DIMdump

Industry Comment #24--Goodbye

As most of my readers already know, on October 31, 2006, Photolibrary of Australia purchased my former company, Index Stock.  I am moving on and will look for "other opportunities."

Now that I have left the stock photo industry, I feel I will be unable to continue contributing to this blog.  I derived most of the inspiration for my posts from the input of our artists and employees.  Without this daily contact, I doubt that I could continue to offer advice that is relevant or insights that are useful.

Still, I thought I'd contribute one final post that summarized some of what I learned in my fifteen years at the head of a middle-sized stock agency.  The list is short, but it may at least provide some historical perspective, for those who stumble across it, in the future.  The list is not in order of importance, I am afraid.

1.  Commercial art is still art.  Customers may think they are using an image because the color matched the client's logo.  They may claim they hate all stock photos.  But, whatever they say, customers enjoy looking at good images and tend to choose those that evoke emotions, stir memories, and make their pulse quicken.  They appreciate art--and after fifteen years of looking at images, so do I!

2.  It is possible for a nice person to be a great artist.  There are a few nasty people in the stock photo industry.  Some of them are good artists, and the nastier they are, they better opinion they have of themselves.  The swagger, pride, and bombast of these unpleasant people can obscure the joy of working with the legions of equally creative people, who are much more fun to spend time with.

3.  Making art is a way of life.  The many successful artist I worked with--including the nice ones I mention above--were all obsessed with their vision of the world.  Everything they saw, ate, thought, and felt got wrapped up in their images.  This single-mindedness must be trying on their kids, significant others, and friends.  As their agent, I always felt priveleged to be part of these unique visions.

4.  There is always room around the edges.  When I first took our agency on line, people were amazed that we had a digital library of 30,000 images.  Nowadays, it is not uncommon to see libraries of four million or ten million images.  Even so, there is room for hundreds of thousands more images--if you move away from the mainstream, and work around the edges.  The same is probably true for the remaining smaller stock agencies.  There should be plenty of room for them, around the edges of the industry.

5.  Be patient, be pleasant, and be willing to change.  In just fifteen years, I helped transform a sleepy mom and pop business into an Internet hub.  If you include photo sharing sites as part of the industry (and I think you should) there are now at least five multi-billion dollar corporations (Google, Yahoo, TimeWarner/AOL, HP, and CNet) and three billionaire-controlled agencies (Getty Images, Corbis, and Jupiter Media) involved in the stock photo business.  From time to time, I lost my patience, was rude or insensitive, or got stubborn on a point of principle.  I regret those mistakes, and wish I could have listened and thought longer and more carefully before I spoke or wrote.  Our industry now touches millions of people all around the world.  We will all do better if we treat each other with more respect.

If you want to reach me, it is easy enough.  The email address on the site still works and I plan to leave it up, for a while.  Thanks for everything.  Good luck and goodbye.

Industry Comment #23--New Pricing Models

Recently, there has been a lot of interest in "new pricing models" for stock photography.  The success achieved by the royalty free license model has encouraged interest in subscription models (like our Index Open product) and the microstock model (like our Photos To Go Unlimited product).  Now, the biggest player in our industry, Getty Images, has announced plans to introduce a new variant of the rights managed model.

I believe this new approach will not be very successful.  I have three lines of thought that I have divided into "logic," "experience," and "analogy."  These lines of thinking lead me to conclude that the royalty free, subscription, and microstock models will tend to dominate any other choices--with the leading model in the long term most likely turning out to be microstock.

Logic = Why pay more for something that is hard to understand?

Despite an increase over the past few years in the price of royalty free licenses, they remain cheaper on average than rights managed licenses.  At our agency, Index Stock, the average rights managed license remains around $600 per image, with the average royalty free license around $300 per image.  Furthermore, if one considers that a royalty free license gives the recipient unlimited rights to use an image over and over, in perpetuity, the value difference is even more in favor of royalty free.

To get a rights managed license, a customer has to define exactly how she or he plans to use an image, for how long, and in what industry or context.  This creates a more complex buying situation, that may have multiple approval steps and require several adjustments to the rights managed license.  Obtaining a royalty free license is simple and direct.

If one puts the industry's licensing models on a two dimensional chart, with cost on one axis and complexity of use on the other, the differences are easy to see:

Even one-off royalty free licensing does not look to be the long-term winner.  Both subscription and microstock appear to be more attractive, from both a convenience and cost perspective.  It is logical for clients to avoid rights managed licenses, whenver they possible can.

Experience = Been there, done that!

I hate it when I start talking like a geezer, but "back in the nineties..."  Yes, back in the 1990s--in 1995 to be specific--my company introduced the industry's first microstock product.  We called it Photos To Go, and we continue to offer the product, today.  We started with a license fee of $3 per 2MB image, for use by small businesses and consumers--and gradually increased it to $39, today.  We included both rights managed and (when they came along) royalty free images.  We limited the use to one year and in certain types of printed and Web materials.  All licensing was done online, with no negotiation or haggling needed.

How was Photos To Go different from istockphoto, fotalia, and the rest of the microstock guys?  It wasn't.  It was just so early that no one back then could figure out what to do with it.  Actually, that is unfair.  Over the years, about 400,000 people have licensed images through Photos To Go or registered on its site.  That probably makes it still one of the biggest microstock products, in the industry.

So shouldn't our Photos To Go experience indicate that microstock will never be a big factor in the industry?  Sorry, but no.  Instead, it has given me ten years of experience about what people really want from a stock photo site.  Those who learned about Photos To Go LOVED it.  They couldn't understand exactly what we meant by "rights managed" and they had a very hard time understanding why they might have to renew their license to an image after one year.  They also didn't understand why they couldn't use the image in major projects, with large companies.  But, they loved it and kept coming back for more.  That is one reason that we introduced a simplified subscription-based version of Photos To Go last year, called Photos To Go Unlimited.  By offering access to more than 85,000 2MB images for only $99 (for six months), we broke into the microstock market.

I am also enough of a geezer in this industry, to remember some previous experiments that did not work so well.  I recall clearly that two of my competitors (both now under different management or different owners) tried out "simplified" rights management approaches.  Both of these experiments failed so miserably, that they were withdrawn without any further announcement.  Thanks to dedicated snooping and probing (yes, we do gossip at those industry conferencs we go to), I learned that the customers of these companies did not understand or appreciate that these new licensing systems were "simple."  They asked over and over again, if the new system was the same thing as royalty free.  When they got the bad news that instead, there were being offered a flavor of rights managed licensing, they were disappointed.  Further, it seemed that any effort to combine rights managed price categories together and reduce their complexity tended to reduce average rights managed prices.  In other words, if an agency stopped distinguishing betweeen quarter page and half page size, or between one insertion in a magazine and three, most of its customers expected to get the lower of the two former price choices, rather than a midpoint between the two.

Analogy = What other industry even tries to hassle people, so much?

It is hard for me to think of another business that expects so much knowledge and understanding on the part of its customers.  For instance:

1.  When I buy a music CD from Tower Records, do they ask me to tell them where I intend to play it, how often, how loud, and with or without watching the associated video on my TV?  If they did, would I tell them, or just go home and download the CD for free, from the Internet?
2.  When I turn on the TV to watch a program, does the TV ask me what I am wearing, what type of soda I plan to drink during the program, and if anyone else is in the room, with me?  I am sure there are certain members of Congress and our Government, who might approve of the networks doing this, but I don't think most Americans would agree with them.
3.  When I buy a newspaper, do I have to sign a document in advance agreeing not to give the newspaper to anyone else or to tell anyone about the stories I've read in it?

Of course, there are some buying decisions that have a level of complexity that is equal to the rights managed buying process.  For instance, ordering coffee at Starbucks (I marvel at the specificity of the instructions I hear--and that they appear to be understood and correctly followed, most of the time!), leasing a car (don't try to read the contracts, just sign and hope you never have an accident or problem), or buying a computer on line (menu after mind-numbing menu of options that no ordinary person could understand).  However, if you ask people how they feel about these processes, many will tell you that they hate them.  Offer them simpler and cheaper approaches (coffee at the corner deli, buying a car at the "employee price," or getting a pre-packaged computer model) and many will choose simplicity and low cost, if they can.

If you are an artist and agree with my analysis, you should be shifting your production towards royalty free material.  I have offered suggestions in previous posts about where opportunities remain for new royalty free images.  If you are one of our artists, we can give you more direction, want lists, etc.  Please contact your editor.  If you are artist who disagrees with my analysis, I will be happy if you are right, and promise not to gloat, if you are wrong!

If you are a customer and disagree with my analysis, please visit our site.  We continue to list hundreds of thousands of GREAT rights managed images--and hope you will license a lot of them, from us.  In fact, we intend to continue marketing images under any license that both protects the copyright of our artists and makes them money.  I don't know if you noticed that I slipped in one model that trumps them all--"Free."  Our industry needs to be realistic that there is a threat that our customers' desire for less cost and more simplicity will eventually drive them into this model.  We need to work hard to increase the value we offer and make it clear why all of our models are better than this one.

Industry Comment #22--Seasonality

Several artists have asked me to comment on seasonality in the stock industry.  They have asked if there is there a regular pattern of sales increases and decreases, over the course of a year?  How extreme are the differences, and has there been any change in the pattern, over the past few years?  Does the revenue we get from foreign agents have a different pattern?

I think I have a good resource to use, to answer these questions, in the 14 1/2 years of revenue information I have for my company, Index Stock Imagery.  I can't claim that we are representative of the entire industry.  But, our data is consitently recorded, and shows some interesting features that make sense to me.

I looked separately at our domestic revenue and our foreign revenue.  I ignored revenue from our electronic distribution effort, despite its rapid growth and increasing importance to our overall income.   I believe few other agencies in our industry have comparable amounts of this type of business.  I divided our domestic revenue into three five year periods:  1992 through 1996, 1997 through 2001, and 2002 through 2006.  (I only had 2006 data through June, but I felt this would not make too much difference.)

I was interested to see if there were differences in seasonality between these periods.  It had been my impression that there was a shift between the early 1990s (when we and most other agencies were doing most of our domestic licensing over the phone), the late 90s and early 00s (when we shifted primarily to on-line marketing), and the past few years (when everyone else went on line).  As you can see, there do seem to be some major differences between these eras.

First, let me comment on the overall pattern. Note that there seems to be a lot of differences between various months.  One twelfth of a year is 8.3%.  As you can see, the actual range of average monthly revenues is between a low of about 6% and a high of about 10%.  It appears to be "normal" for our monthly revenues to vary as much as 60% up or down.  The average standard deviation within the above figures is about 1.5%.  That means that there is a 5% chance that a month could have 3% above or below its "normal" its normal share of our total annual revenue.  In fact, within my data there are months where in one month we captured almost 14% of a year's revenue and others where we booked as little as 4%.

Now, look at the changes that have occurred, between the three time periods.  It appears to me that there has been a big rise in revenue early in the year--in January through March.  There has been an offsetting decline in October and December.  I can offer some possible explanations for these changes--although I am not certain that I am right:

1. Christmas buying has shifted earlier and spread out.  We used to have a rush of orders in October, from customers who needed images for holiday advertising and product launches.  It looks like our customers have shifted some of this activity to earlier in the year--perhaps as a result of an increase in overseas manufacturing of products that makes ad campaign lead times, longer?
2. More licensing may be tied to an annual budget cycle.  Our customers have increased the percentage of images they license as "royalty free."  We notice many seem to buy a chunk of their RF images early in the year, when they get their "new" art budget.  They then reuse these images as the year goes on, rather than licensing new ones.
3. Our clients take more vacation than they used to.  It seems that the art and design world tolerates vacations and days off, better than it used to.  Major holidays have become very quiet--even on our Web sites.  Months that have a heavy holiday burden (e.g., December and November), lose a lot of selling days.

I felt it might be helpful to contrast our domestic seasonality with our foreign seasonality.  Of course, there are some different factors at work, that we need to adjust for.  One thing that may be unique to Index, is that some of our agents still report their revenue quarterly.  This was the style many years ago, when we received reports in the mail.  Quarterly foreign reports tend to pump up the first month in each calendar quarter (January, April, July, and October).

Another thing to remember is that foreign agents report license AFTER they collect the money that is due to them.  So, a report we receive in July may be for a license that was made in January and collected in June.  I estimate that this timing effect shifts seasonality as we see it, to between two and four months later, than what our agents experience.

Finally, a number of agents are forced by their local tax laws to file special forms each year that allow them to avoid paying a withholding tax on their remittances to us.  These forms wend their way through the local tax beauracracy, and eventually get cleared.  Our agents then send us all of the reports they have held until that point.

I think I see this last event, in the pattern I show below.  There may also be evidence of a summer vacation dip, especially from our European agents.  Otherwise, there is no strong apparent correlation between the two seasonality patterns.

I believe artists, distributors, and even investors in the stock photo industry, should not read too much into any short term variations in licensing revenue.  Our industry has a lot of monthly revenue volatility, and a big one-time change in any direction, may not be the sign of a sustainable trend.  It seems that there is a general shift towards a pattern of bigger first quarters and smaller fourth quarters.  And, it seems to be a good thing for agencies to have two (or more) different sources of revenue (such as domestic, foreign and electronic), since the changes in these sources do not seem highly correlated.

Industry Comment #21--The Role of Industry Associations

The commercial photography industry is suppoted by a number of Industry associations.  For instance, the U.S. stock photography industry, is served by the Picture Archive Council of America (PACA).  This long-lived (started I think in the 1980s) and well-respected organization has more than 100 members, including almost all of the major stock agencies that operate in the U.S.  One of the first things I did upon entering this business (in 1991) was to join PACA.  Over the years, I and other members of our Index Stock staff have volunteered for roles that included President of the organization (from 1999 through 2001), the head of various committees, and stuffing envelopes.

We have also supported the European equivalent to PACA, the Coordination of European Picture Agencies (CEPIC), the American Society of Picture Professionals (ASPP), and the American Society of Media Photographers (ASMP).  We are a member of the an association that is trying to set standards for reporting licenses, Picture Licensing Universal System (PLUS), and support other more general industry standards such as the Joint Picture Experts Group (JPEG) and the World Wide Web Consortium's (W3C) Cascading Style Sheet (CSS).  We are a Microsoft Certified Partner and conform to both the International Press Telecommunications Council (IPTC) and Adobe's Extensible Media Platform (XMP).

As you can imagine, it is hard work keeping track of all of these organizations (and remembering which letters go with what group!).  The promise of joining and supporting a trade group, is that its activities will add value to our mission (making money for our artists).  While we have had some benefits from our memberships, there are several areas that seem to me, to have been neglected.

I doubt that many (any?) of the folks in these organizations read my blog.  So, I am unlikely to effect much change, through these ideas.  However, here are a few things I'd like SOMEBODY to take on, to help independent stock agencies, like ours:

1.  Web advertising standards.  Many of the companies in our industry are buying pay per click ads.  We are also buying banners, running affiliate programs, and generally taking advantage of the power of Internet advertising to drive traffic to our sites.  A number of my peers have complained publicly about having their brands and product names hijacked by one or more competitors.  (For instance, someone could buy the keyword "Index Stock" and then put his or her ad at the top of search results page.  Try this search on Google, and you may see as I did, one of our competitors--and distribution partners--Inmagine, at the top of the page!)  Why not promulgate some standards of decency and restraint?  It would benefit us all, and prevent confusing our customers.  By the way, this should include conforming to standards such as those set by the Email Sender and Provider Coalition (ESPC) and the Can-Spam Act of 2003.

2.  "Small model" standards.  We distribute our images into consumer markets, such as those for postcard printing, cell phone wallpapers, and various kinds of personal web use.  The fees in these "small model" markets can be quite low on a per image basis (e.g., as little as a penny per use), but turn out to be good when you factor in the size of image used, duration of use, and type of use.  It woudl be great for our industry if there was a recommended set of small use market terms.  Instead, each time we talk to a potential distributor, we have to negotiate from scratch about things like copyright notice and retention, percentage split on fees, reporting requirements, etc.  Other media-related industries such as music and television have done a much better job of making it easy to license bits and pieces of their stuff, without a lot of hassle.

3.  Create a safety net.  Over the past fifteen years, I have seen several photo agencies go out of business.  It doesn't happen often, but when it does, it can leave the artists who were part of the agency in a real mess.  Instead of hoping that some altruistic third party will step in to collect outstanding payments, sort and return images, and clean things up, our industry should establish a "rainy day fund," that would pay for helping failed agencies wind up smoothly.  This fund would only be tapped once in a while, but its presence would reduce the perceived risk of working with any agency.

4.  An infringement clearinghouse.  If we find that someone has misused our images, we vigorously pursue them, and get the fees our artists deserve.  But, there is no easy way for us to notify the rest of the industry about the problem.  The software industry set up an excellent example in the Business Software Alliance (BSA).  This organization pursues infringements on behalf of all of BSA members at once.  Why can't we do the same?

5. Training and certification.  The financial industry uses the Series 7 exam to make sure its brokers know the rules and the Chartered Financial Analyst (CFA) designation to improve the quality of its financial research.  Automobile companies certify mechanics; airlines certify their pilots.  Why can't our industry train and certify its editors, retouchers, stylists, and salespeople?  Artists get a type of certification, by joining a major stock agency or those artist groups that require a portfolio review, before they accept a new member.  But, wouldn't it be good to have more independently vetted and widely recognized standards--especially for specialized areas like table-top work, sports photography, or wedding photography?

Our industry's organizations probably feel they have enough problems already--enough different projects, needs, and ideas--and sadly limited resources to deal with them.  However, the members of these organizations might contribute more, if they got more in return.  I believe that the things I have suggested would not interfere with competition or stifle creativity and change.  Instead, they would improve the quality of the services we provide and reduce the risk from working together for both providers of images, distributiors of images, and users of images.  Higher quality and lower risk shoudl mean more profit and stability for everyone--a goal that I hope all of the organizations I have mentioned, would support. 

Industry Comment #20--The Dirty Secret of Ranking

Over 200,000 of the more than one million images in my stock photo agency’s library contain the keyword “people.” Have you ever wondered how we decide what image from those 200,000, to show first?

Of course, the first element in ranking generally is the quality of the match between the search string a user entered and the metadata the stock photo agency has added to its images. There are many tricks and twists available when a user has typed in a long search string. But, because 57% of all searches done on our site contain only one word, we need to use other tricks to put our images into order.

Does image rank matter? It is hard to say. There are many variables associated with each image licensing decision. However, in certain categories such as royalty-free lifestyle images, there are many competing suppliers with similar product lines. In these “commoditized” subject areas, it seems likely that a hierarchy similar to search engine ranking may exist. According to a Marketing Sherpa study, the top three lines on a text Web search get 60% of all clicks. Pushing a set of images twenty or thirty pages down in a search result probably would cut their license fees by 50% or more.

There are several ways that stock agents could rank images:

1. Random. I know of one agent who uses random ranking. I find it extremely annoying. I don’t search linearly for images, but recursively. In other words, I may try the same word several times, as I wander around an image site. On the randomly-sorted site, if I see an image I like, but neglect to put it into my lightbox, I may never find it again!
2. Newest image first. Most of the celebrity and news stock photo agencies work this way (see Newscom for a well-organized and clean example). Whatever has come in most recently, hits the top of the list. This makes good sense for news images, but doesn’t seem suited for general purpose stock photography.
3. Best image first. Doesn’t this sound like a great approach? Make the first image the one that is the most creative, most artistic, and most interesting image that matches a certain search term. Of course, the problem lies in deciding which image is the most beautiful or marketable. I know of two approaches:
   1. Human editors pick the top images. This approach gives consistent results, but requires “tuning” of the editor’s taste to match the taste of stock photo customers. Without this correction factor, the editors can get away from current market trends, and develop a view that misses the reality of their market.
   2. Customers “vote” for top images. This approach purports to give power to end users to express their views. However, it can lead to self-perpetuation (an image that is “voted up” will stay highly ranked, because its higher starting position gets it more viewing opportunities) and to style lag (what was popular yesterday remains popular for too long).
4. Most profitable image first. This it the “dirty secret” I mention in the title of this blog. Major agencies are starting to rank images based on how much of the revenue they keep from each license. That means that an agency that has created and owns its own images will put those images first (and keep 100% of all licenses). It will then follow its “owned” images with the group of images on which it has negotiated the lowest commission payout. It will show last the images it makes the least on. This policy is not enunciated on the Web sites of these agents. Some of them make it especially hard to spot, by hiding the names of the party who contributed the image, deep in their site.
5. Sell the top ranking. Some search engines are starting to charge extra fees, if you want your link to show up in the “preferred” area. I don’t know of any stock agents that have tried to extract this type of fee from their image contributors—yet!  I doubt that it would fit our industry association code of ethics, but a lot of the new players in the stock industry aren’t PACA members.

Which approach do we take, here at Index Stock? Option 3a, of course! While it is more work for us, we feel a human-based ranking gives our customers the best possible search result. Our approach favors those artists who give us their best images. That seems fair, and is easily understood. To keep things simple, we do not tell our salespeople what our profit margin is on an image. Their goal is to satisfy a customer and maximize the revenue we generate for our artists, not to maximize our gross profit.

While we endorse Option 3a, Option 4, the “most profitable first” approach, seems to be sweeping the industry. Recently, several of our distributors approached us and threatened to “demote” our images, unless we cut our commission percentage. For about fifteen years, the “standard” payout from a stock agency to a distributor had been 40%. Now, distributors are now demanding 50% or even 60%, with image ranking as their lever.

A change in ranking could easily cut the license revenue from a distributor by 50%. Therefore, it could seem rational for a stock agent to agree to a cut in payout from 60% to 50% of gross revenue (a 17% drop), instead. However, accepting this cut might invite a further cut later. Further, if the distributor is investing heavily in shooting and promoting its own material, it is likely to push up these images to the top. Then, its agent partners will see even fewer revenue opportunities.

There is a risk for our distributors, from this strategy. If our percentage gets too low, we will eventually make more total revenue for our artists by going around our distributors, and marketing directly to their customers. I estimate that the “break point” for this strategy is somewhere between a 50-50 split and a 60-40 split in favor of the distributor. We hope our partners will understand this, and not push us to the point where it makes more sense to buy email lists and do our own pricing and marketing, instead of relying on them.

Industry Comment #19--Scams, Scum and Scum

Last Thursday, my stock photo agency, Index Stock Imagery, was hit by a variant of what is known as the "Nigeria Scam."  Here is what happened:

1.  Someone obtained one of our checks.  It must have been one that we wrote to an artist, for a commission payment, because it was written on our Bank of America checking account (which we use only for this purpose).

2.  That person used our check as a template and created a number of forgeries.  These forgeries simulated Bank of America check stock, bank transaction codes, and security information.  They also had a copy of our CFO's signature on them.  The copies were good--professional quality.

3.  The group involved created checks in denominations ranging from $10,000 to as much as $150,000.  Then then presented these checks to businesses and banks all over the country.  In just two days, they attempted to pass more than $1,000,000 worth of fake checks.

It should be no surprise to learn that we didn't have $1,000,000 in that account.  If the scammers knew anything about the stock photo industry, they would not have chosen us to attack!  Plus, Bank of America noticed the checks, and realized they were frauds.  So, the scam ring probably didn't get much for their efforts.  For all I know, they might even have lost $5,000 or $10,000 on their effort.  After all, they had the overhead of making the fake checks and distributing them to a surprisingly large network of confederates.

Of course, our daily operations were completely disrupted.  We had to close our account and open a new one. Bank of America could not figure out how to pay the good checks (those we actually had written), while still rejecting the bad checks.  So, all of our good checks are now bouncing.  The balance in the account is frozen, because Bank of America doesn't know for sure what it should clear and should not.  So, we have to find another account and different funds to support the replacement checks we are writing for our artists.  Each time one of our checks bounces in one of our artist's banks, our artist gets charged a $30 to $50 fee.  If you figure there are 100 to 200 checks involved, we are out $3,000 to $10,000, just in bank fees.  Add the pain and suffering of dealing with this mess, plus the missed mortgage payments and hassles for our artists, and we lost at least as much as the scammers.

We haven't seen any FBI agents in our office, yet.  No alarm bells rang.  I don't hear any speeches saying "this shall not stand" by the President or posturing by our attorney general/candidate for governor.  It seems that scams like this one are part of daily business, these days, and no one in our government or legal system really notices them.

Does this piss you off?  Ok, stack on top of this scam, the cost of spam.  Not only the suffering of opening your email every day and finding 400+ spams that offer you Viagra, disgusting sexual adventures, or bizarre ads in Russian, Chinese, or Japanese.  But also spams that contain viruses or tracking worms.  Thanks to McAfee, Spamnet, and our Sprint email filtering system at work and ZoneAlarm, Windows Firewall, and AdAware at home, my poor laptop continues to survive.  But, for how much longer?  Even if each of these attacks has only a 0.001% chance of succeeding (one in 100,000), at 1,000+ attacks per day, the odds are against me!

Look at it another way.  We are a legitimate business.  If someone registers with us, and wants to hear more about our products, we send them emails.  Those who receive our emails seem to like them.  We get open rates over 10% and our unsubscribe rate is under 1%.  But, we estimate that 20% to 50% of the emails we send are blocked by corporate and private spam filters.  That takes money out of the pockets of our artists, and deprives our customers of information they want.  And it is not our fault, it is the fault of the scum that clutter up the world with spam!

Another example.  My blog is a modest effort, with relatively low traffic.  Even so, some people want to post spam comments and spam trackbacks.  They have some kind of robot posting machine that does this.  I have to log on to get rid of those entries.  Otherwise, what traffic I get would be siphoned off to sites that would embarrass me...

Not pissed off about this, yet?  Spend your time writing an original blog.  Find time in between everything else to do research, think about things, and post your idea.  Then, post your prose and wait.  One day later, some $%#&*@ in Singapore grabs the first 100 words of your blog and posts it on his site.  He links at the bottom of your entry, to your site, so you are supposed to feel flattered.  But, he didn't ask your permission and doesn't mention that he didn't write the post.  Plus, he sells ads on his site...and doesn't give you a share of the money he is making off you and the other 100 people he "harvests."

Scam, Spam, and Scum.  Remember the movie Network?  As Howard Beale said, "I'm mad as hell and I won't take it any more!"  I wish I knew what to do about it.  Here is my modest plan:

1.  Ignore all your spam.  If EVERYONE NEVER BOUGHT ANYTHING from a spam email, they would stop doing it!  NEVER buy from from someone who spams you.

2.  Permit all your good email.  If you are not careful, you may be blocking emails from your friends, potential business partners, even that friend from high school you always wanted to hear from, again!

3.  Every time you get sent to a spam site (one of those ones that lure you in with their high Google rank and "borrowed" content) leave right away! Please DON'T click on any of the ads they carry.

4.  Be careful.  When you are on a Web site and you start getting asked for personal information, look for reassurance.  We have to get social security numbers for our artists, so we can pay them.  We have to get credit card numbers or Purchase Orders from clients, so we can bill them.  We are really careful with this information--you be careful, too!

5.  Vote for people who understand the problem, and will do something about it!  We need help--stronger laws, international treaties, more FBI agents...heck, I'd be happy to see the Marines get involved!  Forget invading Iraq and giving Iran a hard time.  Let's do something about getting rid of Internet scum.

You may not be pissed about this, but I am!  Please do your part to rid the world of these folks.  And, give me more ideas about what we can do, as a community, to get rid of scams, spam, and scum!

Industry Comment #18--The Vice of Voice Menus

Hope you won't mind if I pause talking about categories, and indulge myself in a brief rant.  I am SO tired of listening to voice mail menus--aren't you?

My company, Index Stock Imagery, has a live receptionist.  When you call us, either there is no one here (yes, we go home at night) or you speak to a human being.  I recently had the excuse to call three of my competitors--and got voice menus and voice mail, each time.

I mentioned this to my sister and she told me that there is a whole site devoted the to subject of voice menus, voice mail, and avoiding same, plus lots of other sites that share my dim view of using machines to talk to people.

gethuman -- a site devoted to instructing us on how to reach a human, when you need one

Tricks of the Trade -- lots of professional secrets, including how to avoid talking to machines

lifehacker -- advice to simplify and streamline your life, and put the geeks in their proper place

I'm happy that other people don't like voice menus.  I assume that they agree with my reasons, for preferring humans to machines:

1.  If we are lucky enough to get called by a customer, we want to talk to her or him!  We don't want that wonderful, kind, interesting person to have to make a choice between hitting a 1 or a 2!  We want that lovely person to talk to one of our equally lovely salespeople and give us some of her or his lovely business!

2.  Want to find someone at Index?  We want you to be able to reach that person, too!  A receptionist can page the person you are looking for, quiz his or her colleagues about where the person is, and even ask you to wait while we come back from the bathroom or getting a snack.  And, if you decide to leave a message, you don't have to worry about getting cut off, half way through a sentence.

3.  Not sure exactly who you need to talk to?  Not sure what you want to ask?  A lot of times, when I call a company, I don't know if I need to talk to accounting, customer service, or sales.  Doesn't it make more sense to speak to someone who knows everyone, and can help you get to the right place?

4.  The CEOs of those other companies probably spend a lot of time listening to their voice messages.  I hope they enjoy listening to stock brokers, leasing companies, those fake police beneficial association people...  I don't get those messages, because a human being knows I don't want them.

5.  Does it cost more money to have a reception person?  Those menu machines don't come cheap, and our reception people do a LOT of other things.  Doing image research for the sales team, adding keywords to images, checking invoices, processing inbound emails from our agents...could a voice mail system do all those things?

6.  Can a voice menu machine say "Good morning," every day?  Can he or she wish you "Happy Valentine's Day," the way our receptionist, did this morning?  Machines are good for a lot of things, but they are not great at dealing with people.

Feel free to disagree, and tell me the wonders of allowing a customer to leave you an important message at midnight.  I can answer with letters and emails from customers, artists, friends, and family, who all appreciate not having to agonize over which number to choose!  Why get hung up on, by a machine that doesn't understand you?  I'd rather rely on the intelligence, good manners, and charm of a human being, any day of the week!

Industry Comment #18--What's Next With the Web?

A few days ago, I had the pleasure of attending a panel discussion that had been organized by the MIT Enterprise Forum. I like this group’s conferences because they have interesting speakers who understand the interaction between technology and markets.

The panel’s topic was Search is King: Guiding Consumers to Content, and there were panelists from Yahoo, Google, AOL, PubSub and Teleshuttle. One underlying theme that appealed to me was an attempt by two panelists to define “what’s next, for the Internet?”

Bradley Horowitz, Director of Technology Development, Search & Marketplace Group at Yahoo (and an MIT grad) gave one view. He suggested that the first phase of the Internet was “the Web” and the second stage was “my Web.” The difference is that initially we took whatever information and features were available. By now we have evolved to feeling that the we should get only the information and features that are relevant to us.

Brad felt that the next (third) phase of the Internet would be “our Web.” Rather than only relying on our own knowledge and preferences, he suggested that we would start relying on the knowledge and preference of our friends and those others whom we trust. He pointed out that we can now do “collaborative” searching—where we look at what others in our social circle or network like or recommend. Some examples of sites that support this type of search are: MyWeb 2.0 (from Yahoo),  Google Personalized Search, and JetEye.

Salim Ismail, Chief Executive Officer, from PubSub Concepts (www.pubsub.com) gave an interestingly different view. He saw the first phase of the Internet as “send/receive.” We sent information to each other (via email or static Web pages) and received what others sent. His second phase was “search,” where we dug deeply into the available information and ferreted out what was relevant to us. His third phase is “publish/subscribe.”

He suggested that the Internet had become too large to effectively search—even with the best indexing systems currently available. Instead, it makes more sense for us to define what we want to know and have it sent to us. For instance, I subscribe to about ten blogs—and read them regularly. I don’t search for the information they contain—but wait for it to be sent to me, when it is produced.  Salim's PubSub site allows him to do neat things, like track all of the sites and blogs that mention him and his company ("Hi Salim!").

These speeches should be looked at in the context of an overall move towards what is called “Web 2.0.”  I think most people give credit for organizing and clarifying this idea to Tim O'Reilly.  If you are interested, you should read more about his views on his blog.

Does all of this matter for stock artists and the stock image industry? I think so. For one thing, our industry is now primarily a Web-based business. We could no longer function without the Internet to collect and transport the images that are our core value. Besides serving our needs, the Internet is also supporting some of the biggest threats to our existence. An increasing number of “free” image sites have sprung up over the past two years—supported by their ability to monetize the traffic they generate with context-sensitive ads and email marketing schemes.

If the Web is entering an “our Web” phase, will it change our business? Frankly, most of the stock industry hasn’t yet implemented the “my Web” phase, so it may take a while to get to "our Web."  For instance, most sites in our industry ask for the same clarification information, over and over. (“Darn it, I always want “cat” to mean “house cat,” not “catamaran!”)  Our high end Index Stock site now allows eight different types of personalization for logged in users (including goodies like adjusting the background color for the work area and the gamma setting for the images!). However, many sites only offer a fixed number of images per page and no customer-driven features, at all.

To become “our Web” focused, we would have to allow customers to rank and tag (keyword) images. We would have to build “interest group” areas, where customers could discuss images and exchange information about them. We would have to build something that looks a lot like Flickr, for instance.

What about becoming "subscribe/publish?" Can we do that? Why not? We soon hope to allow Index customers to tell us the image categories they are interested in. We can then “push” them new images in those categories, when we have them. When our customers' interests change, they can change their preferences. RSS (short for Really Simple Search) feeds make this easy. Our Daily Photos To Go tool allows anyone who has a Web site or blog to easily incorporate a stream of photos into that site. We have other projects under way like this—but need to do much more.

In a Web 2.0 world, our customers will share ideas about images and gather input easily from others in their business and work group.  They will see only images that they need, when they need them.  Our current methods of promotion and marketing (emails, search engine ads, mailers) will be screened out as offering unwanted advice.  We will have to offer only what our users want and appeal to both them and the community of people who influence them.

We will need to devise licensing and business models that capture value from the community that builds around our images, rather than specific uses. Our new subscription products (especially our lower end Photos To Go Unlimited product), seem to be an essential component of this change. By licensing a group of images all at one time, we have reduced the complexity of the licensing process, and made it easier to integrate whole libraries of images into other products.

The stock image industry is now part of the mainstream of the Web. As such, we have no choice but to participate in each wave of technology and innovation that changes our business model.  I would love to hear other ideas about how we can surf these waves, instead of drowning in them.

Industry Comment #17--Getty finally launches its subscription

The 800 pound gorilla finally decided to put on clothes, and join the party!  Getty Images seems to have finally launched a subscription product.  (As far as I can tell, the smart folks at phototalk broke this one, last Friday. This is the link to their original article.)

The launch is a strange one.  Getty doesn't seem to have put the info out front on its site.  Instead, the details of the product are hidden down a layer, with bits and pieces sticking out here and there.  I guess they plan to try things out quietly for a few weeks, and then make a big noise about it.

Of course, folks like us at Index Stock, who have been in the subscription area since 2000 (with our WebSpice product) and who have two pretty successful royalty free subscription products (Index Open for high end users and Photos To Go Unlimited for small businesses, Web designers, and road warriors), have been anxious to learn what Getty was up to.  We worried that their new product would undercut the market we are part of, or would be overwhelmingly wonderful in some new and exciting way.  (The product manager for our subscription products, Brent Phelps, is now writing his own blog on our industry.  He has been especially diligent about looking for info on this product, and broke part of the story too, in his About the Image blog.)

We were pleased to see that the new Getty subscription product is weak.  The table below summarizes what we could find out about it, from looking at the Getty site.  As you can see, on almost every point, both our high end and lower end products are superior in value, image breadth, and (in my humble opinion) image quality.

The only place that we see the Getty subscription having an advantage is in the number of images that can be downloaded per day.  I recently shared my analysis of this issue, and we will soon take steps to address it.  Our product has 50% more images at between half and one tenth the price.  Our images come from more than 80 independent artists and image providers, and most of them are new images.  The Getty images seem to have been selected from the older ranks of the Digital Vision and PhotoDisc files.  Our terms and conditions are more customer-friendly (like us!).  Our subscription remains the only true high-resolution subscription, in the market.  (There is no need to upgrade to a higher resolution with our Index Open product--you get the full resolution file, right away!)  We are also still the only subscription provider who links their subscriptions to their main library.  Our subscribers get instand access on each search, to an additional 900,000 images.  That makes our product an ideal one-stop creative tool, for most image professionals.

The folks at Getty are smart, flush with cash, rich in images and talented artists, and incredibly aggressive.  I am sure their customers will tell Getty that their subscription product is not what their customers had hoped for.  I expect Getty to listen carefully to this feedback, and respond to it.  For the moment, the big monkey has his pants on backwards.  However, we expect him to eventually figure out how to turn his pants around, and start making trouble again in this new part of the zoo.

Industry Comment #16--Dimdump turns 50

No, Dimdump is not 50 years old!  However, this is my 50th blog, so far.  As such, it puts me on track with my original goal of doing about one blog entry per week.  (I started this blog in late June of last year.)  It also signals that Dimdump is "mature."

(Please note that the stock image industry works hard to be politically correct.  Therefore, we keyword images with words like "mature adult" rather than "old" and "senior" rather than "even older."  So, let's be kind and say that this blog is now "seasoned," "savvy," or "wise," rather than "antique," "creaky," or "decrepit.")

My blog remains a fairly unique forum, within our industry.  My colleague Alan Meckler at Jupiter Media has been bloggin longer than me.  But, his style is more towards Engaget--a blog run by my friend and fellow blogger, Jason Calacanis--than mine.  He, and most other bloggers, writes short pithy comments on the events of the day.  My comments have almost all been longer, and related to our digital image management and marketing indusry.

I have also noticed that there are now several company blogs.  I believe the honor of being first belongs to Veer.  Their site is entertaining and irreverent.  Other good ones are PhotoTalk and the one hosted over at CreativePro.  I read them regularly.  Our company has now launched a blog that covers our various Web sites and products.  It is at www.indexstockimagery.com.  Please be patient with it, as it is still young.  You will see a lot of new content on it over the next few months, that should be fairly interesting.

So, I have some company, in my part of the blogosphere.  Still, it seems rather lonely sometimes, to be writing about our industry (30 entries before this one), ideas for images (12 entries), or about the vagaries of image search engines (7 entries).  There have been a few comments posted on my site, and I have received many other emails from people who stumble across an article via a link from somewhere else or via Google.  I have observed a few common threads:

1.  Artist and those who deal with them are nice people.  I almost hesitate to write this, as I don't want to attract bad karma. But, just about every comment I have received has been positive, friendly, and supportive.  I have had zero "flames" so far, and no "stalkers" or other bad actors. 

2.  Very few people feel comfortable commenting about our business, in public.  The ratio of private comments to public ones is probably ten to one.  I've gotten ten times as many comments again, in person or on the phone.  That means that something less than 1% of my readers are moved to go to the bottom of an article, type in their email address and a subject line, and share their views with the rest of my readers.  That seems a shame, as one of my original goals was to provide something of a forum for discussion and perhaps some disagreement.

3.  A lot of what I've talked about so far, seems new to people.  Perhaps this shouldn't be a surprise to me.  I know that when I first considered entering the stock image industry in 1991, there was almost no available literature or research that described it.  I recall phoning up various agents and asking if I could come in to visit.  Many so "No," and hung up.  Others told me to come in, but carefully isolated me in a conference room, where I couldn't learn any "secrets."  There has always been a lot of competitiveness within our industry, and a sense that one needs to hold any possible advantage as close to one's chest as possible.  Maybe that is why it has been so hard for us to stand up to some of the pressures our industry faces, and work together as a group?

4.  It is hard work to create.  I probably already knew this.  After all, I do other creative things in what little spare time I have, and I know how hard it is to craft the ending for a murder mystery or to figure out what color to make a flower, in a piece of embroidery!  But, writing this blog steadily for a year, reminded me that being creative takes time and energy.  Sometimes ideas come easily--even in sets of two or three.  At other times, I have felt stumped for a direction to go, and have to dig back into my files from 14 years in this industry, to look for a fresh perspective.  I hope that any artist who reads this will accept that I truly do appreciate how much work goes into each of those lovely images you give to an agency like mine.  Thank you.

Looking back over this year, I've done what I set out to do, and enjoyed it.  I owe a big debt of gratitude to my fellow worker Mike Kaltschnee, who has often shared valuable ideas based on his experience with his blog, Hacking Netflix.  I also have received support from Ryan Saghir and Bryant Brennan (on designing my site) and input on some of the research I have done, from Meredith Conti.  I see no reason to change this blog, unless a reader has a suggestion on how I can do things better.  Please continue giving me your feedback and support.  I promise to try to accept any criticism, corrections, or crankiness you want to offer with good spirits, and to keep listening for ways to make this blog helpful to those who read it.