Selling Stock: it's about search rank, not price

Yesterday, I reposted an article I originally wrote in 2007, discussing the misconception that microstock pricing is what's driving down overall license fees.

I got a few emails that still challenged my assertion, and it appears I haven't emphasized strongly enough the most compelling arguments supporting this thesis.

All of my research supports the premise that the primary cost of licensing images is not the license fee, but the overhead associated with finding and acquiring the right image. The overhead and administration of a project that would involve photo licensing shows that the actual license fee ranks very low on the budget -- hence, low on the buyer's priority list. My 2007 surveys of buyers showed that.

If the person responsible for finding images for a project is paid $60/hr, and this person spends 2-3 more hours looking for a photo just to pay $1 vs. $50, this translates to paying someone $120-180, just to save $50. People who control budgets know that the license fee for photos is negligible to the total cost of production, even at the traditional stock photo rates. The bigger the project, and lower the proportion of the license fee for the image(s).

Those who sell images are dropping their prices because they're looking at their competition, not the buyer. Further, there is absolutely no evidence to show that sites that have lower prices sell more images. There is definitely a perception that there's a correlation, but that's because people are comparing apples to oranges. Getty sales vs iStock sales are not apples-to-apples because the two entities vary dramatically in search engine results (and other important factors). People talk about microstock sites more, and they link to them (in blogs, discussion forums) and the quantity of images on microstock sites is rapidly growing. So naturally, these sites get higher rankings in search results. Search engines don't rank sites because they have lower prices. They rank sites by size (content), links, and a black magic formula that is best described as "dispersion of discussion in and around the net." In short, microstock sites have more content and get more attention. Hence, better rankings, which translates to more traffic, which attracts more photographers to submit images to them, perpetuating the feedback loop.

In my 2007 survey, those who indicated they were aware of--and use microstock sites-- most don't go to them because the prices are lower; it's mostly because those sites ranked higher in search engine results, where the buyer starts.

Because search engine ranking drives traffic -- especially the untapped (and unaware) segment of the global economy that doesn't use stock agencies -- and because the greatest cost in photo acquisition is time, not the license fee, 90% of the time-savings is the image results the user gets on that initial search. If it takes the buyer to a stock agency site -- microstock or otherwise -- then the deal is nearly done. Price notwithstanding.

This is primarily why I have advocated for years that stock sites should focus their entire effort towards optimizing search engine rankings. While they could have done something about it in the past, the rise of social networks and the plethora of image-related websites and apps has made it impossible for agencies to rank highly on image-search rankings on their own. In today's market, they have no choice but to either partner with, or acquire/be-acquired-by a social-networking site.

The Getty<->Flickr combination is a very pragmatic example. Yahoo is circling the drain, and it needs to shed its non-performing assets and focus its attention on ... something. Whatever that is, it isn't Flickr, and there aren't a lot of buyers that would be interested in that asset, except for Getty or Corbis. The combined product would involve retooling Flickr to be far more socially active (to keep up with modern social networking trends), and to integrate licensing/acquisition into the user/social experience. Most importantly, to provide incentive programs for photo submitters to participate economically. (I've written a great deal about this in the past.)

Of course, perhaps Yahoo should just buy Getty. Facebook is getting into the game, which tends to lead one's eyes towards Google, but they are still struggling to play catch up in the social-networking arena, and their photo division is not run by someone with a disposition towards stock or an awareness of the economics of the photo industry. The company is more interested in building assets that support their advertising model. There's no evidence that "licensing" is on their radar--a pity because they would be on the forefront of the Web 3.0 economic model, where images would play a huge role. (See here.)

In the meantime, there's a $25B shadow economy in peer-to-peer photo licensing that's up for grabs. (See here.)

So, you ask, "how do you convince agencies of this?"
I've been trying since 1998.

(For fun, see this web archive of my site from 1999 discussing this topic.)

Busting Myths about Model Releases

The internet is a virtual echo-chamber of facts and myths of all sorts. When something goes viral, there's no stopping it. Even the most blatant falsehoods can perpetuate for years if they cause no harm in believing them. An example is the myth that the different regions of the tongue tastes different types of things: sweet in the front, sour in the back, etc.. In fact, all taste buds are identical, but the myth started from a single, faulty study in the 1800s that was published in a school text book, and it's been repeated ever since.

In the photo business, the greatest myths are those involving model releases. If you have ever considered selling (or licensing) photos on your own, or through a stock agency, you've probably been told that photographers need "model releases" to sell photos of people, and "property releases" to sell photos of buildings and the like. Some stock agencies actually reject images unless these photos have releases.

While it's true that model release are necessary for certain situations, the actual laws about these issues are deep and complex. As rumors and hearsay perpetuate on the net, the over-simplification has resulted in virtually all the "advice" and conventional wisdom about model releases to be entirely wrong. And the reason why these myths perpetuate is because they cause no harm. No one ever got sued for having a model release. So, people follow the advice because they (and others) seem to be safe, perpetuating the myths.

So, why address the myths about model releases? Because photographers are losing enormous opportunity by not trying to sell the images they don't have releases for, and by going to great lengths to get releases they don't need. Despite the rumors, most publications of photos are not the type that need releases anyway, resulting in an enormous market of buyers. Most photographers could continue to have very successful businesses without ever getting model releases, all while doing exactly what they are doing today. Sure, releases are important for many types of publishers, so if you do get releases for their benefit, you can expand your buyer base by getting them. But it's a proportionally smaller market than people think, and the time, effort and resources necessary to properly obtain, manage and catalog releases is rather substantial. This investment will rarely be offset by the incremental income from sales of images that actually do require releases.

This article attempts to help the photographer looking to make money by setting the record straight on the most common myths about model releases.

Fact #1: You do not need a model release to take pictures.

Nuff said. Don't let anyone tell you otherwise. Everyone in the world has a camera on their phones, and photos are taken constantly. You don't need someone's permission to take their pictures. Now, just because you might eventually intend to sell your photos has nothing to do with the ability to take pictures in the first place.

Fact #2 You do not need a model release to sell pictures. And "profit" has no effect on whether a release is required.

First, newspapers buy photos, and their use of the photo is unlikely to need a release. So, selling a photo (and making a profit doing so) to a newspaper also does not require a release. And because the law does not require you to have any knowledge of the buyer or their intended use of a photo, you are always allowed to sell photos without a release.

Fact #3 You do not need a model release to make photos available for sale, either on your own website, or through a stock agency.

If one can sell a photo without a release, one must also be able to "make photos available for sale" without a release. This includes the publication of such photos in a manner that would allow potential buyers to find them.

The legal case that established precedent for this was Corbis vs. James Brown, where the judge called the depiction of a photo as being for sale a "vehicle of information". Here, consent from a subject is not required.

Therefore, one can make photos available for sale in any manner of publication and media, whether it's traditional print or online formats, including personal web pages, photo-sharing sites, social media sites, stock photo sites, or mostly anywhere.

For detailed information, see the article, Model Release Primer.

Fact #4: A "property release" is NOT required to sell or buy photos of buildings or people's personal property (like land).

The root of this misunderstanding is complicated. The term "property" in an actual "property release" refers to two particular forms of intellectual property: trademarks and copyrights. Examples include logos, designs and other works.

Now, just because these are "protected" works, it doesn't mean that one cannot publish photos of them. It only means that the manner in which such works are depicted cannot cause confusion among the general public about who "owns" the properties, or other legally complex factors. It is impossible for a photo of a bottle of coke to cause the general public to suddenly think that the Coca Cola company was now owned by a freelance photographer in Topeka. If the photographer sold the image to a publisher, and the publisher's use of the image would imply that it had a unique and special business relationship with Coke, then that would trigger a trademark infringement claim. But that would be with the publisher, not the photographer, nor the stock agency that sold the image. Furthermore, such an infringement couldn't possibly happen by merely the photo being printed. Text around the photo would have to give this impression. And, since the photographer or anyone selling such a photo cannot know or control how a publisher uses a photo, they could never be held liable for the infringement.

Like the myth about the tongue's different taste regions, the history of the "property release" stems from a single misimpression from long ago. Certain physical structures, such as the Golden Gate Bridge and the Transamerica building in San Francisco happen to be registered trademarks. And, they have been infringed upon inappropriately in the past, but these were cases that have nothing whatsoever to do with photography. And at the time, news of these suits briefly caused publishers to shy away from publishing photos of such places unless photographers could provide property releases for them. Those releases were not for the buildings, but for the right to use the trademarks. This was very short-lived, however, because it is impossible for photographers to obtain "true" (and legally valid) property releases for trademarks without paying enormous sums of money. So, even though the publishers stopped asking for those releases, the rumor perpetuated nonetheless: photographers erroneously interpreted these requests as "mandates" that all photos of buildings required "property releases." And they've been behaving that way ever since.

To be crystal clear, property releases are not required to sell or resell photos of buildings and other real estate (or physical property of any sort, such as land, pets, livestock, homes, etc). If something happens to be a registered trademark (building or otherwise), then the publisher will already be quite aware that they are the ones that need to obtain permission from the trademark owner (which may not even be the building owner). Any permission obtained by the photographer would be entirely useless to the publisher. In fact, every single property release used by photographers gives no legal right to use a trademark, and since buildings and other items do not require consent for photos of them to be used, these property releases are worthless pieces of paper. But they also cause no harm.

For more, see Photographers' issues concerning trademarks and photography.

Fact #5 You usually do not need permission to shoot pictures of (or on) private property.

While it's true that property owners can restrict photography, that's not saying much. They can also stop you from picking your nose. It's their property, so they can stop anyone from doing anything. You've seen signs that say, "No shoes, no shirt, no service." There's also the sign that reads, "We reserve the right to refuse service to anyone." In short, property owners can apply restrictions indiscriminately and inconsistently and arbitrarily.

But, the owner has to proactively take an action to prevent you from doing things. It's not that you're prohibited from actions by default, and they then grant you permission later. So, most of the time, there are rarely (if any) actual restrictions property owners enforce.

This includes taking pictures. It's permitted by default, and to prevent it they must take explicit actions, including (but not necessarily limited to) posting signs, as noted above. If you are not stopped (or are given reasonable advanced notice), any photos you take are legitimate, and can be sold legitimately. (See later section on "ownership.") Further, one may not retroactively enforce their restriction. That is, if you were at a private event, and then later told you were not allowed to take pictures, it has no affect on your photos or your ability to sell those images. (Publishers, on the other hand, may need releases if the nature of the publication would require it. But that doesn't affect the photographer's liability.)

So, if you're in a bar, or in an amusement park, or touring a winery, you are allowed to take pictures unless you're told not to while you're there. And if you do take pictures, you can sell them to any buyer willing to assume the risk, if any exists.

Sometimes, photographers will often seek permission to shoot pictures ahead of time. This is not only unnecessary, but invites someone from stopping them. If you know ahead of time that you will need permission, that's another story.

Fact #6: You do not need releases for Art, Books, Exhibitions, Presentations, Fairs, Contests, Postcards, Calendars, Etc.

At the risk of over-simplification, the only time a release is needed is if a person can be seen as supporting or advocating an idea, product or service. True, there are often disputes about whether a given publication of a photo of someone could be construed in such a way, but the dispute gets closer into the safety zone when that publication is a form of artistic expression. The First Amendment of the US Constitution protects "artistic exhibitions" (and publications) as a form of free speech, so consent from anyone else—by definition—is never required. Money or profit has nothing to do with whether a work is published or "depicted in an artistic manner."

Again, people argue frequently about whether such depictions are, in fact, artistic in nature, which leads to a complex argument: is it art, and if not, is it a promotion, and if so, is it the type of promotion that should have required consent from the person in the photo?

While these are all good questions, the reality is that no one has ever successfully won the argument that a model release was necessary for a photo that was used in a book, in an art gallery, or at a fair, or any of the items in the above list. In short, the law is on the side of the First Amendment by default - a claimant bears the burden of proving otherwise, and that's a difficult and very expensive bar to clear. While is indeed a very deep and complex subject, those wishing to seek quick answers can feel relaxed: "don't worry. You're fine."

For for more info, I encourage you to read this.

Fact #7: Photographers do not need releases for photos in their portfolio.

A portfolio is a collection of artistic works that demonstrate the skills and talents of the photographer. Permission is not required in order to use photos of people in a portfolio. This includes all forms of publication of the portfolio, whether in physical form, or as a website, or other media.

The one thing to be aware of, however, is that sometimes photographers take pictures of people in special, "closed sessions," where an agreement was made ahead of time—before the photo was taken. If a subject posed for a photographer with the pre-arranged agreement that the photos would not be used in a portfolio or any other manner, than that agreement takes precedent. (Of course, a new agreement, such as a model release, can supersede it.)

For more on this, see Personal Privacy and Model Releases

Fact #8: Posting photos online is just another form of publishing.

What determines the need for a release is whether a photo makes someone appear to support, advocate or promote ideas, products or services. The medium itself is irrelevant, whether it's traditional physical media, or online/electronic media. One cannot say whether a release is required for photos "posted on the web" because it depends on the way the photo depicts the person in it.

When photographers put images on their professional website, they think that this suggests that the people in those photos could be construed as sponsors or advocates, but that's not complete. Putting photos online to "sell" does not require a release, depictions of "art" do not require a release, and a "portfolio" does not require a release. The only way a photo would require a release is if the photographer created a self-promotional piece (such as an ad) that promoted his or her services, and used a photo of someone that might suggest it is a client.

Fact #9 Ownership of physical pictures and ownership of rights are different.

When people hire photographers to take pictures of them, they think they own the photos, or have rights to publish them. They don't. This has to be agreed upon, usually ahead of time (but it can be negotiated later.) Normally, this isn't a problem. But where things break down is when subjects don't like the photos of themselves. Here, they try to demand them back, but they don't have this right. (They also cannot retract permission if it's been granted in writing, such as a model release.)

The same thing is true of pictures taken on (or of) people's property. They think that because it's their house, or their private event, or their pet, that they have the rights to the photos. They don't. Nor can they stop the photographer from publishing those photos. Non-humans do not have inherent rights, unless protected by trademark or copyright.

Concusion

The reality is that photographers (and stock agencies) don't get sued for the publication of an unreleased image. And given the very high cost of suing someone, litigants are usually told by their lawyers to go after the "publishers" of the images in question, as they are the ones who bear the true legal liability.

As an active photographer, understand that most people are entirely uninformed about model releases, and factor this into your business dealings. Publishers, stock agencies and many others may vehemently demand a model (or property) release before buying photos, or for accepting your images into a stock agency. Despite their being wrong, this is the way of the world, and you can only do what they ask, or don't play.

But don't underestimate the sales potential of your unreleased images, and the large market of buyers who don't make such demands.

For those with interest in reading the details, I have many articles that answer all the technical questions, like this one and this one. I also wrote a book called, Photographer's Guide to Model Releases.

Radio Interview: the future of photography

On Thursday, Aug 30, I was interviewed on the morning radio talk show, "Forum" on KQED FM (san francisco).

The one-hour broadcast can be heard here: http://www.kqed.org/epArchive/R708301000

For those interested, this is a summary of the status of the photo industry today:

Over the past 15 years, the internet crawled its way into our collective culture, and with it, the technology behind digital photography has made it possible for everyday people to produce images that were once done only by professionals. The combination of photography and the internet has created not just a new wave of interest in the art form, but the social networking aspects has also given rise to new business opportunities as well. Just about anyone with a camera and an internet connection to engage in the business of photography and make money--and they are doing so in rising volumes. This can come in the form of consumers making and selling their own prints, self-publishing books or other merchandise, or through the most common of all, licensing photos to third party publishers who use them for everything from magazine and newspaper articles to using images on product packaging and other marketing purposes.

Selling "photographs" as a business can be broken down into two basic forms: the service industry (wedding, portrait, event, staff and/or work-for-hire shooters), and the more general freelance photographer, who usually shoots first and sells the pictures later.

The overall stock photo industry has grown by orders of magnitude since the internet has reached more and more people. The largest growth of the photo sector has been in freelance and stock photography for these primary reasons:

1) technological advances in digital cameras have enabled more people to create professional images, and 2) the internet acts as a distribution channel for those who never had had access before (i.e., traditional stock agencies.)

The effect has been a massive influx of both supply and demand, new new buyers/sellers, new ways to compete, different sales and marketing models, and a fundamental change in the "culture."

What was once considered a difficult profession to break into, much less succeed in, photography is now being pursued casually by everyday people, who also happen to be making very good money at it.

SIZE OF MARKET Many industry analysts currently believe the size of the photo market to be around $2B based on traditional survey methods that pre-date the internet era. Thus, the data doesn't factor in non-traditional photo sources, such as consumers, semi-pros and pros who had traditionally not sold "stock" footage (but now do so because of the convenience of the internet). Detailed discussion on the total size of the stock photo market is here:

http://danheller.blogspot.com/2007/07/total-size-of-licensing-market.html

The size of the stock-photography market is more likely around $20B based on inference data like sales of pro-level cameras by the major manufacturers and statistics from sub-industry segments within the photo field that are not part of traditional surveys.

LACK OF INFRASTRUCTURE Because the market is much bigger than anyone has yet prepared for, there is currently a lack of infrastructure to accommodate both the informal buyers and sellers, who are currently doing business through direct (one-to-one) contact, rather than through traditional sales channels, such as agencies.

This is much like the dormant market that was awaiting the emergence of Ebay: the assets were there, and the buyers/sellers were there, but these elements never came together till Ebay facilitated it. And even that required some time for people to "get it." Ebay's continued growth today still shows signs of the masses of people still getting into the business of selling their otherwise unwanted junk.

Similarly, the massive number of photos being taken have "value," and there are many people who use these photos in informal ways (often "lifted" from the net without thought). What's missing is the infrastructure to find these assets and to facilitate transactions.

TWO EMERGING (TRANSITIONAL) SOLUTIONS The most recent attempt to address that is the emergence of "microstock" agencies, who pitch themselves as being the agencies that anyone can (and does) join to sell their photos. However, they suffer from many problems, as discussed here:

http://danheller.blogspot.com/2007/03/myth-that-microstock-agencies-hurt.html

In short, microstock agencies evolved from an insider's exchange program, without the intent of forming a broader business outside of the industry. Because they don't appeal to the consumer, buyers or sellers of photos are largely unaware of these sites outside of the industry.

Ironically, "photo-sharing" and social-networking sites that millions of consumers use every day are in the best position to provide that infrastructure, but don't. The simple, but unfortunate reason is the lack of awareness that the latent demand for photography exists. This topic is discussed in full here:

http://danheller.blogspot.com/2007/02/future-of-photo-sharing-sites-and.html

This has placed the industry in an unsual state of transition, bifurcated between two models: the larger, traditional stock agencies (Getty, Corbis, et al.) who manage traditionally more senior pro photographers and cater to larger media and advertising companies; and the eratic and organic grassroots industries, such as photo-sharing sites and the websites of individual photographers. The "hole" in between these two extremes is currently large enough to drive a truck through.

The biggest losers of this are emerging pro photographers, not the consumers or the existing pros. Consumers are happy to sit back and let things happen casually through the informal networks, and seasoned pros are already engaged with existing larger agencies (though their future in in flux). The emerging pro has the hardest work ahead of him because no existing infrastructure works well for him in today's economic climate. There's no room in the top agencies, which are already in peril by their downsizing, and microstocks simply don't make money sufficient for a pro. Photo-sharing social network sites are fine to plant seeds, but they don't result in short-term income that a pro would need. their only option, which has always been a good one anyway, is to build and evolve one's own photo site. Yet, this is not a simple task with today's tools (though easier than ever before), and it also takes considerable time to rise high enough in search engine results to yield sufficient returns.

The consumer is currently in the best position because of their lack of immediate income from photography. People are finding and licensing photos through photo-sharing/social-networking sites in small doses, but enough to bring not insignificant income. Microsoft made news within the confines of the stock industry when they announced that several of the photos used in Windows Vista were obtained from everyday consumers through www.flickr.com, the largest of such photo-sharing social networks. Yet, because the ratio of purchases are small to the total lot, the perception is that these are anomalies. Still, the growth has been as persistent as the growth of Ebay was in its early days. Still, without the formal infrastructure for licensing these photos, the growth has been stymied, hence the perception of weak demand.

PARADIGM SHIFT The misunderstanding of the photo market is largely due to the mundane nature of photography in the first place: everyone does it, and everyone assumes that only the "pros" really make any money at it. And, of course, the "pros" prefer it that way. Thus, most pro organizations promote the same model of the industry as a way of preserving their livelihoods. But this short-sightedness has not served their constituents well, causing an even greater decline of "pros" in the traditional defintion, and escalating the growth of the non-pro photographer's economic activity. The number of members of pro photo organizations, such as ASMP (American Society of Media Photographers, the largest of the group) has been fairly static over the past 10-20 years. In 1999, ASMP had about 5000 members, whereas today, there are about 5500. Yet, the number of pro-level cameras from all manufacturers has grown from about 2M units per year it 1999, to well over 100M units in 2006. If even a small percentage of buyers of pro-level cameras are actually pros, then it certainly suggests that organizations that propose to represent their interests are failing in this task.

A primer on the basics of the traditional photographer's viewpoint--and the counterpoint--is here:

Chapter 2: The Five Truisms of the Photography Business

In a nutshell, if there's money to be made, entrepreneurs will find a way to make it. As people discover some way of getting income from photography, it'll be as obvious to everyone else about the opportunities in the photo industry, as it was that Ebay is to selling second-hand junk.

FUTURE DIRECTIONS The catalyst that will bring about change will come in the form of a familiar player: search. That is, what makes photos sell will be the same thing that accounts for why many other things sell on the net: the user finds them. Coming up first in search results is the holy grail for most businesses on the internet, and has proven to be a multi-billion dollar business for sites like Google. So it is (and will be more so) for photos.

Opportunity lies in the fact that traditional search engines only play a minor role in photo search (for the time-being, at least) because searching image data is not the same as parsing language. Today's photo-search industry is in much the same condition that more generic internet search was long before Google came onto the scene. Sure, it was there, but its usefulness was a crap shoot at best, and placement within search results was untrustworthy. A detailed discussion on this subject is here:

http://danheller.blogspot.com/2007/04/keywording-and-future-of-stock.html

This brings us to where innovators and entrepreneurs will eventually make a big shift in the industry towards the consumer (who is already there, whether they know it or not). As search technology for images improves, and as photo-intensive sites realize that revenue is available from licensing, there will be a fusion (through consolidation) of traditional stock agencies with photo-sharing/networking sites, resulting in a type of Ebay-for-photographers model, but even easier. Rather than people selling individual photos piece-meal, they'll just have a continuously updated supply (an activfity they already do on photo-sharing sites).

LEGAL SUPPORT The supply is there, the demand is there, and the infrastructure is coming. what's left to support the premise: a legal infrastructure. Again, that's already there: copyrighted material (such as photos) is easy to protect, and is supported by substantial fines and accommodating courts. For discussion, see:

http://danheller.blogspot.com/2007/06/making-money-from-your-stolen-images.html

As "image search" becomes more routine in everyday search engines, the ability to find your images on other people's sites will be as easy as finding your own "text" on other sites. If it's this easy to monitor, and the fines are hefty, there's little incentive to steal images. This, in turn, spurs sales.

We have supply, demand, infrastructure, search, and legal recourse--all the elements necessary to sustain a viable economic model. The only thing needed is a triggering event, which will likely come as a byproduct of other internet-related plates shifting in the ground. The timeframe? About 2-4 years for the emergence of a truly viable business, and 4-6 years for it to properly gain the attention of the wider consumer public.

WHAT TO DO IN THE MEANTIME So, what can people do in the interim? The answer is similar to the same question posed in 1995, well after the "hype" of the internet had been spread, but well before there were any mature web-development tools or infrastructure for internet commerce: land grab. It was clear that the future of the net would provide economic opportunities, but only those most advanced were going to really capitalize on it well. People eventually made millions on doing nothing more than registering popular domain names, like "jeans.com" or "laundry.com". For photography, it's less the domain name as it is its traffic.

And that's the name of the game to making money in the photo industry of tomorrow: take pictures, get them online, and publicize yourself through any means possible: go to photo-sharing sites, discussions groups, writing a blog, and, of course, have your own website. The main "kicker" that draws traffic is to be known for something. It doesn't have to be photography--it can be anything. If people cite you as a source for information, and your site also contains photos, then your photo assets' value piggy-backs on the success of your reputation.

As the infrastructure eventually emerges for more recognizable name-brand companies that are used to market and sell consumer-based imagery, your content (and even your "web property") become vastly more valuable. Knowing that "search" will be critical, you should keyword all photo content well, and so on.

Camera "equipment" is irrelevant--all SLR cameras today can take perfectly good photos, and even point-n-shoot models are mostly good enough for generic consumer-related uses.

Are your pictures "good enough?" Who knows, but another misunderstanding is that only really good photographers make money. Not so--even the most mediocre pictures sell quite well. The most influential factor in a sale is the image being found in the first place.

Should you set up a formal business? Do you need to think about taxes and other things? It all depends on how seriously you intend to get into this business. Again, think about Ebay: if you sell a few things here and there, don't sweat it. If you're making real money, you may need to formalize your business.

Making money from your stolen images

Ever had a photo stolen from your website? Did it make you angry? Did you feel violated? Did you feel powerless? Are you apprehensive about putting your photos on photo-sharing or stock-photo sites because you fear the problem would only be worse? I know it'll sound like a shocker, but you may be sitting on a small pot of gold. To explain why, you need some background.

Think about this scenario:

A web designer is making a web page for the corner hair salon, and there are two images to choose from: one costs $1 and the other cost $349. If the web designer was going to steal one of the images, which image do you think that person would choose?

Most people would say the $1 would be stolen. Why? According to studies repeated in various contexts, a similar theme underlies most acts of theft: the decision to steal is driven primarily on the perceived "consequences." An article in the Journal of Applied Social Psychology showed that the lower the perception of consequences, the likelihood of stealing is pretty equal among genders and racial backgrounds. Innocently taking a small candy at the checkout counter is something most everyone's done at one point in their lives simply because the consequences of the act are very low. It is only when the perception of the consequences go up that the true risk-takers (poor single men under 25) are more likely to steal.

Consequences
What does this have to do with photography? In my hypothetical question about the web designer, most people would assume the $1 image would be stolen. Whether you're aware of it or not, your "intuition" guided you to that assumption because the perception of consequences is lower because the value of the image is lower. Which is also the same rationale as the thief. Odd, though it may sound, this is totally wrong--people attribute stealing images to stealing other things, or for other kinds of crimes or mistakes. Consider one of these two scenarios:

1. If you break someone's window with an errant golf club that mysteriously flew out of your hands only seconds after the ball itself landed in the sand pit, then the owner of the window is entitled to "compensation" to cover the cost of fixing it.
2. If you get caught stealing a candy bar from a store, you have to pay for it.

The common theme here is "compensation based on the value of the item." In law, these are called "compensatory damages" because you, the evil-doer, "compensates" the victim for whatever you did--broke a window, or stole a candy bar. Hence, stealing a $1 image is perceived to have lower consequences than the $349 image because people don't know of other kinds of violations.

Thing is, stealing an image is not really against the law, so much as using the image is. It's like saying that falling off of a tall building doesn't kill you--it's the sudden stop that does. So, stealing the image isn't what gets you into trouble, it's putting it into use that does. In this case, "copyright infringement." And here's the part most people don't know: the law on infringements does not specify compensatory damages, but statutory damages, which is a very big difference indeed.

To illustrate how big, there was an article PDN reported on November 20, 2006: Corbis Settles With TemplateMonster; Wins $20 Million Judgment From Mystery Companies . In short, TemplateMonster stole a bunch of images from Corbis and used them as background images for "templates" that were sold to web designers who would use them to create web pages. The reference to the "Mystery Companies" in the article title is that other people and companies were involved that were either difficult to track down, or impossible. (Turns out that the companies were empty shell organizations.) Still, Corbis had a nice windfall from those they did identify.

When the article came out, photo forums were abuzz with scorn for the notion that photos were stolen, and fear began to circulate that their images would be stolen too. Many even proclaimed they were going to remove images from social photo sites and microstock sites because they can be easily stolen.

My immediate response was "Huh? Didn't you read those headlines? $20M! that's an 'M'! You're kidding me, right? Remove your images from stock sites? Hey, sign me up! Steal my images! Please!"

And that's when I started putting the pieces together and realized something may be going on in this industry that I hadn't considered before, which started me on a long-term hunt for stories, tidbits, interviews, and of course, legal research into the dark world of copyright infringement. Or, should I say, very lucrative world... for the copyright holders.

Statutory Windfall
In "statutory damages," the fine is based on an entirely different formula, irrespective (usually) of the actual "cost" of the item (or, in this case, the license fee). In fact, in the case cited above, the judge awarded Corbis the maximum amount allowed by law: $30,000 per image, plus $2,500 for each act. What's more, the court may (and usually does, according to statistics of such violations in court records) also award attorney's fees. In other words, you not only get the money, but the infringer pays your legal bills.

How much would the images have cost the company if they licensed them legitimately? It's hard to say given the company and the number of photos used. But, suffice to say, one could license the same kinds of images on microstock sites for $1 to $10 each.

And that's where you start hearing the click of light switches going off in some people's heads: if you knew you could gets tens of thousands of dollars if a kid stole a $1 candy bar from your front counter, there may be a lot of money if you put a lot of candy bars out for hungry children to take, especially if you make it very easy for those kids to take them, and especially if those kids have no idea of what the penalty is, and even more especially if we're talking about adults working at businesses that all bear super-size responsibilities.

So what does that mean for photographers and for photo agencies?

Opportunities for Everyday Photographers
I recently got this email, which is similar to a constant and frequent stream I get on an ongoing basis:

On Jun 25, 4:24pm, jrus424@msn.com wrote:

Two of my photos were lifted from Flickr and are currently being used on a hotels' website (w/o authorization). Should I take any action? My photos on Flickr are all rights reserved but others have told me to just forget it.

I get so much of this, that it's staggering for reasons that will become clear soon.

First, let me point you to an invaluable resource: The website for the US Copyright Office. This link is a well-written, easily understood list of the most common topics about copyrights that can be understood by most anyone, including photographers and even those who work for our own Attorney General.

Statutory awards can range from $750 to $30,000 per infringement, or even be as high as $150,000 if the infringement was willful or intentional. (Sound effect of Vegas-style slot machine bells going off.) To determine your situation, consider these two steps:

1. If you have registered your photos with the copyright office, you can sue for statutory damages, and even recover your legal expenses.
2. If your photos have had a visible watermark on them with your name and/or copyright notice, then the act is considered willful and intentional.

If you have done one or the other of the above, you should find a lawyer specializing in Intellectual Property and start letter-writing. Don't contact the hotels first--you don't want to say anything that may make negotiations harder for you later. Make a screenshot of the website that's using your photos for archival and legal reasons, then shop for lawyers. (If it's printed matter, just make copies.)

If you haven't yet registered your photos, or put watermarks on them, do it now. While it won't have an affect on this case, do it for future cases. And always do this for new photos you put online. Soon, the copyright office's new online system for filing your copyright registration will be available, which will make the whole process easier. Details on their website at http://www.copyright.gov/eco/index.html.

Even without having registered your photos, you could have a lawyer file a claim, but the likelihood of a recovery is less certain, and will be considerably lower. According to the law, you still own the copyright, but unregistered images that have been infringed are only subject to "compensatory damages." That is, a $1 photo can recover $1. The hotel's lawyers are going to look at the two points noted above and realize you've got a harder case to prove. Still, if your lawyer is good, you might eek out several hundred, especially because most larger companies don't want stuff like this hanging over them. Your mileage may vary, but it does mean that your lawyer is going to have to do the cost-benefit analysis of time vs. money recovered (since he's the one doing all the work).

If you do not plan on filing a claim, you could try to contact the hotels and state that you "will" a file a claim unless they want to settle early. Here, you risk having your bluff called.

In fact, this is what I did in my early days, and I found that some paid, others didn't. Big companies were more likely to do so, and to pay better; little companies usually said, "Go ahead, sue us." In the end, the time and energy were draining, not to mention the constant, distasteful "conflict," which made the whole practice... well, not to my liking. Perhaps it was because I was doing this without a lawyer, but also because I was making far more money dealing with honest licensees, that I didn't really want to pursue the thieves. And let's be honest: you grow your business by working with the paying clients because they turn into better paying clients. Catching thieves may be morally rewarding, but it doesn't "grow" your business. Of course, it's a great side-business for an existing business, if your sources are such that you can have these lawyers working for you on the sidelines.

Recently, due to finding just one-too-many infringements of my own images, and inspired by Corbis' windfall, I finally got around to using a lawyer to do this work for me. And, because I have registered my images with the copyright office, and because I have my copyright notice on all my photos, I have a "slam dunk" shot at every single case I bring forward. (It's more slam dunk than the last time that phrase was used back in 2003, but we won't get into that now.)

Although I'd implied there are pretty substantial awards to be had for infringements, "common" violations by smaller companies and less serious uses probably yield much smaller payoffs that may range from $2000 to $5000. Given my own back-of-the-napkin calculations of the bona fide infringements of my images that I currently have documented, I could add another $70-100K to my bottom line.

In determining my bigger opportunities, I used Yahoo's site-search feature that lists about 90,000 sites that link to mine from around the web, 5000 of which use my images and link back to my site. Some of them are personal web pages and such that I wouldn't pursue, but imagine the number of image uses that do not link back to me and that use my images. Simple math would suggest that if I got 1000 violations at $2000 each, that's $2M. Not a bad kitty for a single photographer. (Suddenly, my company's valuation is higher.)

The Hurdles
So, if it were that easy, why doesn't everyone do it? One stumbling block is that it's hard to find the violators. Sure, I've done brute force Google searches and found many violations that could be worthwhile, but it's very time-consuming. The real business opportunity is if you can automate the process so you don't spend your time doing it.

In fact, there are some companies that currently do just this: http://www.ideeinc.com, and http://www.picscout.com both have image recognition software (that they have each respectively patented) that can find identical matches for photos, even if they've been rotated, shifted, colored, cropped, or mangled in many ways. The process is simple: they first analyze all your photos by doing an analysis of the pixels and coming up with a kind of "fingerprint" ID. Then they crawl the web, or look at printed material (that they scan) and generate reports for where your images are found.

Sounds great, right? Here's where the next hurdle lies: it's really expensive and time-consuming to crawl the web. So much so, that the resources necessary to do so are so prohibitive that the fees these companies charge eat away at your bottom line. This, almost to the point where, again, it's still more cost-effective to let the thieves go and just continue working with the honest people. (Actually, there's a cross-over point where the number and nature of the violations is high enough that it becomes worthwhile.)

With their limited resources, it takes months and months before actual matches are found, largely because the searching algorithms are rather dumb--they just search randomly. As a human, I can make more intelligent searching decisions, like going to images.google.com and searching on keywords that I know will match my specific images. And true to form, I can usually find several infringements if I put the time into it. But again, there's that time thing again. Too bad those companies don't use more intelligent search methods to come up with more likely matches.

Why don't they? To do so, you have to have already crawled and index the web before searching with keywords makes sense. This begs the question, why not just crawl google's already-indexed search results? Primarily because they are not allowed to. (Google once had an API and an agreement mechanism available to do this, but they've since terminated the program.) So, these visual-search companies crawl the web like "ships passing in the night." A very foggy night with no compass or GPS.

So, although the small image-recognition companies have really great technologies to find the matches, that's not the barrier to entry. It's the mere indexing of the web. Once you do that, the image pairing is simple. So much so, they could probably find all copyright infringements by all photographers in a matter of a few days if they were only allowed to churn through Google's warehouse of data.

Hold onto that thought for a moment.

Opportunities for Agencies
What about agencies and/or photo-sharing sites? Flickr hosts hundreds of millions photos--let's round it off to 1 Billion images. If .1% (one tenth of one percent) of these photos had infringements, that's 1 million violations. Even a low estimate of $500 per violation yields $500M. That's a half a billion dollars. And think of what that would do to sign-ups at Flickr, not to mention Yahoo!'s stock price. People would be Flocking to Flickr! (I've been dying to use that expression.)

Best of all, that barrier that plagues me and everyone else doesn't apply to Flickr because they are owned by Yahoo!, who's indexed the entire web. They could very easily scour the web at the blink of an eye.

Suddenly, the business prospect of Flickr is more interesting. I've said before that Flickr should enter into the licensing business directly, and while I still believe that to be a rosy picture, it's even rosier if you add their natural ability to police infringements. Best of all, NO ONE ELSE COULD COMPETE WITH THAT! (Sorry, I hate using all-caps, but in this case, it's warranted.) They would literally corner the market in stock photos by simple virtue of their back-end infrastructure and existing photo assets.

Nevertheless, would Flickr ever do it? Sigh. Not anytime soon. The New York Times has had daily articles about how Yahoo! is imploding faster and faster: they're losing their vision, having serious upper management problems, and all business units suffering for money, resources, and personnel. Rumor has it that are executives waiting for stock and options to vest (so they can leave). Each business unit within Yahoo is choking for air, and Flickr is not anywhere near the top of the pecking order. So, no, I don't expect to see anything "new" from Flickr, let alone anything innovative, until the bigger company gets it house in order.

This then leads to Google.

Would they get into photo licensing? Not without acquiring a pretty big player, and that isn't quite likely, mostly because the photo industry isn't perceived to be important enough because even the biggest players are having problems making money. (This is a topic for another blog article, I promise.) Given Google's size, this article alone wouldn't even get past a receptionist's desk.

On the other hand, Google does have interest in the social side of photography through its Picasa products, so while we might not see much in the way of photo licensing, it's not totally inconceivable they could be interested in the photo matching game. Why not: it would be a natural fit for their general offerings of search tools, too.

Yet another potential benefit might be its own public relations boost. Google has been the target of many copyright violation claims, ranging from very public ones, such as the YouTube case involving Viacom, all the way to publishers and universities whining about Google's project of scanning books and documents found in libraries to help make the world more comprehensively indexed. Though none of these claims are sticking, simply introducing a mechanism that helps people find "exact matches" of photos on the net could be precisely what the Public Relations doctor ordered.

But, again, there's been nothing even hinted at about Google blinking in this direction, so for the moment, the aforementioned image-recognition companies (Idee and Picscout) have a long time to try to build their businesses without being usurped by major players who could take them out with a flick of a switch. (Oh, and add cognisign.com to the mix: they have great visual-recognition technology as well, but have already expressed no interest at all in pursuing a business in tracking copyright violations.)

Returning to the viability of image-recognition companies, one might argue that image matching is not that hard--or rather, not hard enough to command a secure role as the "leader" of the industry, because the real barrier is still the searching/indexing of the web. Whoever figures that out will be the clear winner.

The other side of the coin
For the sake of argument, let's say Google or Yahoo unleashed a simple mechanism in their image search that says, "find all instances of this image on the net." Click it, and you instantly see every page that uses that image, or portions of it. If you're a photographer, you've just found all (electronic) infringements. What would such a world look like for photographers and agencies, and how would it affect the stock photo industry?

The cynical view would be that the major agencies are really playing a baiting game, and this would pull the rug right out from under them. If they are selling cheap candy bars to kids who they know will steal them, the game will be up. Well, not immediately, but quickly thereafter. The availability of instant search results for infringements would generate a huge influx of money for copyright holders, but quickly evaporate as it became so ubiquitously known what was going on. It'd be like having a police cruiser sitting at every stop sign in your city. There would be a huge inflow of revenue from traffic violations at the start, but within a day or two, there would never be another violation again--people would just know the cops are sitting there.

The less cynical view is one that reflects more of what we're seeing in the licensing world now. For example, Getty's images are so easy to "copy" because the licensing is based on the honor system, but it may be for reasons other than to "entrap" users into infringements. I have personally spoken with many of their clients who tell me they use Getty images all the time for short little pieces without paying for them because they feel justified. This was how the candy bar analogy came up: a client said to me, "Getty will look the other way if I steal a candy bar now and then so long as I do my major shopping at their grocery store. If you did the same thing, you'd get more big buyers like us, too." I wouldn't do it, but not because I didn't believe in the strategy, it's because such a strategy only works for a large company like Getty. It doesn't work on small scale operators.

If the "search switch" were turned on, what would that do to Getty's business model of "give a little away so you can collect the big clients." And therein lies the real question: do you pursue your violators for large sums of money? What if they are also spending large sums in groceries? If they aren't, can you convert them? Do you take the short-term win (of pursuing infringements) at the expense of potentially alienating your clients and long-term growth? And what about the photographers the agencies represent? Whether Getty or a microstock, if they don't pursue infringements, then they can be a contributory infringer. (I alluded to this in an earlier blog about Flickr's liabilities in this area.)

Making it even more complicated is the inherent value of having your images stolen in the first place. In fact, Viacom's claim against Google's YouTube has generated a stir by television industry analysts, as well as within the walls of Viacom itself: the fact that TV shows are available online has actually helped viewership, and thus, increased advertising rates for those shows. Speaking of my own experience, the fact that so many sites use my images and link to me is one of the main core reasons why my site ranks so highly, which is what brings me the traffic that converts to buyers. So, a little copyright violation can actually do your business good.

Converting a criminal into an honest buyer is warm and fuzzy, but what about the tactic that made them a criminal in the first place? It'd be interesting if a defendant actually tried to use the legal excuse of the attractive nuisance doctrine. "They don't prevent me from downloading it without paying for it! It's too easy! I didn't know! The rules are cryptic." That's hard to say, and perhaps somewhat of a stretch, but if that magic switch were ever pulled by a search company, and thousands upon thousands of copyright infringement cases suddenly came up, the courts would have a lot on their hands.

Suddenly, the business aspect of copyright infringements isn't so cut and dry.

On the darker side again, there's this:
in an article by Bug Shell, Getty purchased the negatives to the National Archives, and is now on a litigation spree against those who use those images, regardless of the fact that owning the film does not grant ownership of copyright, and the fact that the photos are in the public domain. Getty claims that their "scanning" of the negatives (dusting and other corrections) creates a "derivative work," but many legal observers are taking great exception to this claim.

And the industry pendulum continues to swing back and forth.

Summary
The net-net is there's big money in copyright violations, especially if photos are registered with the copyright office and they are watermarked. What keeps this from becoming a more prominent figure in the industry itself is two-fold: the lack of awareness of how lucrative it can be, and the "resources" available for tracking the infringements in the first place. But, like anything that has the potential for money, there will be those who start down those paths to see where they lead. For those playing the home game, keep in mind that the issues faced by agencies are not shared by individual photographers. That is, while an agency may have business risk by being too aggressive in pursuing violators, individuals certainly do not. Even as I type this, yet another email has just trickled in from another concerned photographer, "I'm going to take my images off Flickr because I don't want them stolen." My response to him will be to read this article.