Individual Assignment:

Write [DO NOT COPY] short notes on the application of any of the concepts learnt in Managerial Economics. You may try to use these concepts to everyday problems in life or in any of the current debates on in the media Not more than 1500 words. It should be a word document Plagiarism in any form will result in a Fail grade for the component.

Prelude Stock photograph, also known as photo archive, picture library, image bank or photo bank is a collection of pictures (including stills, video, and illustrations) licensed to be sold either individually or through distributors for specific uses by publishers, advertising agencies, graphic artists, hospitality, government agency and many others as print or digital media. Market Structure Current stock photography market estimate close to 20 billion dollar, excluding that sell through ones in action market. The participants in stock photography market are Suppliers - Photographers both professional and armature category Distributors Individual photographers and Stock photo agents Buyers Mainly publishing media, and specific industry like hospitality, travel and tourism, government, etc Stock photography is currently a buyers market with over 100 million stock pictures for sale. This is a highly competitive market where the entry and exit conditions are very flexible. Even an armature can start own web site for selling his or her pictures. However the niche market demand likes with handful for proclaimed photographers and market is monopolistic in that facet. Certain buyers and collectors go for buying pictures from particular photographers examples being Ansel Adams, Raghu Rai. These original works and collector pieces make the price of this market highly elastic. A useful way to look at a photography niche is by markets. We will analyze specific needs and characteristics that are associated with selling photographs to specific markets. It is customary to distinguish between four basic markets:

1. 2. 3. 4.

Advertising Corporate Editorial Retail

Advertising: Advertising photographys one and only purpose is to sell a product or services. It is the most lucrative photography niche because the total dollar amounts realized on the sales of products and services are enormous, marketing is a major expense in generating sales, and advertising is a major item in marketing budgets. The majority of photographers you hear about with six-figure incomes are advertising photographers. Corporate: Corporations have a variety of photo needs. While corporate photography is not as lucrative as advertising photography, there are also large amounts of money spent by corporations for corporate image engineering, and it does pay considerably better than other markets. Public relations brochures, executive portraits, and corporate events also present profitable opportunities for corporate photography. Other corporate photography opportunities include the annual report and other corporate literature needed to make the corporation look good.

Editorial: Editorial photography is maybe the most visible market to amateur photographers and might appear to be among the most glamorous. Editorial photography fills the large appetite for photographs of thousands of magazines and newspapers, as well as books. Editorial opportunities run the gamut from illustrated how-to books to encyclopedias and special interest and general consumer magazines to Time, Life, and the tabloids. The editorial stock photography market has become a major uses of stock photographs. For example, photographs appearing in the little-known but largest segment of the editorial market, textbook publishing, are acquired by publishers almost exclusively on a stock basis. Retail: Retail photography, summed up, is providing professional photographs to the general public for personal use. It encompasses a wide variety of specialties including wedding, boudoir and other special occasion photography, portrait photography, pet photography, and school photography. The retail photography market is a highly specialized one, with its own professional standards, marketing techniques, and pricing practices. Many retail photographers choose this market because they are first and foremost people photographers who prefer interacting with private individuals to dealing with ad agencies, companies, and the media. Demand and Market Diversity In years past, many hobbyists and serious amateurs rarely sold images into the photo market. Because of the internet, millions of people from all over the world are selling images. Although most are not selling images for a lot of money, their sheer numbers dwarf the total number of "professionals" by orders of magnitude, thereby making the non-pro photographer the main driving force on what happens in the marketplace. One cannot reeducate the amateur or the hobbyist, so it is futile to attempt to shape the nature of the industry by advocating that pros "stick together." Amateurs notwithstanding, consider the number of semipros that have tried to get into the industry, but couldn't because their portfolios were rejected by agencies, or because they had no other representation that could move their images. These people are now rushing in, and selling more than the amateurs who don't even care. In fact, many semi-pros sell more than pros because they're playing catchup, and, unlike the hobbyist, they are serious about the business. So, instead of just selling images, they are accepting assignments under terms that the old pros would never have taken. Both the hobbyist and the semi-professional unambiguously imply this truism:

"There will always be someone willing to work under lesser-favorable terms than you." Whether it's out of ignorance, or because it is a good deal for them, or because they simply have an interest in photography, this is a fact - the law of supply and demand dictates it. Historically, assignments and license fees for images were based on "the media buy." That is, an ad campaign may budget for ad space in magazines, billboards, modeling fees, and so on. The price for the photography used to be about fifteen percent of the "media buy" (less production costs). As photo buying and selling matured, it eventually got to the point where you might not even need to ask what the media buy was, you'd just know based on the nature of the client. Photographers just got used to pricing product based solely on the size of the company; the deeper the pockets, the more they charged. (The "media buy" calculation is still used in some cases, such as when the "supply" of images is tighter, or the client's needs are more narrowly defined. Again, this is differently defined in some submarkets.) The market has shifted in favor of the buyer, and one cannot assume that because the client is wealthy, that pay is higher. How much clients pay is now based more on market rates, not necessarily their ability to pay. "Market rates" do vary, and finding an appropriate fee to charge for any given assignment or license fee is admittedly far more difficult because of the flux in the industry. Clearly, some rates are higher than others, depending on the specialty of the shoot, or the specificity of the need.

Collector's photographs

Pro/Armature stock photos

Price

Copyright Infringement Shift demand curve resulting in huge revenue loss

Number of Photographs Challenges and Threat

Easy online access to millions of stock images has also made stock photograph extremely susceptible to theft and misuse. With just a click and a drag, users can move a digital file from any web site onto their desktopwithout payment or license. Naturally, everyone wants to know the dimensions of the problem in dollars and cents. In 2005, SAA and PicScout joined forces on a study that used SAAs methodology and PicScouts technology. There was an unacceptably high level of infringements. 80% of these were for Getty Images and 20% from Corbis. A study has been conducted from all of the three well-developed markets in U.S., U.K. and Germany. Together they account for about 60 percent of the worldwide market, preliminary estimate of the annual market value of these mal-usages then rises to about $67 million.

Summary Stock photography market is mainly dominated by 2 sets of demand

Highly niche market with greater than 1 elasticity that comprises of collector item photographs from very well known photographers. The huge competitive market of photographers from armature and professional photographers.

The demand for this market is much focused ranging from advertising and publishing media to auction houses. The business has very high cost of capital towards beginning, both in terms of implicit and explicit cost. The quick money making strategy does not work, the ROI pays back in long run, generally in 7 to 10 years of service. Copyright infringement is a threat to the business and huge loss of money results from this. Open sourcing the stock market shifts the demand curve to left while the highly nice market of collector photographs remain to continue to show high elasticity to market demand.
Cost, Profit

Cost

Profit Maximization

Number of Photographs