Free seminar on model releases

For those living the in San Francisco Bay Area, you can come and hear me give a presentation on model releases, courtesy of the ASMP, on July 14. (It is purely a coincidence that this is also Bastille Day; please, no fireworks inside the building.)

Event details are here: http://www.asmpnorcal.org/drupal/?q=node/780

The event is free for ASMP members. Non-members: $10. I'm not getting paid for this--I'm donating my time. I will be selling my model release book, but again, I don't make money on it--I sell it for the same price I buy it from my publisher: $20. The advantage to buying it at the event is no sales tax (I'll eat it), and no shipping charges.

Oh, food is also free. It's good, and lots of it. In fact, if you're a starving photographer, you can come just for the food at 6. I will be there early to meet, greet and argue with.

An API to the Copyright Office?

I got the following email that I thought I would just post directly here to my blog (with my response).

Have you heard anything further about the USCO possibly switching to a "reseller" system for copyright registrations? I've been hearing a rumor lately that they are about to start beta testing a program.

It was mentioned in this presentation for one:

http://www.c-registry.us/CEPIC/MILE_Orphan_Works_Solution_060309.htm

I can't find any formal announcement on the USCO site nor have I been able to find any other stories on this. I don't subscribe to every single mailing list though. Have you heard anything?

With respect to the c-registry.us site (the link you sent), on slide #4, the "reseller" program they refer to is not the same as the "copyright registrar" proposal I put forward. More on all this in a second. But first, it should be made very clear that "c-registry.us" has absolutely no affiliation with the copyright office. I am constantly getting questions from people about this company and whether they are some sort of commercial "retailer" that has some special relationship with the CO. The danger is that when they say something like what you referred to above, people believe it to be an official statement from the CO.

Officially, you should just call Maria Pallante at the CO. She's extremely accessible and very pleasant to talk to. Alternatively, you could call David Christopher, who sits next to her. He is more up-to-date on the technology stuff. You'll get all your questions answered instantly. Whenever there are rumors floating around, call them to get the scoop.

Now, to the "reseller program": whether this is what c-registry.us is referring to, I'm not sure, but I what I do know is that the CO is creating an API (application programmer's interface) that would enable third-parties to write their own UI (website, applications, etc.) that would allow users to submit new copyright applications to the copyright office for processing. It would NOT provide access to content already there, nor would it expedite the process, nor would it allow third-parties to process those applications or act as resellers or retailers for the copyright office. The API offers nothing more than what is already provided by eCO.

All that said, it does beg the question: Why? The answers may appear obvious, but no one has formally stated "who" gets to use this API, under what terms and conditions, or any other business-related objective. For now, we just know it's in development. (Limiting access of this new API would done through access keys, which is assigned to authorized users. This is identical to APIs used by Yahoo, Flickr, Google, Facebook, etc... There's nothing magic here. Various levels of security are available to keep stuff safe and locked up.)

There are several things to keep in mind about this API:

1) It is very early in the process. They have contracted with a vendor to design the API specifications, and that part is still very new. I asked to review the material, but I was told that it's too early to see anything. I was not given any time frame for when this might be done, or even a time schedule for deliverables. They aren't keeping it "secret" -- clearly, they told me what they were doing -- but they aren't exactly open about it either... which leads to:

2) The API draft specifications or early-developer process is not open to public review. (I have not been informed of a beta program, and I am on the list of people to be notified if/when such a thing is started.) In my opinion, this is a big red flag--the CO should do this entire process in the open, exactly the way the IETF (internet engineering task force) does with all new protocols and other specifications. The CO should have a public forum and developer application list to allow everyone to contribute useful and important feedback on proper design and implementation from the very outset, not *after* specifications and preliminary applications are built. Furthermore, it would be best for the CO to expressly avoid having their OWN implementation, and instead, just publish the specifications and allow third parties to implement their own prototypes, which the CO would then certify if they met certain criteria. (One of which would be for the code to have open-source status.)

3) It should be known that, just because there's a back-end API, it does not solve the problem of back-logged registration applications. In fact, it would flood the registration backlog even worse because more people would be filing applications. That's NOT to suggest this is a bad thing! IMHO, the worse the backlog gets, the quicker the CO will be forced to solve the problem. And the only solution to that is to outsource the processing of applications to third parties. In other words, "copyright registrars" as I've been proposing would do much the same administrative tasks that the CO currently does in-house. They would be trained and certified by the CO, thereby performing exactly the same duties and responsibilities, but can be farmed out to an infinite number of companies. This would alleviate the back-log, improve efficiency, reduce costs (which bring down filing fees) and increase participation in the copyright registration program. Everyone wins.

The API that the CO is doing has nothing to do with my proposal, nor would it affect anything that already exists in the copyright process today. And of course, it has nothing to do with the c-registry.us website.

It does still beg the question: what direction does this suggest that the CO is moving? The API would eventually be necessary for a "copyright registrar" to exist, but that idea has not yet been accepted.

What the API will NOT do is streamline the application process... It doesn't really matter how backlogged the CO may happen to be in order to have your works protected--all you need to do is apply to get the date of registration established. Granted, having the certificate does help considerably in the legal process, and it does avoid potential risk that a given judge might rule inconsistently with precedents. For such conservative applicants who really need to protect their valuable works (such as timely news and/or celebrity material, for example), expedited registrations might be worthwhile. But, for the vast majority of people, the eCO is sufficient to get protection immediately.

In summary, I think the API is a step in the right direction. It isn't perfect for the reasons noted above, but these things tend to work themselves out.

dan

Quick Note on Current Orphan Works Disinformation

I am being mildly bombarded with questions and mostly links to articles on other photographers' blogs about this one bit of disinformation about the Orphan Works Act, so I thought I would write a very short blog entry to set the record straight.

The disinformation being passed around everywhere is this:

"Someone can now steal your photo and claim it's an orphan work, and you have to spend $50,000 filing a lawsuit just to prove them wrong. No photographer can do that!"

Folks, this is a senseless argument because someone could steal an image and claim anything, not just that it's an orphan work. They can claim they shot it themselves, or that they're using the work under Fair Use provisions, or that it's got a Creative Commons License. Any of these arguments could be entirely baseless and untrue. If the argument is that the photographer would have to spend $50,000 to go to court, and he can't or won't do that, what makes the OWA any different than any of these other threats?

The reality is that the photographer does not have to spend money to go to court or even "hire" a lawyer. All the photographer has to do is engage with a lawyer on a contingency basis (where he is paid only if money is collected), write a letter to the infringer that says that says that their use of the image is a copyright violation, that the statutory damages for such a violation ranges from $750 to $30,000, but an amicable settlement can be reached.

At this point, the infringer has a decision to make, is he going to spend $50,000 going to court to defend his claim that he's protected by the Orphan Works Act? Or is he just going to pay the photographer a couple thousand bucks just to make the problem go away? Remember, the infringer's lawyer costs $500/hr, so he already has to spend that much just the show him the letter you wrote and draft a reply. The lawyer is also going to advise his client that, in copyright infringement claims, the onus is on the defense to prove their case, not the other way around. What's more, if the photographer wins, he gets his legal fees reimbursed. But if the infringer wins, he does not get his legal fees reimbursed. Even if the OWA really did provide a mechanism for infringement -- which is does not -- the defense still has the burden of proof, and has to spend the money to do so, and he does not get that money back. In short, infringing bears nothing but risk.

You can argue up and down the merits or details of the OWA till you're blue in the face, but the pragmatic reality is that the infringer will pay the photographer a settlement, even if he thinks he's right.

And that's why a lawyer will be willing to take your case on contingency. You don't have to spend a dime to protect your works.

And you never did.

The Economics of Controversy

There’s an old folk tale that tells of Neil Armstrong having sent a letter to the leader of the Flat Earth Society with an enclosed photo of the Earth taken from space. His one-line inscription simply read, “SEE?!” To which Armstrong got a reply saying, “We never said the Earth wasn’t circular!”

With some people, there are arguments you just can’t win, no matter how persuasive the evidence. And most of the time, such arguments aren’t worth having anyway.

Other arguments are worth having because you really believe in the cause.

Some arguments go on so long, they seem both endless and senseless. Remember the Monty Python skit about the man who pays another man to have an argument with him? The first thing they start arguing about is whether or not he even paid. “No you didn’t!” “Yes I did!” “No you didn’t!” “Well if I didn’t, why are you arguing with me?” “I could be arguing in my spare time!”

And then there are those arguments that turn into “controversies.” These are special arguments where the issues galvanize core groups of supporters on both sides, tempers flare, and before you know it, it’s no longer a Monty Python skit.

Though it may be odd to see it this way, here is where new economic ecosystems begin to form. As a controversy gains momentum, more and more people benefit in one form or another by keeping it alive. If it garners enough critical mass, real money can be made, social fabrics can be formed, and political affiliations created. All of these represent different goals and objectives for the individuals involved, which make the intertwining of motivations, methodologies and psychological dispositions fascinating for behavioral economists: those who study people’s behaviors as they pertain to market conditions and self-interest.

In the photography world, there is no better place to study behavioral economics than in the controversy surrounding the Orphan Works Act. And from these observations, one can look for known patterns of behavior that themselves help forecast where there may be investment opportunities.

The Controversy: The Orphan Works Act

The OWA happens to be the perfect controversy because its complexity involves both law and economics, each of which are beyond most people’s understanding, even the leadership. This makes it ripe for oversimplification, misinformation, disinformation, and persuasion.

In the case of the OWA, many who preach aspects about it simply aren’t educated enough on the fundamental principles involved to understand what they’re saying, and the “base” followers are not the type to ask questions—just to “believe.” Straw-man arguments are thrown up all over the place. The classic example is one that I mentioned earlier here: "someone can now steal your photo and claim it's an orphan work, and you have to spend $50,000 filing a lawsuit just to prove them wrong. No photographer can do that!" This is the galvanizing argument that's now settled into the mantra in photo discussion groups.

As my blog post points out, it's a senseless argument because someone could steal an image and claim anything, not just that it's an orphan work. The summary of that article is that it's the infringer that has to spend $50,000 in court to defend his claim that he's protected by the Orphan Works Act. The pragmatic reality is that the infringer will pay the photographer a settlement, even if he thinks he's right.

Yet, none of this very basic, standard legal information is disseminated by anyone in the artist community hierarchy, the photographer community in particular. In fact, quite the opposite. But why?

Once again, it's all about behavioral economics: there are benefits to keeping the issue a controversy, and in keeping the controversy alive.

The Players
Several unique sets of conditions converged at once that allowed the OWA to become the nuclear power station within the photographer community. The stock photo industry has been suffering from economic hardship for quite some time, which itself has threatened industry leaders and organizations, who naturally respond by finding galvanizing issues to maintain control and continuity.

At the bottom of the ecosystem are the core (“base”) believers who are told they have a stake in the game: "If the OWA passes, you will lose your rights to protect your images." The base believers buy into this, and reap psychological dividends by being part of an impassioned movement against the OWA. It’s in this ecosystem where there is a rather dogmatic and cohesive community that typically responds well to populist rhetoric, while being derisive of non-conformist views. In fact, the use of populist rhetoric is prototypical among leaders of economically distressed groups.

On the sidelines is a panoply of catalysts, eager to participate as well: reporters who objectively journal the events, investigative reporters who tell the story from behind the scenes, lawyers and media consultants who work on behalf of their clients to effect a certain outcome, analysts who churn the data to assess the likelihood of various outcomes, and the investors who seek opportunity. Everyone has a vested interest in the process. And therefore, such people become participants.

I too am a player in this eco-system. I’m an analyst, and my economic benefit is the clientele who pay me to do objective research so they can make financial decisions (investments or divestments) based on the likely outcomes of certain events. The Orphan Works Act is one such event. Since it also happens to be a hotly controversial one, at least within the photography ecosystem, the question for these investors is not whether the OWA puts the future of image licensing at risk, but where’s the opportunity for investment? Smart money goes to companies and individuals that know how to capitalize on opportunity. In this case, opportunity lies within those organizations that have a solid, realistic understanding of the state of affairs. My job is to find those opportunities.

Analyzing the Ecosystem
To understand how I do this, I talk to people. For example, I had a conversation with a lawyer who has been rather outspoken against the OWA on behalf of a trade association for a different industry. I asked, “If the OWA passes, and if a case came up that you had to prosecute an infringer who tried to hide behind it, what would your strategy be for dealing with this?” Essentially, I was given a more balanced legal analysis on why the OWA isn’t a threat to artists. The response I got was used as the basis for this blog entry, modified to address the photo space:
http://www.danheller.com/blog/posts/orphan-works-act-courts-and-law.html

So, I then asked, “Why don’t you say anything like this publicly?” The response: “Because my client doesn’t want me to. I’m paid to make these statements and support the objectives of my client.” To which I replied, “Why aren’t you telling your client to soften up on the OWA?” And then came the unsurprising answer, “Because it galvanizes their membership. Renewal rates are up, and they haven’t seen as many new members join in years.” One can only surmise the additional social and political dividends the leadership receives as a result. Short-term economic benefits clouds longer-term judgment. Text-book Behavioral Economics at its finest.

Needless to say, the companies and individuals that hired this lawyer would not be considered “worthy investments” by my clients. (There’s nothing wrong with the lawyer, of course; but that’s not who the investors are interested in.)

To illustrate a more tangible, but more complex example, recall the time when Getty was looking for a buyer to take it private. The company was public, but its share price was dropping quickly, revenue and profits were evaporating, and the nature of stock photography itself was going through a major transition.

One particular suitor asked me to look into an element they believed to be a vulnerability of the company: the economic effect of being “responsive to photographer demands.” Because the investor believed that Getty made key strategic decisions based its photographer base, the question was whether their demands were economically sound. That is, if Getty appeased photographers, would they make more or less money by listening to them?

A hint that gave them concern was Getty’s acquisition of iStockPhoto. It wasn’t the acquisition that bothered them, of course. It was the timing of it and the circumstances around the decision. The feeling was that they moved too late in the game; that they should have been innovators rather than followers in the microstock up swell. They delayed entry into the market and failed to build new and innovative companion products and services because of strong photographer objections. Were the photographers wrong just this once? Or was there a trend? If Getty is going to have a habit of appeasing its photographers, the pivotal question is whether photographers tend to be right or wrong. Would they lead forward, or hold the company back, causing them to miss or delay other key strategic moves as well?

What I was asked to research had nothing to do with Getty, per se, but the effectiveness of pro photographers’ influence on their own industry. Specifically: at key turning points in the economics of the photography world, what were the “photographers’ positions” on those events, and were their forecasts right? Did they fare better or worse as a result of their collective recommendations to their community membership?

Without getting into the details of my report, the data was rather bleak for photographers. In the 1970s, after the supreme court ruled that the ASMP violated “restraint of trade” rules by publishing price lists, the union was disbanded, and a power vacuum resulted. A variety of disparate trade groups started forming, each of which differing only slightly from the others. Yet, at no time did the socio-political strategy change; the culture of the photographer community remained strongly union-oriented. The message remained “all for one” with a strong discouragement of individuality in building a career. Conformity was and always has been the social rule, which itself runs counter to open-market economic conditions.

At no time did I find any key recommendations by the pro photographer community that resulted in positive economic returns. At one point, they discouraged photographers from shooting “stock imagery” because it would “ruin the careers of assignment photographers.” They also discouraged using the internet as a place to sell photos because “people will only steal them.” They also said it would “compete with traditional stock agencies” (who themselves resisted using the internet till royalty-free images moved from CD-ROMs to internet sites). Their poor analysis and responses to matters such as royalty-free, microstock, social-networks, consumers, semi-pros and other industry trends have all been entirely off base. I’ve written extensively about each of these phenomenon at great depth on my blog.

Photography trade associations’ economic advice has also been similarly off target. Membership levels in most all groups have seen very little (if any) growth, despite the fact that hundreds of millions of more people own high-end digital camera gear and contribute larger and larger proportions of images to the stock photo base. The outright rejection of the consumer and weekend photo enthusiast has been one of the primary factors associated with their inability to grow financially, which has also weakened their political influence. (At one time, I recommended that PDN and trade associations charge a maximum of $25/year for subscription and/or membership fees and start running programs that appeal to non-pro photographers that somehow engage in monetizing their images, even at lower levels.)

An incident in my report that summarized it all was when the SAA sent a letter to Getty images strenuously objecting to their having lowered photographers’ royalty rates, seemingly unaware that the company’s sales and profits were plummeting. (This would be like auto worker unions asking General Motors for raises just before they go into bankruptcy.)

Of course, the responses from trade associations have always been akin to “we are giving advice, but no one is taking it; if photographers did what we advised, then we wouldn’t be in this mess.” The reality is, they are taking the advice, but it isn’t working. At some point, one just has to realize the Earth really isn’t flat, and it’s not worth having that argument anymore. There simply needs to be new blood. There’s too much homogeneity. There’s no tolerance for dissent. Perhaps the best quote that encapsulates this situation is one from the 9/11 Commission Report about the errors in judgment that lead up to invasion of Iraq: “When everyone around the table agrees, someone’s got it wrong.”

In general, photographers have had no true economic leadership, and this has lead to a vacuum of economic opportunity. And the evidence is as overwhelming as the Earth is spherical: extremely few stock photo agencies are profitable, and of those that are, the margins are slim and getting slimmer; “publicly traded” stock agencies have had to take themselves off the market (well before the economy turned downward); most stock photographers have reported declining incomes steadily for years; and the per-image license fees have been dropping since records were kept.

When I collect data and do analysis to generate these reports, I have no personal objective, vendetta, or an argument to settle; I don’t care. I just want to be accurate so my clients can make fiscally responsible decisions. And I’m not the only one to come to these conclusions. With the exception of a few very speculative investors, the “smart money” stays away from anything in the stock photo sector. As one of my clients put it, “so long as a company is reactive to the pro photographer community, it’s a losing investment proposition.”

The problem is, there are too few companies that deal with stock photography that don’t worry about the political fallout from discontent raised by the photographer outcry.

If this is the case, why doesn’t the photographer community leadership recognize this and adjust their message to the base? Here’s where we come full circle to behavioral economics: there’s money, politics and reputations involved. Different people seek different objectives, and without centralized leadership, you hold onto what you’ve got. As one executive at a trade association told me, “It’s the perfect controversy for us because we win whether it [the OWA] passes or fails. If it fails, we can say we won; and if it passes, then our members will benefit, and we can say it’s because of what we did. Taking a stand against it is the only position that makes sense for us. Besides, it brings everyone together.”

What Investors Look For
Smart money, smart lawyers, and smart legislators all know that there are no risks to either artists or licensors with the OWA. So, the political theater from the blogosphere is uninteresting to investors, other than to know where not to invest. Investment money looks for signs of intelligence. Any company or investor making business decisions based on photographers’ outcries would be considered a poor investment.

But don’t confuse this with an anti-photographer sentiment. Investors are not anti-anyone. They just don’t want those who don’t understand economics interfering with business. If a company were to exist that keeps photographers happy, while also pursing business goals that show profitability, then that’s great. But the catch-22 in this economic climate is the challenge: the internet and digital photography changed the game from how photographers once viewed themselves, and unless and until they change their cultural disposition, they’re not going to be part of the solution. The stock photo industry has already shifted to be a high-volume/low-margin model, which runs antithetical to how photographers want it. For so long as they don’t accept that, they will be at odds with any company that attempts it. At which point, the company has to choose which path to take: upset the pro photographer and succeed, or acquiesce and fail.

It is for this reason that I’ve predicted for several years that, barring any new disruptive innovation we haven’t seen yet, or a shift in photography-industry culture, the future of stock photography is likely to be inherited by much larger media companies that already deal with massive media distribution and licensing. They have no qualms about playing “Borg” and assimilating the photographer community into the flying cube, all the while chanting, “Resistance is futile.” Once such media behemoths realize there’s money to be made in photography, they will likely start acquiring agencies and photo-sharing sites, and building out the high-volume licensing model that is the only option left for stock anyway.

As for the controversy about the OWA, it’s just a theatrical venue for people to gain their individual advantage. Sure, there may be fine-tuning of language that industry leaders will take credit for to great fanfare, but that’s also part of the game. The Earth is not flat. But as long as there’s some benefit to people arguing about it, the controversy will continue.