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Author Topic: The state of our market and a case for exclusivity  (Read 17381 times)

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« on: October 28, 2013, 10:19 »
+13
I read a quote in the book "The 4-Hour Work Week" that I think summarizes our situation quite well.

..talking about why not to sell product through many distributors..

"It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B .
In no time at all, no one is making profit from selling your product
and reorders disappear. Customers are now accustomed to the lower
pricing and the process is irreversible. The product is dead and you
need to create a new product. This is precisely the reason why so
many companies need to create new product after new product
month after month. It's a headache. "

Sound familiar? 
It makes me think a site with exclusive content, which can control the price, certainly has a business edge over the other sites.  It makes the Stocksy strategy (everything image has to be exclusive) seem very smart.

Thoughts?


« Reply #1 on: October 28, 2013, 10:29 »
+2
The reason we distribute is that the agencies have a huge divergence  in succeeding to attract and hold onto customers.

Attracting customers is about a lot more than just price. And again stocksy is a great example,because they are a new site that is extremly successful and yet coming in at a much higher price point than regular micro agencies.

For contributors however, it is very difficult to predict which agency will be the most successful at growing market share. Success in business is often connected to great leadership, having the best and most qualified team of people in addition to excellence in internet/IT technology. Losing top level talent can destroy many companies and internet companies are extremly vulnerable because the customers can be gone with one click.

So if you know for sure which agency will be the most successful, then giving them exclusive files is a great strategy. But if you are not sure which site is going to make it and you want to spread your risk,then working with different agencies is a wise choice.

So I think exclusive files are a great strategy in addition to having a base level portfolio that is spread over several places (and sell from your own site as well...)

ETA: just to clarify - without overall great leadership and ideas i dont think an agency will succeed just because they have high prices and few files. stocksy success involves a lot more than that and the site is still new,who knows where they will be in five years and what the competition will do.
« Last Edit: October 28, 2013, 10:41 by cobalt »

EmberMike

« Reply #2 on: October 28, 2013, 11:25 »
+2
It makes sense, in some cases, but in microstock I don't think the proverbial "race to the bottom" is real. In fact, some of us have seen the opposite recently. Instead of the steadily declining pricing that Ferriss talks about we see a fluctuating market, where sometimes new distributors try to compete on lower pricing and some compete on other things, including collection quality, exclusivity, unique imagery, etc.

I recently started up with a company that lets me set my own prices, pays 70%, and generates daily sales (and no, I'm not saying which company, so don't ask). I'm setting all prices at $12-$18 and people still buy my stuff. So how could that be possible if customers are expecting lower and lower prices all the time?

And how could SS justify starting a company like Offset, or Bruce starting Stocksy, if our product is expected to be worth less and less? Exclusivity wouldn't matter if the perceived value of the product is already irreversibly damaged.

The idea is solid, I don't think Ferriss is wrong entirely. But I just don't think it completely applies to our business in the same way as it does others.

« Reply #3 on: October 28, 2013, 12:04 »
+2
This is going to be unpopular but there are no new products, just variations on the same products.  Stocksy et al are probably good marketing initiatives but, like apple vs pc, they are not offering anything inherently better, just that perception.

« Reply #4 on: October 28, 2013, 12:20 »
0
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« Last Edit: May 12, 2014, 08:51 by Audi 5000 »

« Reply #5 on: October 28, 2013, 12:40 »
0
Tons of things, some very subjective and some less so.  I'm not talking about individual images, I'm talking about product offerings and, with 10s of millions of images, there is nothing that unique or special and the only things that differentiate the agencies are price and perception.  Using the example of Apple, there is a perception of quality but there are very few serious companies that have one of those on every desk.

Shelma1

  • stockcoalition.org
« Reply #6 on: October 28, 2013, 12:50 »
0
Tons of things, some very subjective and some less so.  I'm not talking about individual images, I'm talking about product offerings and, with 10s of millions of images, there is nothing that unique or special and the only things that differentiate the agencies are price and perception.  Using the example of Apple, there is a perception of quality but there are very few serious companies that have one of those on every desk.

In the case of Apple, perception matches reality. Their products *are* high quality. Almost all ad agencies and advertising production companies run on macs. I believe Apple is the world's most valuable brand right now...bigger than coca-cola.

I think there are two markets for stock art. One is small companies and bloggers, who don't really care if an image is exclusive as long as it looks good and is inexpensive. But large corporations and ad agencies are interested in exclusive images (and buyouts) because they're willing to pay more to stand out from their competition.

« Reply #7 on: October 28, 2013, 12:56 »
0
I recently started up with a company that lets me set my own prices, pays 70%, and generates daily sales (and no, I'm not saying which company, so don't ask). I'm setting all prices at $12-$18 and people still buy my stuff. So how could that be possible if customers are expecting lower and lower prices all the time?


Creative Market (www.creativemarket.com) feels very different from most stock site and sells itself as an online market-place where sellers open a little shop. Much more like Etsy really. Everything there (fonts, themes, vectors, renders etc) has a sort of handmade feel about it. It feels much more like a bunch of boutiques which is why I think higher pricing probably works there. I do not think that style of market place would suit stock photography.

« Reply #8 on: October 28, 2013, 13:02 »
+4
I haven't read 4HWW but I did buy Ferris's 'The 4-Hour Body' and, from reading it, I'd take anything he has to say with a large pinch of salt. Ferris is very good at self-marketing and making good money in supposedly providing simple solutions to all of life's problems. Unfortunately the real world is actually much more complex than he would have us believe and therefore his basic ideas often don't actually work.

This issue is a good illustration of how Ferris's theory breaks down when examined. We (i.e. microstock contributors) may consider the 'product' being sold by our distributors to be the content we create. SS however wouldn't agree. SS believe that what they are really selling is a service and it is their skill on handling data that allows them to provide a better service than anyone else.

Once again here's Oringer's blog explaining his thoughts on the issue;

http://jonoringer.com/2013/01/13/why-going-exclusive-as-a-microstock-photographer-doesnt-work/

Let's say I had a real tangible product to sell __ a really good homemade jam for example. Here in the UK we have the 'Big 4' supermarkets (a bit like we have the Big 4 agencies). Now I could do an exclusive deal with just one of those supermarkets. They would then be able to sell it at the optimum price and both they and I would achieve good margins for the product. However, if I sold my jam on a non-exclusive basis to all the supermarkets, then it might sell in 4x the volume. Price competition might mean that I made less margin on each sale however the greater volume might mean I made far more money.

« Reply #9 on: October 28, 2013, 13:06 »
0
.
« Last Edit: May 12, 2014, 08:50 by Audi 5000 »

Shelma1

  • stockcoalition.org
« Reply #10 on: October 28, 2013, 13:26 »
+2
Quote from: tickstock
If that image is only available on one site doesn't that make the site and image 'inherently better'?   

Not at all. I've taken thousands of awful photos in my lifetime. If I offered them exclusively on my own site, they'd still suck.

« Reply #11 on: October 28, 2013, 13:32 »
+5
This is going to be unpopular but there are no new products, just variations on the same products.  Stocksy et al are probably good marketing initiatives but, like apple vs pc, they are not offering anything inherently better, just that perception.

Also, don't just look at "the product", or the image.  Also look at "the experience" - everything that makes up the buying process.

Shelma1

  • stockcoalition.org
« Reply #12 on: October 28, 2013, 14:23 »
0
I haven't read 4HWW but I did buy Ferris's 'The 4-Hour Body' and, from reading it, I'd take anything he has to say with a large pinch of salt. Ferris is very good at self-marketing and making good money in supposedly providing simple solutions to all of life's problems. Unfortunately the real world is actually much more complex than he would have us believe and therefore his basic ideas often don't actually work.

This issue is a good illustration of how Ferris's theory breaks down when examined. We (i.e. microstock contributors) may consider the 'product' being sold by our distributors to be the content we create. SS however wouldn't agree. SS believe that what they are really selling is a service and it is their skill on handling data that allows them to provide a better service than anyone else.

Once again here's Oringer's blog explaining his thoughts on the issue;

http://jonoringer.com/2013/01/13/why-going-exclusive-as-a-microstock-photographer-doesnt-work/

Let's say I had a real tangible product to sell __ a really good homemade jam for example. Here in the UK we have the 'Big 4' supermarkets (a bit like we have the Big 4 agencies). Now I could do an exclusive deal with just one of those supermarkets. They would then be able to sell it at the optimum price and both they and I would achieve good margins for the product. However, if I sold my jam on a non-exclusive basis to all the supermarkets, then it might sell in 4x the volume. Price competition might mean that I made less margin on each sale however the greater volume might mean I made far more money.


The 4-hour workday reminds me of those pyramid schemes where someone trying to convince you to sign up tells you they're "retired." Um, no, you're not retired, you've just switched to working for a pyramid scheme company and spend all your work time trying to convince people to sign up. I'll bet Ferris works more than full time writing, making appearances, blogging, etc.etc.etc.

« Reply #13 on: October 28, 2013, 14:26 »
+1
The premiss fails because of its assumption that the customer moves effortlessly between outlets. That's not the real world. There's other stuff, too, but I can't be bothered

« Reply #14 on: October 28, 2013, 14:41 »
+1
Thanks for all the thoughts everyone.  I remember Jon's post that Gostwyck linked to and it is a great little read with lots of great points.  That goes quite strongly with what Lee said in his latest post regarding how it's not longer really a competition on pricing but on the experience or services.. ie. how good the search works. 

I do think that for some people the price does play a slight roll but from most people it probably doesn't. 

I think colbalt made a good point that it is wise to do a bit of both (another reason why istock exclusivity is a bad idea).  Have some (or lots) exclusive images on a site you believe in (if it's advantageous) and spread a firm base of other images over several other sites.

« Reply #15 on: October 28, 2013, 14:48 »
+3
I think the sites should be competing more on the "experience" - mainly a search that returns what buyers are looking for as well as not having annoying sized credit packs and seemingly random different priced collections and so on. They should hire some people to start with the most common search terms and hammer the files that show up in it that are spam (possibly the entire ports - that will get spammer's attention) and maybe move down the images that aren't spam but don't belong there. Clean up the first 10 pages or so of the top 1000 search terms and the big buyers could be a lot happier. Of course when they hide my top selling images I'll be bummed.

Unfortunately the sites that appear to be trying to compete most on price, the Getty PP and Bigstock are linked to some of the most lucrative sites so it is hard to starve them of images.

« Reply #16 on: October 28, 2013, 15:03 »
+1
I think the sites should be competing more on the "experience" - mainly a search that returns what buyers are looking for as well as not having annoying sized credit packs and seemingly random different priced collections and so on. They should hire some people to start with the most common search terms and hammer the files that show up in it that are spam (possibly the entire ports - that will get spammer's attention) and maybe move down the images that aren't spam but don't belong there. Clean up the first 10 pages or so of the top 1000 search terms and the big buyers could be a lot happier. Of course when they hide my top selling images I'll be bummed.

Unfortunately the sites that appear to be trying to compete most on price, the Getty PP and Bigstock are linked to some of the most lucrative sites so it is hard to starve them of images.

Good point!!  I'd go as far as to say that accurate keywording is probably more important than the images themselves at this stage - I get irritated looking at the spam and I'm not even a buyer.


ShadySue

  • There is a crack in everything
« Reply #17 on: October 28, 2013, 15:19 »
+1
I'd go as far as to say that accurate keywording is probably more important than the images themselves at this stage - I get irritated looking at the spam and I'm not even a buyer.
Couldn't agree more, but the way sites are set up, spam can clog searches, giving a bad impression (sites may boost certain contributors, whose keywording is 'less than optimal', at least outwith their specialty) or the actual way the search engine on some sites work may map or combine words to make false search, not necessarily the fault of the contributor (many sites have any random whales or whale sharks in blue water,  on a search for blue whale, or the much-loved site which seems to map 'Highlands' to Scotland, so random mountains show up in a search for Scotland).

It would be nice to have a site that you weren't embarrassed to show someone else the search results (content relevancy, not photo quality).

drd

« Reply #18 on: October 28, 2013, 15:29 »
+1
"It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B .

Even harder to compete if reseller D shares the image for free on social websites. Not surprised sales are so low.

« Reply #19 on: October 28, 2013, 17:05 »
0
......talking about why not to sell product through many distributors..

"It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B .
In no time at all, no one is making profit from selling your product
and reorders disappear.

........
Thoughts?

I don't think that model really describes the stock photo market - images now are a commodity, not a particular product like an ipad or a food processor -  few distinct items.

the individual photographer isn't affected as much by the price at different sites, as they are by the millions of other images competing for views at all sites; there's some difference beteen sites with subs and those without, but when a buyer is looking for an image, they're not likely to shop around for the best price on an particular image,when they can find a dozen others that do just as well for teir needs

in the 80s ibm & apple found themselves in a similar position - they thought they had unique products, and apple in particular went the exclusive route.  instead pc clones brushed them both out of the market when pcs became commodities - apple made a comeback when jons switched to different products like the ipod, ipad & iphone, but those too are increasingly under pressure from lower priced equivalents.

« Reply #20 on: October 28, 2013, 18:37 »
+7
Relevance of search results is a big opportunity for new agencies.  Search results are lousy at the current agencies because they pushed all the keywording onto the contributors.  An agency might have 20 million photos but doesn't know what's actually "in" any of them in terms of subject or quality.   

To offer significantly better search they'd need to have reviewers tag each photo with a field describing the actual subject (i.e. this is a photo of an apple, not a picture of an Apple store) and some sort of subjective quality number. And yes that would have cost money.

Instead they crowdsourced not just the production of the photos, but the keywording too, and tried to substitute popularity-based ranking for subjective quality assessments by knowledgable people.

Imagine going into a huge hardware store and seeing millions of products randomly assorted and stacked on shelves.  The employees don't know anything about hardware or what products they actually have.  Instead you describe your need to them and they come back with carts full of items that were bought by other people who'd used some similar words in the past...



« Last Edit: October 28, 2013, 19:18 by stockastic »

Ed

« Reply #21 on: October 28, 2013, 20:31 »
+1
Leaf....I like the thoughts in your initial post.  The problem is, with relation to stock, even if we submit on an exclusive basis to ONE agency (and mark said images as exclusive to that agency), that agency will then turn around and market those images through 50+ other agencies through partnership agreements.

There is an agency not listed here on the poll results who's owner has mentioned that the agency cannot survive without also distributing through other agencies (including Getty and Corbis) and would like to push for exclusive submissions.  What's the point of submitting on an exclusive basis if the that "exclusive" agent is going to submit your images non-exclusively to other agencies?

It contradicts the business model in "The 4-Hour Work Week"

I have not been paying attention to Stocksy....I don't know if they sub-distribute to other agencies....if they don't, they are one of the very few agencies out there that don't.

The issue in our case is that the market is so flooded that even the supplier cannot control it's own distribution outlets.  Heck, even Alamy is licensing images for re-distribution as is mentioned by this contributor in this thread => http://discussion.alamy.com/index.php?/topic/1283-i-do-not-like-this-one-sorry-not-ctr/

Uncle Pete

« Reply #22 on: October 28, 2013, 20:46 »
+2
Not at all more profit. Your cost of goods and proiduction go way up. Your cost of distribution goes up. Your unit profit and value go way down. You may turn more dollars but you Do Not make far more money. In many cases companies that expand just like you have described, lose money and some go out of business.

Vlasic's gallon jar of pickles went into every Wal-Mart, some 3,000 stores, at $2.97, a price so low that Vlasic and Wal-Mart were making only a penny or two on a jar, if that. It was showcased on big pallets near the front of stores. It was an abundance of abundance. "It was selling 80 jars a week, on average, in every store," says Young. Doesn't sound like much, until you do the math: That's 240,000 gallons of pickles, just in gallon jars, just at Wal-Mart, every week. Whole fields of cucumbers were heading out the door.

For Vlasic, the gallon jar of pickles became what might be called a devastating success. "Quickly, it started cannibalizing our non-Wal-Mart business," says Young. "We saw consumers who used to buy the spears and the chips in supermarkets buying the Wal-Mart gallons. They'd eat a quarter of a jar and throw the thing away when they got moldy. A family can't eat them fast enough."

The gallon jar reshaped Vlasic's pickle business: It chewed up the profit margin of the business with Wal-Mart, and of pickles generally. Procurement had to scramble to find enough pickles to fill the gallons, but the volume gave Vlasic strong sales numbers, strong growth numbers, and a powerful place in the world of pickles at Wal-Mart. Which accounted for 30% of Vlasic's business. But the company's profits from pickles had shriveled 25% or more, Young says--millions of dollars.

The gallon was hoisting Vlasic and hurting it at the same time.

Young remembers begging Wal-Mart for relief. "They said, 'No way,' " says Young. "We said we'll increase the price"--even $3.49 would have helped tremendously--"and they said, 'If you do that, all the other products of yours we buy, we'll stop buying.' It was a clear threat." Hunn recalls things a little differently, if just as ominously: "They said, 'We want the $2.97 gallon of pickles. If you don't do it, we'll see if someone else might.' I knew our competitors were saying to Wal-Mart, 'We'll do the $2.97 gallons if you give us your other business.' " Wal-Mart's business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level.

Finally, Wal-Mart let Vlasic up for air. "The Wal-Mart guy's response was classic," Young recalls. "He said, 'Well, we've done to pickles what we did to orange juice. We've killed it. We can back off.' " Vlasic got to take it down to just over half a gallon of pickles, for $2.79. Not long after that, in January 2001, Vlasic filed for bankruptcy.


The myth that selling at all the agencies and diluting the market, competing with oneself... which is supporting and feeding, the race to the bottom, which is very real. (why do people complain day after day, about dropping prices, commissions and sales, if things are just fine?)

I'm a distributor. One of the companies that would take anyone who wanted to sell their tools, for a $50 stocking order. And then these people would go in and sell for less and less, until the markup was theoretical and the real price was cents above cost.

Came out last year with a distributor agreement that said "I agree NOT discount more than 15% or I will lose my right to sell "XYZ" tools." Do you think they did that, because it was good business, having people sell based on discounting and devaluation of the apparent quality of the tools?

Same for your stock photos. Sell for less and less and make less commission and the apparent value, will be lower and lower.

Stop supporting the parasitic price cutting sites that do nothing for us and just take advantage of artists. It's like being an abused spouse/partner who won't leave a dangerous relationship. Break free of abusive agencies! The money you fear losing will come back in higher earnings from the friendly and nurturing agencies.




Let's say I had a real tangible product to sell __ a really good homemade jam for example. Here in the UK we have the 'Big 4' supermarkets (a bit like we have the Big 4 agencies). Now I could do an exclusive deal with just one of those supermarkets. They would then be able to sell it at the optimum price and both they and I would achieve good margins for the product. However, if I sold my jam on a non-exclusive basis to all the supermarkets, then it might sell in 4x the volume. Price competition might mean that I made less margin on each sale however the greater volume might mean I made far more money.
« Last Edit: October 28, 2013, 20:49 by Uncle Pete »

« Reply #23 on: October 28, 2013, 23:31 »
0
Thank you bhr ;)


My Very Best :)
KimsCreativeHub.com

« Reply #24 on: October 29, 2013, 00:18 »
+2
The myth that selling at all the agencies and diluting the market, competing with oneself... which is supporting and feeding, the race to the bottom, which is very real. (why do people complain day after day, about dropping prices, commissions and sales, if things are just fine?)

I'm not picking on you, but I've always hated the whole "race to the bottom" talk. While it is true that some prices have lowered, others have raised significantly. I also think the slogan ignores other questions about contributor competition and volume of sales. I know I don't do the same volume in many agencies anymore. Also, a lot of my dissatisfaction has to to do more with my own changes in expectations than anything that happened within the industry. Sorry about my little rant.


 

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