the part you do well is creating stock photos.  But that isn’t enough.  You need the technology part and the access to buyers part in order to get money into your pocket.  You have choices about who you hire to do this.  There are services which only help you with the technology for $100 a month.  Some of them will help you attract buyers too, maybe for a little extra.  Or, you can send your photos to an agency who manage all the technology for you and give you access to their massive buyer base.  They won’t even charge you an upfront fee.  You just have to pay them 30 – 80% of your sales.  It’s your choice.

From this perspective you can see why a successful agency charges you 80% for access to their buyer base and an unproven agency only charges 30%.

What do You Think?

Do you think photographers have valid complaints about agencies?  Does this perspective clarify why successful agencies have so much market power?

iStockphoto have announced the Premiere Collection they started building in December will be launched today branded as the Vetta Collection. They also announced intentions to start serving localized search results based on geographically aware user behavior data that they’re already collecting. And what’s not on the press release is that they expect 2009 revenues to reach $200 million.

The Vetta Collection

The Premiere Collection, now known as the Vetta Collection, launches with 35,000 photos, and will continue to grow. Contributors and inspectors can nominate files for the collection, though standards are obviously very high.  The photos in this article are four of the 35,000 that made the cut.

Vetta Collection files will appear in regular search results but identified with a gold camera icon. They’ll sell for $20 for the small size up to $70 for XXXL which is a substantial premium to the $1 – $20 standard prices.

Localized Search Results

Continuing to innovate, iStockphoto’s search results will soon start showing the results which work best in each region of the world. There are theoretically different styles and subjects which work better in some countries than others. iStockphoto have been mining this data from the search and buying activities of their customers so the next version of Best Match will include country and language factors in the search result order.

Anything that gives buyers improved search results is great for contributors, though assessing the performance of our keywords is about to get a little more complicated.

$200 million in Revenue for 2009

While not included in the announcement, iStockphoto have publicized their expectation to reach $200 million in 2009 Revenues. They’re also paying $1.2million to contributors each ‘week’ and selling a file every second.

By comparison, the official figures for 2007 were revenue of $71.9 million, $20.4 million to contributors for the ‘year’ (equal to $392,000 per week), and a file sold every 1.4 seconds. Owner Getty Images predicted iStockphoto revenue to reach $262 million by 2012 back in November, 2007 which was considered impressive at the time. At this rate of growth they’ll reach that figure at least a year ahead of schedule.

Prominent German photographer Robert Kneschke wrote a comprehensive news update on Polylooks on his blog. He generously agreed to translate it into English for me to publish here.

The dice are rolling. There’s a new player in the microstock game. Polylooks is the name of the first German microstock agency powered by Deutsche Telekom AG (German Telecom) launched on June 3rd 2009. The agency is working with another German picture agency, Zoonar who have provided over 125.000 images to launch Polylooks.

Polylooks combines three areas:

1. Mediastore – this is the main area where images can be sold and bought
2. Community – photographers can present and rate images, there will be photo contests and a forum is in the making. This area is still in the beta-phase.
3. Magazine – this is basically the already existing “Augenblicke” magazine from T-Online, the online section of Deutsche Telekom. It’s an editorial area where photos and related stories will be presented.

The most important facts for image buyers:

• Prices range from 1 credit for the smallest (about 226 x 340 pixels) to 15 credits for the biggest resolution (about 3300 x 4961 pixels). A credit costs 1 Euro at this time. The standard licence is Royalty Free. There is a merchandising licence available for 50 credits. When buying more than 25 credits at a time you will get a discount.
• There are different subscription choices available from one to 12 months and 10 to 120 credits per month.
• Payment is done by credit card, large-volume-buyers can pay by invoice too. Payment via PayPal will be implemented soon.
• The search function offers to search by keywords, categories, emotions, alignment, size and date.
• The image collection focuses on nature, travel, wellness and business, but there will be concentrated efforts to add German and European motives.

The most important facts for suppliers:

• Images need to have at least 6 MP (about 2000 x 3000 Pixel) to get accepted.
• Other technical upload requirements: only JPG, RGB-colorspace (preferably AdobeRGB), 8 Bit color depth, no or only little compression (10-12 in Photoshop), max. file size 50 MB.
• 20 images per day can be uploaded.
• An image must contain at least 10 keywords.
• Keywords can be entered in German or English.
• Polylooks advises not to just keyword the basic word forms but the conjugations as well (for example: “play”: plays, played, playing).
• Illustrations should be compatible with EPS and Adobe Illustrator, an additional JPG (6 MP, max. file size 50 MB) should be supplied.
• The royalty share for the suppliers is 35%, or 50% for exclusive content. Subscription downloads will be credited accordingly.
• The payout limit is 25 Euros.

It is a rough time for new microstock agencies, but German Telecom has a solid financial basis and a ready-to-operate marketing department. It also has a strong hold in the mobile communication sector (T-Mobile) and is one of the biggest suppliers of broadband internet (T-Online). This provides easy connection to potential image buyers, e.g. wallpapers on cell phones or pictures for blogs and websites of T-Online customers.

German Telecom has no history in the stock photography market, but the deal with Zoonar makes up for it. Zoonar has been around since 2006 and the owner is a long-time stock photographer.

We will see how Polylooks develops in this tough microstock times and how the big players will react.

Check out Robert’s blog in original German or the Google translated version.