You can't spend your gross income. Employees must be paid. I don't remember the exact number but it was about 10 or so. Taxes are going to get at least 50 percent of that. Even with licensing a million images a year, take half that for taxes and he is down to $500,000. Making payroll is next. Even if he is paying them just $15,000 a year that's another $150 grand. Now the building rent or mortage payment has to be significant. Hard to put even a guess at that. You can make that guess as good as I can, but it was a HUGE building with anything you could ever want in it.
Next is fees for models and operating expenses. Things like utilities, transportation costs, air fare ect that are all necessary to create the images. All that together is easily another $100 grand in my estimation. Feel free to disagree.
You now have about $750,000 gone out of the million income and you haven't even hit equipment. Somewhere on the You Tube clip I think he had 25 or so of the top of the line lenses, multiple top of the line digital bodies, huge investments in lighting, light modifiers, strobes, soft boxes, and all sorts of tools at their beckon call. Much of the digital stuff would have a very short life span but the glass and lighting could be considered a longer term investment. With the quality of stuff he had it was easily $100 to $150 thousand in just camera stuff, with maybe $70,000 or so needing very regular updates, especially digital bodies and computers.
As you said the types of images he is likely to be marketing will date quickly so it isn't like you can create a database and live off the image file in retirement. It has to be continued.
At the very least he has $250,000 in cash out of pocket leaving. What people often forget to factor in is loss of return. If he put that $250,000 in an account an invested it, that cash alone could easily and safely bring in maybe 5 percent or about $15,000 he won't get.
That brings the total down to about $85,000 left. Not including things like insurance an load of other things that a business of that size would bring. Worse than that places like I Stockphoto.com are going to make 8 times what he makes for little if any of the actual risks. Why would any want to pad Istockphoto.coms pockets instead of their own?
Now after all this he has created the impression among his customers that images are surposed to be cheap. The skill knowledge and talent necessary isn't of value if you sell the final product to the customer at $20.00 or less. If its of no value, at some point they want it at no value. He is for all practical purposes obliging them. Before long a file with missing metadata will be free for all and even that $ will go away. He has put the Neiman Markus product in the 99 cent store.
When royality free came out many of these arguments were made, but at least it was a bit different. There was some value to not having to keep records and not having to make the contacts necessary made RF a choice many made. Yet it was perfectly plausable to make a living selling images at $300 or so, but not $30. What has happened with the micropayment was just the next step in the progression that many of the Rights Managed people pointed out years ago. Sadly now the photographer gives up 80 percent of the $30.
Now web clients are different, but its because many never really dealt with buying images before. The web mentality of if its on the net it must be free is so rampant that I don't really consider buyers that are buying JUST for the web to be that viable of a market in the first place. Those that buy for a company report or sales brochure AND the web are a different story.
With so many more images out there and so many companies trying to get them for free (just look at how many news channels and agencies are asking for your pics rather than taking their own) it is natural the price would come down. But at some point a profit must be made by the creator and at a $ an image that is impossible. He might not realize it yet, but he is on that threshold right now.
-------- Original Message --------
Subject: RE: Free-almost free pictures?
From: David Dyer-Bennet <dd-b@xxxxxxxx>
Date: Fri, August 07, 2009 12:59 pm
To: List for Photo/Imaging Educators - Professionals - Students
<photoforum@xxxxxxxxxxxxxxxxxx>
On Fri, August 7, 2009 12:33, mark@xxxxxxxxxxxxxxxxxxxx wrote:
> I disagree that stock can't keep up though. In fact unless you are
> looking at something particularly unique its probably already out there.
> I recently read a story on strobist about a guy, Danish I think, had a
> studio of 10 or so employees and tens if not hundreds of thousands of
> dollars in equipment to sell images at a dollar a piece. The guy doesn't
> seem to realize he will be the victim of his own success. He is
> destroying the market which is paying his bills and fostering a mindset
> that images have little or no value and that includes his.
Why do you think he'll do his own business model in? So far as I can see,
his business model is selling a high-quality product at current
micro-stock prices. He's built it up at current prices; he's not
dependent on old-style high stock prices (which most of my web clients
laugh at and reject out of hand), he should be excellently positioned to
thrive in the current market.
--
David Dyer-Bennet, dd-b@xxxxxxxx; http://dd-b.net/
Snapshots: http://dd-b.net/dd-b/SnapshotAlbum/data/
Photos: http://dd-b.net/photography/gallery/
Dragaera: http://dragaera.info
