Licensing Still Images

Version 1.0

September, 1994

Cross Reference: An Intellectual Property Law Primer for Multimedia Developers

You may distribute copies of this white paper to friends and colleagues as long as you:

• 1. Retain the cover page and the copyright information that is at the bottom of each page.
• 2. Do not assert any ownership or copyright interest in the contents.
• 3. Do not sell the paper or use it to promote a particular product or project.

Executive Summary

Multimedia producers need lots of still images. Traditionally, these still images can come from three sources:

• In-house or outside ("assignment") photographers, graphic designers, and artists.
• Public domain sources--libraries, government agencies, and schools.
• Commercial stock photo houses.

• CD-ROM discs of still images.
• On-line networks that provide still images.

This paper reviews the advantages and disadvantages of each of these sources, and offers advice on how to work with them. We first review the basics of licensing still images. We then discuss the differences between the traditional sources and their advantages and disadvantages.

Next we show how new technologies will affect image licensing. We give examples of some of the special fears that photographers and photo sources have about multimedia use. We hope to help licensers of images avoid "contract impasses" with image providers and to understand the relative merits of each type of image source.

We end with some advice and a set of appendices on image sources, industry associations, general price guidelines, industry publications, etc. The paper does not offer legal advice. While it is a collaborative effort from many prominent players in the market, we are certain to have missed some important information and viewpoints. We look forward to receiving comments about this paper and any additions you may suggest.

Table of Contents

• Executive Summary
• Table of Contents
• Licensing Still Images: Some Basics Information for Multimedia Providers
• Appendix A--How to Choose The Right Image
• Appendix B--Rights Management Issues
• Appendix C--Traditional Pricing
• Appendix D--Networks for Still Images
• Appendix E--Traditional Image Sources
• Appendix F--Industry Associations
• Appendix G--Helpful Publications

Multimedia producers need lots of still images.

A typical "electronic book" could use 1,000 stills along with video and sound clips. Video games need still image backgrounds, educational software uses still examples of situations or locations, and training products use stills for both.

For example, a major New York image provider recently received requests for:

• 600 images for a software product that allows cable TV advertisers to create on-the-air want ads.
• 1,000 images for each of five modules of an educational program that helps children choose their future occupation.
• Up to 1,000 images for use in a personal stationery printing program.

Traditionally, these still images can come from three sources:

In-house or outside ("assignment") photographers, graphic designers, and artists.

Public domain sources--libraries, government agencies, and schools.

Commercial stock photo houses.

There are two new sources now available:

CD-ROM discs of still images.

On-line networks that provide still images.

This paper reviews the advantages and disadvantages of these sources, and offers advice on how to work with them.

The paper cannot offer legal advice. Please consult your own counsel regarding how you should handle the copyright and other legal issues we will discuss.

We want the concepts discussed in this white paper to be disseminated as widely as possible. Therefore, we would appreciate it if you would distribute a copy to any friend or associate who might enjoy reading it. You may distribute these copies freely as long as you:

• 1. Retain the cover page and the copyright information that is at the bottom of each page.
• 2. Do not assert any ownership or copyright interest in the contents.
• 3. Do not sell the paper or use it to promote a particular product or project.

We have solicited and included information from many of the players in the still image industry: We are certain to have missed some important information and viewpoints. A list of the people who contributed to or reviewed this paper is at the end of the report. We look forward to receiving comments about this paper and any additions you may suggest.

First, we need to review the basics of licensing still images. There are three key steps to licensing an image:

1. Choose the right image. Factors should include:

• Right style, color, and composition to match the layout.
• Best orientation (horizontal, vertical, or square).
• Subject fits the product.
• Proper release for any models or property shown in the image.
• Electronic scan at the right resolution and in the right format.
• For more details on some of these issues, see Appendix A.

2. Decide what rights you need.

• Do you need a model release?
• Do you need a property release?
• Will you need the right to use it in foreign countries?
• How long will you need the right to use the image?
• Do you need exclusive use in your type of product or for all products?
• For more details on rights management issues, see Appendix B.

3. Decide how much you want to pay.

The right image will add value to your product by differentiating it from those of your competitors. Do your competitors use stills? Will your customers notice them? Could the availability of stills improve ease of use or affect the ratings you receive from reviewers?

The right image may reduce your costs. How much time do you have in your development cycle for choosing images? Do you have a picture researcher on your staff or would you have to hire one? What risk is there that someone will sue you for copyright infringement or intrusion of their privacy if you use an image whose rights are not properly cleared?

These cost saving elements should become part of your cost-per-unit budget. In today's environment, these budgets are under tremendous pressure. Most producers do not want the cost of licensing images to exceed 3% of the wholesale price of their product. For example, on an item with a $49.95 suggested retail price and a $28.00 wholesale price, this is a limit of $1 per unit.

See Appendix C for more information on license costs.

These factors reveal differences between the traditional sources:

Choose the right image

In-House/Assignment Production: Can often create exactly what you want. However, some unique shots--especially historic or celebrity shots--are difficult or expensive to create.

Public Domain: May have the right image, but hard to find. You may need to hire an experienced researcher and may need to retouch or adjust the image.

Commercial Stock: Will have hundreds of variations of standard concepts. Will not have little used or unique material.

Decide what rights you need

In-House/Assignment Production: If you are using your own staff and had them sign a "work for hire" agreement, your company will be the copyright holder. This gives you all rights. However, you will still need to obtain model and property releases and negotiate rights agreements with any outside contractors you may use.

Public Domain: It is difficult to obtain any exclusive rights from these sources. It is also hard to obtain model or property releases. Sometimes you can get a release directly from the rights holder, if you can find out who it is.

Commercial Stock: The library should be able to tell you immediately what rights are available. It is possible, but uncommon, that another user has already locked up the rights you need.

Decide how much you want to pay

In-House/Assignment Production: The cost can range from film and processing (pennies per image) if you hire your neighbor's cousin, to $5,000 per day for a top professional photographer. Most professionals will make deals--especially if you don't need all rights and they can resell the images elsewhere.

Public Domain: Some sources give away copies of their images for free or for the cost of duplication. However, more and more are asking for fees of up to $50 per image. A few have turned over the right to license their collections to outside commercial stock houses.

Commercial Stock: A few commercial stock houses have set discounted rates for multimedia use. Most of the rest will seek to charge something close to the standard rate for "editorial" use--between $100 and $250 per picture for a run of 10,000 units.

As you can see, each traditional source has advantages and disadvantages.

Advantages

In-house producer: Get exactly what you want, if it can be created. Can own all rights; Can control quality of original scan. Can crop and manipulate in any way you wish.

Public domain: Cheap. Large variety of items. Many historic images.

Commercial stock agencies: Fast service. Can find out immediately what is available. Many images available. Model and property releases available. Can purchase exclusive use if you wish.

Disadvantages

In-house producer: Limited by the talent of the producer you hire. Expensive to do complex subjects. Can't create historic images.

Public domain: Hard to get model and property releases. Cannot assure that no one else will use the item. Not many modern images. Collections may not be well organized. May take time to receive images. May not be able to control quality of original scan.

Commercial stock agencies: Costs more for each additional use. May require limits on length of time used or changes made. Many agencies do not have enough technical sophistication to answer scanning and color correction questions.

New technologies are adding a few wrinkles

Several companies market still images over networks. (See Appendix D.) Each allows users to browse thousands of images using keyword searches. A user who wants an image use can download a low-resolution copy immediately. Two networks have set standard multimedia prices. Networks may develop into excellent multimedia sources. However they currently have drawbacks. They have gaps in their image collections and they charge a fee to connect to them. Using the networks requires having a high-speed modem and a computer with a lot of memory and free disk space. Users need employees who can handle both picture research and computers.

Other companies offer still images on CD-ROM. These "clip-photo" disks can satisfy many multimedia needs. However, a user needs to be aware of some potential problems:

Many of the disks do not allow reselling the images in another product. Some of the vendors will cut special deals with users that avoid this problem--but then the multimedia buyer is back at the negotiating table.

The quality of the images varies. Many photographers will not allow their images to be sold on "all rights included" CD-ROMs. A few CD vendors offer "sampler" disks that give thumbnails of the images on their "clip photo" disks. Browsing these samples can save a lot of time and money.

There have been cases where photographers' images were used on a disk without authorization or where model or property releases were not proper. Make sure the vendors' license warrants that it has the right to distribute all of the images on the disk.

It is impossible to obtain exclusive use of the images on a clip-photo disk.

One way of describing the differences between these sources is to chart their relative cost against how much control each gives users over images:

Given the limits of the new sources, we expect many multimedia producers to work primarily with traditional sources--at least for a few more years.

There are lots of reference materials on buying images.

Lists of image sources. See Appendix E.

Industry associations. See Appendix F.

Publications. See Appendix G.

However, there is little information on buying images for use in multimedia products. Furthermore, photographers and photo sources have special fears about multimedia use that buyers should know:

Illegal copying. Photographers fear that it is easier to copy the scanned version of an image than a printed version. This fear does not have much technical validity. One can buy a $2,000 flat bed scanner that can transform a quarter-page magazine image into a 24 bit color image with 1000 by 700 pixel resolution. This is superior quality to most multimedia stills. However, buyers of multimedia products may tend to copy more often--and be less informed about its illegality--than traditional users of still images.

Loss of image "integrity." Most image creators are proud of their work. They do not like seeing their images "adjusted" to fit on a CRT screen or electronically tweaked. News photographers have the strongest feelings about image integrity--probably because they sometimes risk their lives to capture visual evidence that an event occurred.

Uncertainty about who owns derivative works. Suppose a multimedia producer used still images in an animation project. Let's say he or she pastes elements--a clock, a castle, or clouds--from photos into certain frames. Who holds the copyright to the final product? Most experts agree that the original copyright holder and the multimedia producer share the rights. No one seems sure how to handle the sharing in practice.

Future events may make current deals look stupid. Fifteen years ago, 1,000,000 vintage black and white photographs might have fetched a few thousand dollars. Today the same collection might be worth several hundred thousand dollars. Photographers don't want to make a rights deal today that they might regret in a few years.

Loss of control. There are abundant stories about a photograph being copied onto one bulletin board and then appearing overnight on hundreds of others. Once a picture "proliferates" like this, there is little that its owner can do to stop its use. The damage is even greater if the image appears in a market it should not be in, or is used in a derogatory way.

These special fears tend to create "contract impasses" between still image providers and multimedia producers. For example:

Who is responsible for preventing end users from making illegal copies? One recent deal stalled for six months when the parties disagreed over this issue. The image provider wanted to know who had bought a legal license to the product and the right to sue any illegal users. The multimedia producer did not want to give up his customer list or suffer the bad press that would occur if the provider sued his end users.

How many years should a producer be able to use images in a product without paying a second fee? A major image provider balked recently at giving a ten-year license on 1,000 images to a multimedia producer. The producer argued that there was no guarantee that the product would be in the market in one year--no matter ten--but if it was, the producer couldn't risk changing it. The provider wanted to ensure that it received its fair share of a possible "hit" product.

How should overseas sales of a multimedia product be handled? One provider had given exclusive rights to market certain images in a major European country to an agent in that country. When a multimedia producer wanted to use some of those images in a product that might be sold in Europe, it created a licensing conflict. Should the agent receive a portion of the royalties on multimedia sales into the foreign country? How would the provider and producer keep track of sales and whose books could the foreign agent audit? To address many of these issues, you will need help from your attorney, your accountant, or a consultant.

You now understand the merits of the different providers and what they fear. Here is some advice for dealing with providers in general:

Don't fall in love with an image before you know you can get it. Any experienced multimedia producer has a horror story of how he or she struggled to get permission to use a specific shot. Most of these stories have unhappy endings--the image couldn't be used and the product release schedule slipped.

Use multiple sources when you need to -- but be reasonable. Most successful producers use one source as a base. It may be impossible to coordinate terms and conditions from more than four or five sources.

Use as few rights as possible. Do you need international distribution? Can you afford to renew the license in a few years if the product does well? Each time you limit the scope of the license, you will reduce your costs and shorten the time needed to acquire images. If you want to leave room for future possibilities, pre-negotiate a few "add-on" clauses.

Check file formats and other technical specs in advance. One recent project slipped two months when the image provider's file format proved incompatible with the multimedia producer's hardware. After trying various conversion approaches, the producer had to pay for the images to be re-scanned.

Be willing to pay a little extra for service. If your first impression is that a particular provider will be hard to work with, you are probably right. Look elsewhere for your images--or risk having a balky provider kill your development cycle.

Use your provider's services to save money. Most providers can get better deals than you could on retouching or duplicating an image. Many have full-time researchers who can advise you where to find any pictures they don't have. Some are beginning to offer scanning or file-conversion services for a modest charge.

Don't work with original images unless you own them. In a number of recent court decisions, photographers won damages of $1,500 each for lost or damaged originals. As a result, most image providers include a notice with an image shipment that each image has this value. A shipment of 100 slides is therefore worth $150,000 and there is no commercially available insurance for them! If you lose or damage an image, expect a $1,500 charge for your mistake.

Make sure you document everything. No one knows what will happen with case law in this area. Your best long-term defense is a clear contract that describes each party's rights and responsibilities. These contracts should preempt a case law development from costing you money in the future.

You will need a bit more advice to deal successfully with image providers:

Explain what you are trying to do to your sales rep. The better agencies are beginning to teach at least some of their representatives about electronic technologies.

Ask to see the agency's catalog. The major agencies have catalogs of the images they represent. They will give you an overview of the kind of images the agency has. You can order images directly from catalogs--but don't expect to get exclusive use of any of them. Once a picture is in an agency's catalog, it becomes more valuable and is rarely licensed exclusively.

Try to use "stock" terms to describe your needs. Tell the agency whether or not you need exclusivity, model releases, international rights, etc., up front--so they will only pull pictures from their files that match your needs.

Expect to pay a research fee. Most stock agencies charge fees ranging from $50 to $100 for a typical research job. You should negotiate these fees in advance.

Ask for electronic delivery. A few agencies have their own scanners. With these, they can deliver images in scanned form on floppy disks, removable hard disks, or DAT tapes. You save money, reduce concerns about illegal use, and avoid the risk of losing an original slide.

Treat any images you do receive carefully and return them promptly. Stock houses seek to sell each image many times. If you damage an image or hold it longer than one or two months, you cost them money.

Make sure the agency has cleared electronic use with its photographers. Independent photographers own most of the images that commercial stock agencies represent. The agency does not control these photographers, it just markets their work. Some agencies have not clarified what multimedia rights they control. If you license an image from an agency that has not cleared these uses, you risk being sued by the photographer who took the picture.

Read the terms of the picture delivery paperwork (the "delivery memo"). These documents protect the rights of the photographers who took the images. They have been tested thoroughly in court, so be sure you understand the restrictions they place on you.

Don't put terms in your paperwork that stock agencies will object to. Your purchase order should not ask the stock agency to transfer copyright in the image or right to future uses. Putting in these clauses will just slow down the clearance process.

Don't cheat. Don't scan images from a stock agency's catalog and use them in a storyboard without permission. Don't include an image you had the right to use once into a second product without paying for it. Commercial agencies have good lawyers and know how to use them.

Good luck, and feel free to send comments on this white paper to its author:

Bahar Gidwani, Index Stock Photography, Inc., 126 Fifth Avenue, New York, NY 10011, (Tel) 212-929-4644; 800-729-7466, (Fax) 212-633-1914

Or to any of the following reviewers who have contributed to the white paper:

Tay Vaughan, President, Timestream, Inc., 6114 LaSalle Avenue, Suite 300, Oakland, CA 94611, 510-339-2463, Fax 510-339-6469, eMail: tay@timestream.com

Kasz Maciag, Director of Business Development, Continuum, 15395 SE 30th Place, Suite 300, Bellevue, WA 98007, 206-641-4505

Fay Schriebman, Archive New Media, 530 West 25th Street, New York, NY 10001, 212-620-3980

Brian Horey, Lawrence Tyrrell Ortale & Smith, 515 Madison Avenue, 29th Floor, New York, NY 10022, 212-826-9080

Heather Clancy, Emerging Technologies Editor, Computer Reseller News, 2800 Campus Drive, San Mateo 94403, 415-525-4414,

In addition to the above, this white paper was reviewed by the staffs of the Software Publishers Association and the Picture Agency Council of America. While both contributed valuable suggestions and advice, neither officially endorses the document or its contents.

Appendix A -- How to Choose the Right Image

Many factors affect choosing images. The most important should be artistic and content-related issues better left to texts on design and photography. However, there are some issues that are unique to licensing images from outside sources:

Color

While there are several standard systems of measuring the colors in an image, most computer monitors and printers are not calibrated to follow them.

Furthermore, the computer industry uses a number of different color "depth" standards. Some scanners, printers, and computer displays only allow 64 different colors while others allow millions of them.

The result is that if several different image suppliers scan the same image, the colors on each scan would look different. If the accuracy of an image's color is not important, this variation will not matter. However, if color accuracy matters, a multimedia producer should either ask its suppliers to use one of the available calibration schemes or perform its own calibration tests.

Negative Space

In many design situations, the layout artist wants to put text into the frame of the picture. This is hard to do if there is no place that is free of picture elements. These "empty" spots in a picture are called negative space.

Most commercial photographers will try to put negative space into their pictures. Sometimes they will do a "tight" version with little space and then several "looser" versions. If want more space, ask for it.

Orientation

Most computer screens are wider than they are tall. This leads to a natural tendency to choose horizontal images rather than vertical ones.

Most commercial stock agencies encourage their photographers to make both horizontal and vertical versions of each subject they shoot. If you see a vertical image you like, ask if there is also a horizontal version.

Caption Information

Most photographers carefully record when and where they take their pictures. Some put this information on caption labels on their pictures.

If you don't see information you need to know, ask for it. If it is important to you that the image be exactly what it is claimed to be, ask for a written assurance. Most invoices for still photo rights explicitly state that the image provider does not guarantee the accuracy of image captions.

File Format

An excess of image file formats is one of the curses of electronic imaging. An image provider might decide to produce scans in TIFF, PICT, GIF, EPS, BMP, or TGA formats--to name a few. A multimedia producer can use a utility program to convert an image from one of these formats to another. However, when it does, it risks hurting the quality of the image.

In addition to various file formats, the electronic imaging industry uses several file compression schemes. The most widely used is called JPEG (for the Joint Photography Experts Group that wrote it). Different vendors have developed their own versions of the JPEG compression scheme. Most of the different JPEG systems are compatible, but translating from one to another can introduce the same artifacts as file format conversion.

If image quality is important to a product, a multimedia producer should carefully specify the file formats and compression types it wants to use. It should then test any conversions to be sure that the images it wants to use will not be distorted by them.

Appendix B--Rights Management Issues

You may need a release to use an image

In the U.S., every citizen has a right to privacy. The courts have interpreted this right to include the right to control the sale of pictures of the person or of his or her property.

If you want to use a picture of a person or a piece of property for commercial purposes, you must get their permission. This permission is called a release. Most people would consider "commercial purpose" to include using a picture in an ad, on a box cover or poster, in a company newsletter or in most multimedia products.

You do not need releases for some types of "editorial" uses. For example, you could use a picture of Madonna's house to illustrate an article on her for Rolling Stone. You could not, however, put that picture on the cover of a book about her.

Professional photographers routinely obtain these releases from the models they use or from the owners of the property they capture in photographs. Amateur photographers and journalists are much less likely to have releases. Releases are rarely available for historic images found in museums and libraries.

The rules on model releases are tighter than those for property releases. You need a model release even if someone is dead, only seen at a distance, blurred, or seen from the back--if he or she is recognizable in any way. You should get a release on pets or farm animals. You generally need a property release only when you shoot a picture while on someone else's property.

Failure to obtain a release can be costly. Remember that the plaintiff will be an individual whose privacy you have invaded. A court could conceivably order you to withdraw an offending product from the market and destroy all existing copies. A typical starting demand for damages is $25,000.

Most people will give a release if you ask for it. Most will not ask for any compensation in return. Most people will not sue if you use their likeness in your product without a release. However, there is always an exception and most experienced still image users require releases on all of them.

Foreign sales

It used to be simple to get worldwide rights to use a still photo. However, most image marketers now have agents in foreign countries who represent their images.

If you want worldwide rights on an image, you need to allow the image provider time to contact its agents and clear the use.

Term

Most image providers are reluctant to license use of an image for more than three years. If you need an image for longer than this, providers consider it a "buy out." The provider will track the term of the contract for you and notify you that the term has expired.

Some providers will give you one-year protection against use by a competing company as a free courtesy. Ask for it.

Exclusivity

If you want to be the only person who can use an image, you need to license it exclusively. It is almost impossible to get exclusive use on most historic material--someone else could have been there. It is only an issue with modern pictures, licensed from commercial stock agencies.

Typically, you would only buy exclusivity if seeing an image from your product in another place would confuse your user. For instance, assume you used a picture of a man and woman on a beach as the opening background of your software vacation planning package. It looked good, so you decided to use the picture on the box cover and in a magazine ad in Computer Reseller News. At this point, the picture is starting to be important to consumer perception of your product. You need exclusive rights to use it.

However, you probably do not care if the picture is used on a perfume package or in an ad for a retirement home. Therefore, you may be able to get away with buying a limited exclusive use of the image.

Some stock agencies allow their photographers to sell their images independently. Others allow them to sell pictures through other agencies. Make sure the agency has a system for notifying its photographers that they may no longer sell an image once you have obtained exclusivity.

Appendix C--Traditional Pricing

How many copies of an image are made and how "big" it is determines the base price for an image. This base price is then adjusted up or down depending upon how the image will be used, how unique the desired image is, and what type of customer wants to license the image.

The concept behind the base price is that some of the value of a stock image lies in its "freshness." Each time an image is licensed, some value is consumed. For example, printing an image at full page size should cost more than printing an image at half page size. Similarly, using an image in a presentation before 300 people should cost several times more than showing the same presentation to 30 people.

Here is an example of this base pricing grid for using images in brochures:

*Wrap around covers are front cover + 50%. Back covers are 75% of the front cover fee.

Source: Index Stock Photography, Inc. Prices are in U.S. dollars.

Once the base price is set, stock agencies start applying various adjustment factors. These factors fall into three categories--type of use, uniqueness of the photo, and type of customer. The effect of the factors is cumulative. If the customer wants to use an especially unique photo in several different ways, the price could top $10,000. If instead a steady customer wants to use a common picture (a sunset is a good example) in an in-house newsletter, the price could be less than $200.

Here is a list of the factors that could affect the price of a stock image license and an idea of how much each would raise or lower it:

Effect on Price

Type of publication: -50% to +300%. The least expensive uses would be for in-house publications--training materials or newsletters. The most expensive uses would be for broad-audience advertising media such as billboards, newspaper, or magazine ads.

Foreign use: +25% per additional country or +100% for worldwide use. Most of the larger agencies can offer clients the right to use their images anywhere in the world.

Reuse: -25% is standard if a picture is reused for the same purpose.

Collateral materials: -15% to -25%. Customers often use the same image in a brochure and an advertisement. Most agencies discount these collateral uses. Historic value: +200% to +1000%. The only extant image of the Hindenburg blowing up is worth more than an image of it landing normally.

Model or property release: +25% to +100%. Releases are hard to obtain in some situations. For example, it is hard to get model releases on the people in a crowd scene or property releases on golf courses.

Exclusive use within an industry: +50% to +200%. The exact amount depends upon the industry and the number of years of use purchased. Restricting other banks from using a business shot will cost more than restricting supermarkets from using a picture of a fruit salad.

Number of elements, composition, and subject: +10% to +50%. A complex shot that used several models or a lot of props is worth more than a beautiful landscape. Customers pay top price for images that have room in them for text or have well-balanced colors or lighting.

Educational/charitable: -25% to -50%. Most agencies discount to these users.

Regular buyer: -10% to -25%. Some agencies will give deep discounts if the customer commits to a certain level of use.

Large number of uses: -10% to -25%. A customer who uses 10 pictures from one stock agency is likely to get a better deal than one who buys one picture each from 10 different agencies.

Competitive deals: -10% to -35%. Most agencies will discount to match a competitor' price. Few will go more than 35% below "list"

For example;

A major bank wants to use three photos for a "counter-top" brochure. One will be on the cover of the brochure. It will use the other two on the inside on 1/4 of the page. It will print 15,000 brochures in English and another 5,000 in Spanish (but for U.S. distribution). The image on the cover is a colorful montage of 100 different types of money. The bank does not want any other financial services company to use the cover image for at least one year.

The base price for these uses would be $750 for the cover shot and $325 for each of the inside uses. This is based on a total print run of 20,000. No premium would be added for the second language and a 25% premium might be asked for on the cover shot because of its unique nature. However, a 10% discount might be offered because three pictures are being used. Finally, a 100% premium would be added to the cover shot for guaranteeing exclusive use to the bank for the financial services market. The resulting price quote for all three images would be $2,300.

New Media Pricing

The same pricing principals described above carry over into pricing for new media uses. Stock agencies are attempting to charge more for unique pictures and are resisting appeals to give up rights to images "in perpetuity." A few additional pricing factors come into play in the new media markets:

Resolution: High resolution images are much more expensive to obtain than low. Agencies are unwilling to license high resolution scans because they fear illegal copying.

Quality: The quality of an image scan can vary tremendously. Some agencies take extra care to produce high quality scans and expect to be paid for it.

Electronic rights: Only a few stock agencies have cleared the right to use photographs for new media projects with their photographers. Those agencies that have carefully cleared these rights expect more for them.

Multiple formats: New media customers often want the freedom to "migrate" their products to take advantage of new computer or video screen technologies. Stock agencies generally treat these multi-format sales much as they would collateral materials.

Derivative rights: Agents charge more if the buyer of the multimedia product has the right to use the images for his or her own projects without paying a further royalty.

Here are sample stock agency prices for some typical projects:

1. Low resolution images for inclusion with a screen saver. The customer wanted 25 images, all from the same subject area. Each would be used at SVGA resolution (about 500 by 700 pixels). The end-user would not receive any right to copy and reuse the image apart from the screen saver application. The customer wanted to create versions for the PC and Macintosh and to be sure that no other company used these images for at least three years. The customer expected to sell 20,000 copies of the product in the first year.

The stock agent offered the images for 1 cent each per copy of the screen saver produced. This worked out to $200 per image over the first year--about 60% of what it would have charged for using the images at full page size in a brochure.

2. High resolution images for a "montage." The customer wanted to create a picture of an airplane with a human face flying over a prehistoric jungle. To do this, he needed images of airplanes, people, jungles, and a sky with clouds. The customer wanted to own the copyright for the resulting image.

The stock agent supplied six pictures for the project. For a "buyout" of the copyright on one of these pictures, the agent would normally charge $7,000. However, the stock agent recognized that most people would never detect the original images in the montage. Therefore, it would not lose the chance to market the six images to other customers. It charged only 50% of the cost of buying out the rights for a single image, or $3,500. (By the way, the agent divided the royalty among its photographers based on how much of the final image each contributed.)

3. Medium resolution images for a children's book. The customer planned to use up to 300 still images as part of a CD-ROM story book for elementary school children. The customer hoped to sell 10,000 copies of the CD-ROM in the first year of publication. Each image would be displayed at low resolution (400 by 600 pixels). However, the customer wanted the right to republish the CD with medium resolution versions of the same images (700 by 1,000 pixels).

The agent attempted to persuade the customer to license only low resolution rights. It was willing to guarantee that it would supply higher resolution rights later if the customer wanted them. However, for technical reasons associated with the customer's authoring software, the customer insisted on buying the higher resolution rights. The agent quoted 2 cents per image, per copy published. This would have equaled $200 per picture over the expected print run. The customer insisted on a one-time fee for an "unlimited" print run. The agent quoted $350 per picture. The customer eventually redesigned the project to use fewer pictures and relied on in-house sources.

4. Use of still images for a cable TV program. The customer wanted to use 10 images as backgrounds to lead into commercial breaks. Because the program was syndicated, the customer needed the right to use the images as long as the program was being shown.

The agent was unwilling to give "perpetual" rights. It wanted a "residual"--much as actors, directors, etc. involved in the show receive. After much negotiation, the customer agreed to a limit of three year rights on the images for a price of $200. It then pre negotiated a price for each additional three years of use that was 75% of the original price or $150.

5. Use of still images as "eye relief" in a piece of training software. A software company that makes custom training programs for large corporation wanted to include pictures of people in business situations as "resting points" in its software. Some versions of its program might contain 10 images, others might have 20. It only needed low resolution rights and the end user would have no right to copy or reuse the images. It wanted to use three of the images on a brochure for its software and up to ten of them in a "demo" disk that it could mail to customers. While it might mail the demo disk to up to 10,000 prospects, the customer expected to produce less than 1,000 copies of its software each year.

The agent built a package around three separate uses. It priced the demo disk use at $3,000, or $150 per image for up to 10,000 copies. It priced the customer use at $3,000, or $200 per an average of 15 images for up to 1,000 copies, and the brochure use at $1,000 for an estimated print run of 10,000 brochures. The agent then discounted 25% off the $7,000 total to give a package price of $5,250.

Some CD-ROM suppliers include multimedia rights as part of their initial license fee. Others ask customers who want multimedia or other "product" rights to call them directly. Each supplier seems to be following its own pricing algorithm--although most seem to favor a single, fixed "upgrade" fee of between $2 and $20 per image.

Two of the four currently active on-line vendors (KPX and PressLink) pass requests for multimedia rights to their image providers. Compuserve's charges depend upon the forum involved--some charge only for connect time while others have various premium fees. PNI reportedly has the right to negotiate multimedia rights for all or most of the images it represents.

Appendix D -- Networks for Still Images

Compuserve

Number of Image Providers as of 4/30/94: 100's on Graphics Forum, only one so far in Photos to Go Service. Objective and target market: Business/consumer network that offers photography through a Graphics Forum and through private forums such as Photos to Go. Charges to Customers: Membership. Time on line. Download fee.

Kodak Picture Exchange

Number of Image Providers as of 4/30/94: 16. Objective and target market: Desktop access to a large database of images from leading stock providers. User can search by agency or across multiple agencies. Ad agencies, publishers, designers. Charges to Customers: Initial software. Time on line. Design Proof access fee.

Picture Network International

Number of Image Providers as of 4/30/94: 20. Objective and target market: PNI expects its Seymour System, an on-line image browsing resource that allows users to request images for review in conversational text, to attract advertising and publishing customers. PNI licenses use on behalf of agency. Charges to Customers: Time on line. Download fee.

PressLink

Number of Image Providers as of 4/30/94: 30. Objective and target market: Editors, publishers. Charges to Customers: Membership fee. Download fees.

Other network operations, including some that are announced but not yet active: Time Warner Picture Library, an editorial collection (New York, NY); Continuum, a multimedia information collection (Bellevue, WA); Media Photographers Copyright Agency (MPCA), a division of the American Society of Media Photographers (Princeton, NJ); and connect-time-charge only forums on America On-Line, Prodigy, and the Internet.

Appendix E--Traditional Image Sources

Black Book Stock:

Companion volume to Black Book Creative Directories that showcases stock photo agencies. 866 Third Avenue, New York, NY 10022

Picture Agency Council of America (PACA) member agencies:

Association publishes a Directory of agency listings. PACA, P.O. Box 308, Northfield, MN 55057.

Stock Workbook:

Images from Stock Agencies in the U.S. 940 North Highland Avenue, Suite B., Los Angeles, CA 90038

Note: Most of these sources will provide to a qualified buyer a printed catalog that shows a sample of the images they have available, upon request. Some also have a CD-ROM version of their catalog. The format and content of these CD catalogs vary, but most allow users to browse for images using keyword searches and download low-resolution versions of images for comp and layout uses.

Appendix F -- Industry Associations

A S M P

American Society of Media Photographers, founded in 1944, protects the interests of published photographers; promotes high professional standards and ethics, and cultivates friendship and mutual understanding between photographers. Has publications available on pricing, marketing, copyright issues. Offices: 419 Park Avenue, South, Suite 1407, New York, NY 10016 212-89-9144

A S P P

Association of Picture Professionals, is a professional organization for those involved in the creation, research, cataloguing, preservation, distribution, and publication of photographs and other still pictures. Quarterly the organization publishes The Picture Professional. Contact: Mindy Klarman Sharmouil, Macmillan/ McGraw-Hill, 866 Third Avenue, New York, NY 10022.

N A D T P

National Association of Desktop Publishers, an association of 13,000 people who are interested in desktop publishing. Membership includes subscription to Desktop Publishers Journal. Offices: 462 Old Boston Street, Topsfield, MA 01983.

P A C A

Picture Agency Council of America develops uniform business practices within the stock photography industry based on the code of ethics that it has established. PACA publishes a directory of current member agencies that describes the strengths of the agency's library and provides address and phone numbers. The president of PACA is Alan Carey (914-246-0383.) For information, contact: PACA, P.O. Box 308, Northfield, MN 55057.

S P A

The Software Publishing Association is the principal trade association of the personal computer software industry. The SPA's 1,060 members include major business, consumer/leisure and education software companies, as well as many smaller software firms and hardware systems manufacturers. The SPA's associate membership includes firms with industry-related products and services that benefit from alliances with the software publishers. The SPA has publications available on a broad range of software industry issues and tracks sales of both software and CD-ROM products quarterly. It supports two Special Interest Groups (SIGs) related to multimedia issues: the Interactive Multimedia SIG and the Multimedia Working Group. For membership information, contact: SPA, 1730 M Street, NW, Suite 700, Washington, DC 20036-4510. 202-452-1600.

Appendix G--Helpful Publications

Books and Pamphlets

Negotiating Stock Photo Prices, Jim Pickerell, 110 Frederick Avenue, Suite A, Rockville, MD 20850.

New Media: Roles in the Industry, Software Publishing Association, 1730 M Street, NW, Suite 700, Washington, DC 20036.

101 Ways to Succeed at Stock, Marty Loken, Allstock, Seattle, WA 98109.

Photographer's Market 1994, Sam Marshall, Writer's Digest Books, 1507 Dana Avenue, Cincinnati, OH 45203.

Pricing Photography, Michael Heron & David MacTavish, Allworth Press, 10 East 23rd Street, NY, NY 10010.

Picture Researcher's Handbook, an International Guide, Milary and Mary Evans, Blueprint (a division of Chapman & Hall), 2-6 Boundary Row, London, England SE18HN.

Sell & Resell Your Photos, Ron Engh, Writer's Digest Books, 1507 Dana Avenue, Cincinnati, OH 45203.

Selling Stock Photography, Lou Jacobs, Jr., Billboard Publications, 1515 Broadway, NY, NY 10036.

Selling Your Photography, Arie Kopelman and Tad Crawford, St. Martin's Press, New York, NY 10010.

Shooting For Stock, George Schaub, Billboard Publications, 1515 Broadway, NY, NY, 10036.

Stock Photo and Assignment Source Book, Fred W. McDarrah, Editor, The Photographic Arts Center, Ltd., 127 East 59th Street, New York, NY 10022.

Stock Photo Deskbook, Fred W. McDarrah, Editor, The Photographic Arts Center Ltd., 127 East 59th Street, New York, NY 10022.

Stock Photography, The Complete Guide, Ann & Carl Purcell, Writer's Digest Books, 1507 Dana Avenue, Cincinnati, OH 45203.

You Can Sell Your Photos, Henry Scanlon, Harper & Row, New York, NY.

Newsletters and Magazines

Taking Stock is a newsletter that supports communication between professional stock photographers. It covers issues of copyright protection, digitizing images, fair pricing, and contracts with stock photo agencies. Published six times a year by: Jim Pickerell, 110 Frederick Avenue, Suite A, Rockville, MD 20850.

Stock Photo Report is a newsletter that covers stock industry issues and stock photo agency developments. Published by Brian Seed & Associations, 7432 Lamon Avenue, Skokie, IL 60077.

Photo District News is a monthly magazine that chronicles the photography industry, including its issues, equipment, services, trends, electronic developments, events, and ethics. Photo District News, 1515 Broadway, New York, NY 10036.

The Picture Professional is a quarterly publication of the American Society of Picture Professionals, Inc. Mindy Klarman Shamouil, Macmillan/ McGraw-Hill, 866 Third Avenue, New York, NY 10022.

Handbooks

ASMP Stock Photography Handbook, a compilation by the American Society of Magazine Photographers, 419 Park Avenue South, New York, NY 10016 212-89-9144.

The Green Book, The Directory of Natural History & General Stock Photography AG Editions Inc., 41 Union Square West, Room 523, New York, NY 10003 212-929-0959.

PACA Directory. Lists member agencies, address, telephone number and a brief description of unique features. Each entry notes strengths of the image collection. Available from PACA, P.O. Box 308, Northfield, MN 55057.