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- "Assignment" photography pricing is based upon COST TO PRODUCE the image.
- "Rights managed" stock photography pricing is based upon HOW YOU WANT TO USE THE IMAGE.
- "Royalty-free" stock photography is priced based upon THE FILE SIZE YOU PURCHASE.
When negotiating a price for a rights managed image, it is invaluable to understand the pricing dynamic that is at play. In order to understand that dynamic, we need to go back a step and look at the historical relationship between "assignment" photography and "stock" photography, and how and when this pricing dynamic began to split between those two things. So let's do that...
Anyone who needs a photo has essentially two ways they can obtain it:
- They can hire a photographer "on assignment" to shoot to their specifications. If models need to be hired, or locations scouted or styling done, all these things will be accomplished (and paid for) for the purpose of producing a specific image based upon the direction of the person hiring the photographer "on assignment".
- Alternatively, they can purchase the use of a photo that already exists.
The former is referred to as an "assignment photograph", the latter is referred to as a "stock photograph".
Stock photography, in turn, is divided into two broad categories: "Rights Managed" stock photos and "Royalty-Free" stock photos. If you are uncertain as to the differences between those two business models, and, most especially, how those differences can affect your image choices, we invite you to read our explanation of The Real Differences between Rights Managed and Royalty-Free Images.
For now, we are assuming that you have already made the decision to purchase a license for a rights managed image and need to negotiate a price with the photo agency or photographer for that image.
Know where these prices came from, and you'll know how to handle the issues that come up when you are negotiating now...
If you go back about 30 years ago, "high concept" commercial images of the type needed by graphic designers and advertising art directors could not be found in "stock" — for several reasons:
Number one, they're incredibly expensive to produce, and the only people willing to go to that expense were large advertisers with big budgets who paid the freight and then kept the images for their own use (rightly so).
Hence, the "conventional wisdom" was that if you needed a premier quality commercial photo, especially one with models in it, well, you hired a photographer on assignment to shoot it for you.
The second reason, perhaps flowing from the first, was that no model-released images of the type that commercial users would want... were available. The model release issue was especially important: Even if a suitable photo did exist, if it wasn't model-released for commercial purposes, it could not be used. [See our essay: Model releases: What You Don't Know Can Kill You]
So, almost all photos used for advertising purposes were shot on assignment by photographers, primarily in New York, Chicago and Los Angeles.
When an advertiser "assigned" a photographer to produce a custom photograph for them, the photographer would calculate how much it would cost to produce the photograph, including his or her normal daily fee, add it up, and that’s the price. (This is still the case today.)
And it was very, very expensive. By the time the photographer was paid (often a day rate of several thousand dollars) the models, the stylists and the numerous other expense items, the cost to produce the picture was many thousands of dollars.
Thus, the determining factor in "assignment" pricing is the expense of production.
And since it was so expensive, it made no sense at all to go that route unless the project was extremely big and highly significant to the client.
But what if you were a great art director sitting in Davenport Iowa doing a wonderful job designing a brochure for a local company? It didn’t make sense to hire a photographer to shoot a $5,000 photograph for the cover of a brochure whose other costs — paper, printing, etc. — didn’t amount to more than, say, $2,000. The cost of photography was badly out of proportion with the cost and size of the project itself. All-type covers were the norm, or perhaps an inexpensive illustration or drawing. But not photography. Too expensive. Access to that sort of photography, therefore, for that sort of project, was definitely out of reach.
The cost of the photo needed to bear some REASONABLE relationship to the cost of the overall project. Since the pricing of assignment photography was based upon the costs of production of the image, irrespective (often) of the scope of the use, an alternative pricing approach was needed if this type of imagery was going to be made feasible for the very large number of smaller projects that were being done every day, but being done without photography. What was needed was a way to secure the USE of a "$5,000 photograph" — for much less than the cost of production.
That's where "commercial" rights managed stock photography began to enter the picture...
THE CONCEPT WAS THIS: Rather than charging a designer the cost to produce the picture — why not create prices that are based solely upon how the photo will be used, with the idea that the price charged for the use of the picture should be in proportion to the other expenses associated with the project? In other words, the goal was to establish a business model whose pricing structure would flow from the benefit received, rather than the costs to produce the image.
A very small project would incur a very small fee. As the size of the project increased, so too would the photo fee, with that fee always remaining in appropriate proportion to the overall costs of the project. All of a sudden the client doing a limited-run brochure could use a photograph that had cost thousands of dollars to produce — for a few hundred dollars.
No matter how much it might cost to produce a photograph-- clients would be charged only on the basis of how they are going to use it.
The problem, of course, was this: How do you spend $5,000 producing a picture, sell it for, say, $300, and make a profit?
And the answer is: You sell the same picture to more than one person.
That's right: There is no way this business model could work, no way the stock photo agency (or photographer) could hope to make a profit, unless they were selling the same picture to more than one person. If you spend $5,000 taking a picture and then sell it for $300, you go broke. But if you sell it to fifty people for $300, you make a profit.
It's that simple. That is the entire financial "engine" of the stock photography business model.
The problem is: What if two of those fifty are doing essentially the same thing, with the same picture in competition with each other? What happens if you sell the image to both?
The good news about this new "pay for the benefit you get" business model is that, indeed, all of a sudden imagery of extremely high quality (and high cost to produce) was put into the hands of designers for projects which would otherwise never be sufficiently budgeted to allow for that imagery.
The bad news is: You don't get exclusive use. The only way the business model can work is if other people are purchasing the same image, and that was the trade-off: Yes, you gain access to extremely expensive imagery at a fraction of the cost to produce it, but other people get that same access to that same image.
And the further bad news is that, therefore, potential "conflicts of use" can occur. If a picture is used by a real estate developer in Tampa for a brochure to be distributed only in Florida, and the same picture is used by a developer in Dallas for distribution in Texas, so far no problem for either. But what if both those users were doing ads in The New York Times?
Both would be embarrassed (or worse).
Some kind of system had to be developed where by some "protection" against this sort of competing usage of the same image could be established, and that's what "rights management" is all about.
On the one hand, the photo agency is "protected" against any use other than that which has been specifically purchased by you, and the price they will charge will, indeed, be based on the scope of that usage: Big usage, big fee. Small usage, small fee.
On the other hand, since the use of the image is "managed", you can be protected against having the photo used by a direct competitor for a competing usage. Unlike "royalty-free" imagery whose use is NOT "controlled" (after you have purchased an image), with "rights managed" photos the agency knows exactly how each image has been used and can therefore control whether the same image is then sold to someone whose use would be competing with a prior use.
[THEORETICALLY. Something that is easily stated, above, is actually quite difficult to accomplish from a record-keeping standpoint. These days it requires a lot of computers and tons of expensive programming to keep track of all this and actually deliver on the implication of rights management. The better agencies do it well; others do not. See the concluding section of this document for some advice on determining whether the rights protection you are paying for can actually be delivered by the photo agency you are dealing with...]
To what extent will selling you this picture prevent them from selling someone else the same picture?
That's it in a nutshell, and make no mistake about it: When you are engaged in the process of negotiating a price with a photo agency, underpinning all their questions, all their thinking, will be that issue: If they sell you this stock photo for the use you have in mind, what is the likelihood that they are going to have to turn down other sales that would compete with yours? If that likelihood is small, you can and should be able to negotiate a favorable price; if it is large, you will have more difficulty.
Knowing that this thinking is "in play" is the baseline from which all your negotiating approaches should proceed, and you need to enter into the negotiations knowing how YOU feel about that specific issue. The more protection against competing usage you require, the more you are going to pay, and you're not going to be able to have it both ways: The greater degree of potential conflict of usage you can live with, the lower the fee you are going to be able to negotiate. If someone else using the same picture in a way that might be a little embarrassing, but not a catastrophe, is a potential (not a certainty) that you can live with, you need to know that at the outset so that you don't wind up paying for protection you don't really need.
Similarly, if your budget for stock photography is limited, the negotiating process becomes not so much a question of how much you have to pay for the rights protection you need, as it is how much rights protection can you get for the amount you have to spend.
Again: Being clear on this fundamental issue will serve you well throughout the process of establishing a price.
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