Dan Heller's Photography Business Blog Industry analysis from www.danheller.com

The photography world -- the business, the culture, the art, the politics, the technology.

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Monday, August 06, 2007

Who am I? What am I doing here?

My recent posts have generated some emails, interesting inquiries, PR pitches by imaging companies, and of course, comments (positive and negative) in other photo-related blogs.

One thing that I learned from all this is that I have never really clarified what it is I really do. (And, as importantly, what I don't do.) So, let me set the record straight on a number of things:

I examine the stock photo business trade and related industries and report on trends that I think are interesting, or that will move or change the market
I started this blog to set the record straight on the most common misunderstandings, misperception, and irrational conclusions that many people have about the goings-on in the photography business world. The two main reasons why people err in their understanding is 1) they oversimplify, and 2) they are biased towards what they want (in favor of what they believe to be in the best interests of photographers). I use my business experience and understanding of broader issues to communicate a deeper understanding of this business to go beyond the superficial (and often simplistic) overviews that one finds in typical blog entries, news releases or discussion forums.

More importantly, I endeavor to be unbiased. I am a photographer, but I am not a a flag-waver for the group. My greatest criticism of photographers and of photo-industry publications is that they report and interpret news events as "advocates" for photographers. And it's not just their editorial coverage, it's their news analysis that is biased. (Hint: a news article should never use expressions like "good (or bad) for photographers.")

For one to be successful in business, one must examine the industry for what it is first, and then consider ways to capitalize on those conditions. Magazines especially need to at least appear independent in their view, but better still would be to give voice to the devil's advocate. (Business advice to those magazines: this would boost subscription rates, and therefore, advertising.)

Yes, I write extremely long, verbose postings that, as many people have said, "make their eyes glaze over." Sadly, deep understanding of an industry requires more text than can be condensed into short snippets. Since no one else provides this service, here I am.

I am not a member of the press
I am not a member of a news organization, nor do I submit articles for publication to the press. I don't report or even seek to discuss news events. While there may be occasions where such events are current news items, usually, it's an exception if I cover it. I render opinions as to whether an event may have longer-term effects on the industry, but it's almost always the case that it's based on well-known events that have had time to take root and demonstrate longevity (or if I think it will).

I have been approached on several occasions to write for press organizations, including two particularly well-known ones. But my greatest goal is for the public to perceive my writing as being free from editorial interference, whether in substance or length. I am happy to entertain offers to write for anyone, provided that I can write in the same manner that I have demonstrated in my blog entries to date.

I am not a stock analyst
While it's true that I have extensive experience with such activities, stock market analysis is a very narrow and specialized field that I do not wish to engage in. That said, my experience as an early internet entrepreneur has given me direct experience in all the nuances involved with how stock analysts work, what information they seek, and how they do their research.

My experience in this area started after I took my own small software company and sold it for roughly the same valuation that iStockPhoto got from Getty Images (taking inflation and valuation scales into account). As the executive vice president of the newly merged, publicly-traded company, where I also served on the board, I was intimately embedded with many in the investment community, where I witnessed first hand the "methods" (good and bad) of painting whatever picture one wants others to see. I have worked with (and against) not just financial analysts, but industry press, accounting firms, legal firms, and everyone in between. (The now infamous Frank Quattrone managed our valuation and liquidation process.)

Yet, it's a far different matter to make buy/sell decisions based on that kind of information, as such analysis requires familiarity with different skills, such as analyzing stock charts and the memorization of many formulas that churn numbers. As this applies to my blog, I have mentioned shorting Getty stock twice. The first time I happened to be right; the second time I happened to be wrong. Yet, my attempt was not to impart investment advice, but to use such expressions to illustrate a fundamental confidence (or lack thereof) in a company where billions of other people's money is at stake.

[It is in this second case, where I had done so in response to John Harrington's blog who jested that he recommends shorting the stock, I was being as facetious as he was. (He was using it to kid about how wasteful Getty is in their entertainment expenditures.) His cogent response to my posting is here.]

At any rate, stock analysis is fundamentally difficult, which is the source of my favorite quote: "even a clock that doesn't run is right twice a day." When it comes to stock-picking, I am no better (or worse) than a clock that doesn't run. And neither is John Harrington, whose clock happened to be right that day. :-)

(For what it's worth, even actual stock traders aren't that good at it. The Wall Street Journal compiles lists every year of the performance of money managers and mutual funds, and the same statistic is always true: 75% of professional money managers under-perform the basic market index funds.)

I am a business analyst
I am decidedly not an economist, nor a psychologist, nor a lawyer, or politician. That said, I am well-studied in each of these fields and then some, as I read and follow the writings of many who are well-recognized in each of these areas. I believe business skills are the byproduct of a broad base of understanding in many disciplines, and the successful business person is one who can most accurately draw upon these knowledge bases to derive sound decisions that result in long-term growth and benefit. Those who are particularly successful can see the relationships between things or events that most others do not see, but which can be used as strong indicators of emerging opportunities. My article here about using asymmetric information as an example of how we can forecast future developments in the industry based on data that most people don't look at.

Yes, I am hired as a consultant for various aspects of the photo industry or specific businesses, but not to give investment advice for trading stocks. Where people gain from my analysis is the broader understanding of the photo industry, and the ability to articulate complex issues into actionable items. A sampling of the kind of consulting I have done includes: serving as an expert witness for the photo industry (one time for the US Department of Justice); analyzing 10-K statements for investors; analysis of business plans for startup for VC firms; refining (or "spicing up") business plans for companies hoping to raise money; and rendering business opinions on the legal ramifications for industry-related law firms. While each of the people I've worked with are experts in their related fields, it often takes someone with a broader perspective to see the forest for its trees. As a bonus dividend, I often learn quite a bit from their expertise as well.

I am a Professional Photographer
I list this last because, odd as it sounds, my attitude towards my own photography business has less to do with my desire to make money in it, than it is to use it as a lab to experiment with my various theories on business and technology. I have tested pricing models, marketing methods, search technologies, user-interface packages, and just about every aspect of the photo business. My photo skills are sufficient to garner happy clients and good sales, though I pride myself on not being in the upper echelon of talent. (That said, I have a low tolerance for arrogance from anyone, especially artists.)

My site gets a sufficiently large chunk of traffic that passes the test for viable random sampling of the larger industry, which I use to establish my assertions about the nature of the business. I then retest those hypotheses by watching trends in the broader industry to see if my predictions come true.

No one has a crystal ball, but the revisions that I've made to my own analysis have tended to be accurate enough that my business itself has grown as a result of it.

I am also asked why I don't grow my photo business to include other photographers, or build a photo-sharing social networking site. I have chosen specifically not to grow my business beyond just myself for three important reasons:
  1. I have been an entrepreneur where I did it myself, and I don't ever want to do it "alone" again. For me to grow my company, I would have to hire employees, and I don't want to do that.
  2. I would be amicable to joining another company, or having my company acquired, but I have never sought any such opportunity to date because that would require a major turn in my life that is hampered by this next item:
  3. I don't hunger for the big time again. I wouldn't turn it down, but because I've done it once, I no longer possess the youthful ambition to conquer the world, or to "prove" that my ideas are meritorious. I have no ego to feed, and no desire to accumulate wealth for the sole purpose that it can be done. If I were to join another company, it would be because of a shared vision, and a personal affinity with other teammates.

I'm often asked if I also submit photos to agencies. No. In the early years when I was learning about the industry, I tried. And my favorite story is when I submitted my website (as a portfolio) to Getty back in 1998. My rationale was simple: I was getting about 10,000 visitors a month (I currently have about 10-20K visitors a day), and my own stock sales were clearly trending upwards, all of it through no particular action of my own. People just showed up at my site asking to license photos. I suggested that the company simply take over my licensing business so I wouldn't have to bother with it anymore. Their response was that my photos are not high enough quality. I countered again that the traffic to my site and existing sales would already provide them enough income to accept the risk. Their response: "we don't view the internet as a potentially viable platform for stock photography."

That's when I realized that stock agencies were really going to miss the boat, and because they're the top of the food chain, they're going to influence others down the hierarchy. Sure enough, everyone from photo industry groups, media and individual pro photographers of the day, all lined up in lock-step with much the same attitudes. (This lead me to write this article shortly thereafter.)

I never bothered with another agency again, nor do I advise emerging serious photographers to bother with agencies. If you're not already in one, and you want to earn a living from from shooting freelance stock imagery, your window of opportunity with agencies is closed. The good news is that it should open up again probably in 3-5 years. During that time, establish your internet presence and bring value to your site. If you're an amateur or a semi-serious photographer with no real ambitious for earning a living, microstocks might be a short-term addendum to your hobby. (And no, I do not believe that microstocks hurt the industry at large. They hurt Getty and other larger agencies who fail to capitalize on their existing assets, both physical and in "good will." And they continue to miss the boat on the opportunities that the internet itself provides, but their failure to act intelligently is not a sign that the industry is hurting. My complete analysis is here.)


No doubt there will be those who view this posting as a way for me to "flex my muscles" or who may interpret it as a display of arrogance. If that were my goal, I'd have made a posting like this long ago (and my various interim postings would also have self-inflating language as well). It is only now that I feel the need to present my background because my blog has gained readership and popularity, and the kind of feedback and write-ups I get suggest that readers want to know more detail about the guy behind the green curtain. Having been in the spotlight in the past, I am well aware of the dubious "benefit" of being so visible. Just as I am a vigorous and unapologetic critic of Getty because they are at the top of the food chain, I fully expect that I will get my share of criticism as well. Some of it will be warranted, some not. I have been mostly fortunate (so far) that those who criticize me in person (via email) do so with informed, articulate and well-considered ideas. If I could only have an email filter for the rest. :-)

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