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THE ANNUAL PACA MEETING: April 6-8, 2006

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Session Reviews: By Gina Bringman/Alaska Stock Images

Summary Of A General Session Presentation: By Chris Ferrone, PR Chair


CLIENT SESSION: WHERE IS THE STOCK INDUSTRY HEADED?

This year's PACA Annual Meeting opening day started off with the theme of where the stock photo industry is headed. After a robust speech from Jeff Burke with Jupiter Images, it was time to hear from the clients. What were their thoughts on the state of the industry and its future? The panel consisted of Kathy Nakamura (Encylopedia Britannica), Cheryl Bersano (Bagby & Co.), and Ray LaVoie (AOL).

Kathy Nakamura began the session by summarizing her experience with using stock photography and acknowledging that her use of royalty-free (RF) images has certainly gone up. One of her current challenges centers on the amount of rights-managed image licenses that are now beginning to expire, so she is forced to find a budget to re-license old photos as well as find new ones. Therefore RF and even the possibility of microsites certainly hold their appeal. However, even though subscription models have potential, she stressed that she did not see the viability of "community" sites due to the unreliable nature of amateur photography and licensing photos from individuals un-familiar with image licensing.

Cheryl Bersano also commented on the cost being important in image licensing. However, she also stressed that continued personal service and research were also key factors to the industry. She expressed concern over the consolidation of all the stock agencies into large conglomerates. If a company "tries to be everything to everyone, it can lead to lack of service." Cheryl also had advice in regards to stock photo websites. She suggested creating sites that were intuitive so that a user could "jump in and drive." If a user had to spend too much time learning the mechanics, there are several sites "just a click away" that are easier to navigate.

Finally, Ray LaVoie chimed in by giving some insight into his position with AOL. His division alone procures approximately 56,000 images a year. AOL technology is able to constantly watch statistics to determine how well a photo is performing and attracting users throughout any given day. If an image performs badly, it is changed out, so, therefore, image acquisition is all about speed. Typically AOL purchases RF images, but as the importance of imagery to attract users (and therefore advertisers) grows, the AOL budget for RM images has also seen an increase. Furthermore, as RF image pricing increases, oftentimes the difference between purchasing a RF or RM photo becomes negligible. Ray also saw areas of growth continue to be, at least for AOL, the age demographic of 18-24 year olds and photos representing different ethnicities. They have an absolute minimum requirement to have multicultural related photos be at least 10% of all photos used.

The session was then opened up to questions by the audience for the panel members. A summary of some of the questions and answers:

  1. What type of content buying do you do besides photos?
    1. Kathy responded with illustration, animation, video, audio… and noted that these are often used less due to their added expense.
    2. Ray also noted that video purchasing is on the rise but still prohibitively expensive. Also, he explained that AOL prefers not to use too much motion in photos because it would conflict with much of the motion that advertisers include in their advertising.
    3. Cheryl indicated that still were often pulled from video for comping/presentations also.
  2. Pricing… where is it going?
    1. Cheryl emphatically indicated that budgets are being "slashed" and having a one-on-one relationship with an agency is key. She explained that if they have the budget, they have no problem spending it, but if they simply don't have the money, they rely upon agencies that they have a relationship with to work with them. Cheryl also felt that RM pricing is "topped out" and has run into many instances where purchasing an RM image was as expensive if not more than doing an assignment and time constraints are often the only impetus for using RM.
    2. Kathy with Encylopedia Britannica stated that she is mostly price driven and rarely has to worry about deadline issues.
    3. Both Ray and Kathy expressed concern over the usefulness of CD's. Generally there are not enough usable photos on a CD to be a value to the company.
  3. How do you decide between RF and RM?
    1. Ray with AOL decides almost purely upon what works for the content and then second the price may play a part if too far out of the normal range.
    2. Cheryl also suggests that the "integrity" of the image is key followed second by budget.
    3. Kathy is more constrained by budget and aims for images that have longevity (RF photos of monuments, for example). Images of people and technology tend to be replaced more often and be more from the RM collections
  4. What is the potential for subscription services and microsites?
    1. Ray makes use of subscription sites frequently due to his need for celebrity photos.
    2. Kathy finds them difficult to use due to the lack of quality and information about the photos.
    3. Cheryl also finds that her uses are too diverse for subscription and need photos of higher quality
  5. What types of search improvements could be made on websites?
    1. Ray loves to see the "search with results" types of features and not have to rely upon what type of searching method any given site uses. Drilling down seems to work better. He would also like to see more consistent metadata imbedded in photos.
    2. Cheryl emphasized that she would love to see more sites with the ability to search "similars." Also, having model releases available for downloading would be a great enhancement.


RIGHTS & CLEARANCES: A REVIEW OF LANGUAGE FOUND IN CURRENT LICENSING AGREEMENTS

Editorial rights seem to be in a state of constant flux in today's stock image realm. It seems that textbook publishers' main concern is to incorporate more rights into a license for the same cost or less as previous years. Therefore it was extremely helpful and interesting to hear about the state of the publishing industry from Jacqueline Lee with Pearson/Scott Foresman.

As an introduction to the topic of rights & clearances, Jacqueline outlined the textbook publishing process. A textbook project generally takes approximately two years from start to finish. Actual production is 3-9 months and during all of that time, image use is one of the very last things to be settled. In addition, one of the biggest challenges that publishers face is the constant fluctuation of requirements from the individual states. At the beginning of the project, a particular state may require only printed material, but one year into the project, electronic rights and the requirement for a Braille edition may be added. Therefore, publishers have found it necessary to make their image contracts somewhat vague and inclusive. One such example is instead of specifying CD/DVD rights only, the language may read something like "electronic rights including CD, website, and any electronic form not yet specified…."

The constantly fluctuating state requirements are what have given rise to the "preferred vendor agreements" which, according to Jacqueline, provides the ability to predict a budget, language that is easier to understand and consistent, and versatility for future unknown changes to state requirements.

Jacqueline further explained that ancillaries, including CD versions, have become less of a product and more of a marketing tool. Some time ago, one publisher started giving away ancillaries as a way to have the edge in the market and eventually everyone followed with more and more "freebie" ancillaries. However, on the bright side, Jacqueline also sees the possibility that this might change back as publishers become more creative with digital media. It is foreseeable that an electronic version would be more than just an exact copy of the textbook. E-books would become more of an interactive lesson for students. Also, the idea of a Podcast lesson isn't beyond the realm of reality. Theoretically, there will be a day when the actual printed book may become the ancillary.

UK textbook publishers are already incorporating e-learning into the curriculum and it is quickly becoming a prevalent method of educating. It is also possible that in the not too distant future, the idea of selling the text and photos as separate products to the schools may be the choice method. The photos would not only be a visual tool for learning but also students would be able to use them in reports and presentations.

Nancy Wolff, attorney for PACA, also sat in on this session and provided some key advice for reviewing contracts. One trend that she has been seeing is a conflict with client/agent contracts after an e-commerce sale has been made. Once a client makes an e-commerce sale, they will then send in to the stock agent their "standard" contract to be signed. Nancy warns to carefully read and watch for any language that states, "This agreement supercedes all others."

Another element of concern in contracts seemed to center around the language of "warranties" within delivery memos or conversely textbook contracts. The controversy from both sides seemed to be who takes responsibility if some item in the photo turns out to be trademarked or copyrighted. Jacqueline explained that the publisher is willing to negotiate this language, but their main concern is that the photographer does not knowingly misrepresent that they truly do own the photo and have the rights to license it.

Other language phrases that Nancy suggests are carefully examined include: "in perpetuity," "un-conditional sale," "assignment of license," and "work for hire." These phrases are either intentionally vague and leave holes where clients can claim permission granted for additional rights.


GETTING SEEN WITH KEYWORDING: FROM A USER'S PERSPECTIVE

The keywording panel consisted of representatives from the advertising, corporate, and editorial realms who offered their insight into the state of the stock photo industries use of keywords and search methods online. Sari Row with Foot Cone & Belding represented the advertising arena, Judy Feldman with Feldman & associates for editorial, and Rosie Henderson with Best Buy for corporate.

Judy Feldman began the session by stressing that she "feels passionately" about keywords and their importance in the industry. Judy outlined what she felt were the 12 most critical areas of information and keywords that should be added to an image:

    1. Nouns (probably at least two) and include correct and alternate spellings for words that are commonly misspelled. Also include scientific names
    2. Verbs including various forms (example: milk and milking)
    3. Adjectives
    4. Location (at least city, state, and country)
    5. Date photo was taken
    6. Ethnicity
    7. Gender
    8. Handicap/medical
    9. Seniors (age)
    10. Image info such as restrictions, MR/PR, image manipulations
    11. Delimiters- orientation, with/without people, silhouette (if these are not available as part of an advanced search menu, she suggest making them keyword options
    12. Stock agent becomes "reference librarian" and offers service to continue search. She loves receiving emails that offer "we saw you searching XXX, try this keyword…"

Rosie Henderson also provided valuable information that she had collected from her informal survey of co-workers. Some of the key frustrations from users are that there are too many irrelevant images that appear for any given search. It also seems that each agency has their own "special" keyword that makes a search work. This inconsistency makes it difficult for her staff to be motivated to use the smaller agencies even though she recognizes the value in small agencies and encourages her staff to use them. Rosie also likes the "more like this image" option to finding similar photos and likes the idea of a Thesaurus or any tool that provides more options to understanding how to best search on a site.

Lastly, Sari Rowe chimed in on her experience and "wish list" for keyword searching. Sari suggested that a site should be able to use natural language. You should be able to search by how you speak: "12 year old boy without shoes." Sari also likes the idea of a thesaurus and the "search log" responses from customer service staff. However, she encourages email communication rather than phone calls. Sari also suggests that agencies clean up their database and remove old photos. If she is on a site where she sees too many photos with outdated computers and technology, she assumes the database is old and/or not extensive and not worth searching. Sari emphasized that modern brand names should also be included as keywords like iPod, Trio, and Blackberry.

Finally, some key elements that all three seemed in agreement about and would love to see on sites include a homonym feature where the site asks the user to clarify a search: "do you mean Turkey the country or Turkey the bird?" Or, if a user made a search for "orange car," the site would ask, "do you mean an ‘orange car' or ‘an orange and a car?'" Another prized feature is a spell check so that if no images are found under a search, alternate spellings or similar words are offered. And as Judy mentioned, all seem to be in agreement that some sort of "see similars" feature is a huge help.


A REVIEW OF THREE RECENT CUSTOMER SURVEYS
Summary of a general session presentation at PACA’s 2006 Annual Meeting by Joe LaCugna, PhD
At the recent PACA meeting in Chicago, industry veteran Joe LaCugna, PhD, was invited to summarize findings from three surveys of image buyers. Joe summarized, synthesized and sliced-and-diced these surveys into some useful insights, summarized below; the presentation is available here. It may be helpful to download or print his presentation to view the tables and graphs that summarize these findings. Joe can be contacted at jlacugna@expedia.com.

Joe reviewed responses to three surveys: a PACA survey from the Picture House-NY show in November, 2005 (154 responses); Graphic Design USA’s 19th Annual survey (1,200 responses); and Communication Arts’ 2005 subscriber survey (407 responses). For those who were unable to attend the meeting, PACA’s PR Committee worked with Joe on the following recap of the surveys.

Joe began by noting these groups are quite distinct, representing a broad cross-section of image-buying customers: Picture House tends to attract editorial picture buyers; Graphic Design USA is popular among a more diverse group of commercial image professionals; and Communication Arts is read mostly by creative professionals for print media. He noted that traditional print formats are well represented but that customers who use images primarily for online publishing are not. He also cautioned that surveys are imprecise ways of measuring customers’ needs and priorities, and acknowledged that these surveys were not directly comparable. Nonetheless, nearly 1,800 customers participated in these surveys and their views are worth sharing with the PACA membership.

  • About half of Picture House-NY respondents use both RM and RF images; 32% use mostly RM and 15% use mostly RF. It’s important to note this reflects their editorial workload, which frequently requires RM licenses. Among Graphic Design USA respondents, 9 out of 10 uses RF and 6 out of 10 use RM. Up to 3 in 10 use other means to license imagery, such as subscriptions or assignment work. Among these respondents, just over half said they spent more on RF than RM images; 40% spent the reverse; and 8% said their spend was split 50/50.
  • Communication Arts’ respondents indicated that 71% of the stock photography they use is RF; 20% is RM; and 9% is from subscription services. Perhaps more interestingly, 38% said they do not use RM images vs. 6% who do not use RF. Another interesting result: about 20% use RM "more than half the time" while nearly 80% use RF "more than half the time". This is indirect evidence of the recent and large-scale shift in customers' buying preferences toward RF.  
  • When asked about what matters most when licensing an image for a client’s project, Picture House-NY respondents indicated a tie between "price" and "the quality of the image itself". Tied for second place: "licensing model (RM or RF)" and "relationship with agency".  Joe concludes that the search and selection process is fundamentally context-dependent and that successful agencies will strive to offer the right content at the right price, admittedly a difficult balance, particularly for smaller agencies. Notably, "convenience" and "customer service" were distant also-rans, perhaps because customers now take for granted that all agencies offer these. These may be a cost of doing business but 'convenience' and 'customer service' may not be competitively valuable differentiators since all agencies are expected to provide them.
  • Two surveys asked roughly similar questions about "intentions to license", with broadly similar results. The central take-away: a slight majority of respondents (51%-60%) expect the number of images they license will "stay the same". About one-third (31%) expect to license more RM images and 42% expect to license more RF images. A note of caution: 12% of Graphic Design USA respondents expect to license fewer images; among Picture House respondents, 9% expect their demand for RM imagery to "decline slightly". These findings are useful in the context of the industry debate about whether demand for imagery is growing, slowing or falling: a large majority of respondents anticipate their demand will stay the same or grow slightly. The question is whether this increase in demand will translate into more licenses for stock agencies, or whether this demand is satisfied by re-using already licensed images or by substituting self-produced images.
  • About 1/3 of Picture House-NY respondents say they re-use previously licensed images "almost always" or "most of the time", and another 20% said they source images "less than half the time" or "not often".  More encouragingly: 80% source new images "almost always" or "most of the time", and two-thirds re-use images "less than half the time" or "not often". Joe offered a nuanced interpretation of this good news/bad news finding: While it’s a good sign that the majority of respondents usually license new images for new projects, such extensive image re-use translates into missed revenue opportunities. Encouraging the 20% who re-use images frequently to think of new projects as occasions to license new imagery might be an effective growth strategy for some agencies, particularly those with strong RM offerings.
  • About 40% of Communication Arts respondents report using stock illustrations and 12% use stock footage or audio. Joe posed the question whether these other forms of digital content are substitutes for image purchases (that is, a film clip used on a website is a functional equivalent or replacement for a pre-shot photo), or whether it’s evidence that those who buy images are also looking to buy stock illustrations and, increasingly, stock footage and audio files. In this case, agencies with a broad-scope offering may be better able to meet these customers' needs for other forms of digital content. Demand for these other forms of digital content appears to be on the verge of rapid growth as online publishing becomes more important to agencies' clients.

In his presentation, Joe also drew out the competitive implications of these findings for agencies. He emphasized two themes in particular: the difficulties of "capturing" the value that is being created as the industry moves from a craft industry into a globally hyper-competitive marketplace, and the challenges for organizations that want to act on what their customers tell them. These implications are being developed and refined in articles published by Stock Asylum, abouttheimage.com and Jim Pickerell's newsletter, among others.


11TH ANNUAL PACA INTERNATIONAL CONFERENCE: October 20-22, 2006
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10TH ANNUAL PACA INTERNATIONAL CONFERENCE: Oct 14-16, 2005 (REVIEW)
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