This article was originally written by Jim Pickerell for Black Star Rising. Reprinted here with permission.
James Cavanaugh recently posed this question to members of LinkedIn’s ASMP group: “A client wants you to create photographs that they can use on social sites so they can ‘go viral’ to promote their company. It means potentially countless people may use your copyrighted work. How would you approach such a request?”
I suggest handling the job as an all-rights assignment. Forget about copyright. Make sure you earn enough from the assignment to cover your costs, overhead and profit. Since it is highly unlikely that your name will remain attached to social network uses, do not discount your price based on some imagined promotional value.
And do not worry about — or expect to earn anything from — residuals, but do retain the right to license other non-exclusive rights to use the images.
There is no way we will ever control the use of imagery made available on social network sites, so stop agonizing over it, accept the paradigm shift of our industry and adapt to the new reality.
You have two choices. Either establish a fee that makes it worthwhile to produce the images without any hope of residuals, or refuse to do the job. Do not factor in, in any way, a potential value for residual use of the images.
[Everyone has different opinions on how to charge the client. For a different view, check our our previous post, How to Start Your Photography Business.]
Calculating Your Fee
There is a simple formula for calculating what the fee should be. First look at all your overhead expenses to operate your business, not counting expenses specifically applicable to shooting various jobs. Assume $75,000.
Add what you need in take-home pay before taxes. Assume another $75,000.
Thus, the jobs you produce need to generate $150,000 annually.
Now, estimate how many jobs you will be able to do in a year given the pre- and post-production time and marketing time involved with each one. Let’s say 100.
Divide the number of jobs into the total you need to produce, and you get an average of $1,500 per job.
You should charge that fee per job, plus all the expenses related to the particular job. (Obviously, your own numbers may be higher or lower than these illustrative figures.)
Some jobs will take a lot longer than others. If the job is not going to take much time you might want to charge less, but when thinking about time involved do not forget pre- and post-production time, waiting time and travel. For those jobs that take a lot longer or are a lot more complicated, you want to charge proportionately more than your calculated average.
In some cases, you will want to take into account the value the customer will receive from using the images produced and add appropriate fees — for example, charging more if the images are to be used in a major ad.
Retaining Future Usage Rights
If the original customer is paying the full cost of producing the image, why retain the right to license other non-exclusive rights to use the image? Because there may be future opportunities to do so despite the wide distribution through social networking.
Do not count on the revenue such situations will bring — but do not preclude it, either.
For instance, someone may need a large file for a poster, a billboard or an ad, and you can license a non-exclusive use for such a purpose. You can also place the images into an online database where customers may find them easily. They will pay to use such images, even when the images are also available for free on a lot of social network sites, because they do not necessarily know about such sites or cannot easily find the image on them.
Keep in mind that some images on microstock sites have been downloaded more than 16,000 times — at microstock prices. Certainly, those images have been used occasionally on social network sites and your customers could find and use them without paying. But despite this fact, 16,000 customers have been willing to pay something to use these images.
The main reason they are willing to pay is that they are able to find the right image easily. But when they buy rather than steal the image, its creator benefits.
There is a good chance that any image you post on a microstock site will never earn more than a few dollars, but whatever it earns is additional profit — the proverbial icing on the cake — because you have already been fully compensated for the cost of producing the images.
Regardless of whether or not you try in some way to generate residual sales, the important thing is to not depend, in any way, on such income to support your business or your lifestyle.
— Jim Pickerell
Jim has been involved in stock photography since 1963, with over 35 years of experience as a photographer. He also started writing at www.selling-stock.com, an online newsletter that deals with the business aspects of stock licensing. More recently, he launched his website Photo Licensing Options in 2010 to provide individual consultations on pricing and stock photo industry related issues.
The information and tips we’re sharing in this article are meant to be a starting point for your year-end tax prep, so you can be informed and feel confident when working with your accountant. Be sure to check with a tax expert in your country or region for any specific advice you need, as each business (and tax district) is different. As our lawyers would say: “This article is for informational purposes only. It should not be considered legal or financial advice.”