The business of stock art involves licensing artwork that was previously created and is therefore "in stock." For illustrators trying to maximize their assets and diversify their business opportunities, stock art offers an attractive option for making additional money on artwork beyond the original commission fee.

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Overview

Stock art is the business of licensing artwork that was previously created and is therefore "in stock." The stock image market includes all forms of visual imagery such as photographs, illustrations, 3D models, animations, and videos. The existing artwork may have been created for a prior assignment or may be self-generated work that is available for reuse or licensing by the copyright owner. The selling of reuse rights has long been common practice for medical and commercial illustrators and photographers. Normal anatomy or "base art" depicting an organ or disease can be re-licensed or combined with other illustrations to make a new customized derivative work of art. By reusing their existing art, illustrators offer clients options when their deadline prohibits commissioning original artwork. This business model is only available to the artist who retains copyright ownership of their art.

Fueled by the increasing demand and availability of stock photography, the growing market for stock art has changed the way illustrators market and price their reuse rights. These changes are not without controversy. Some artists argue that glutting the market with stock art that is priced significantly lower than new commissions decreases the fees and overall number of new commissions they receive. Other artists argue that re-licensing stock art at near or equal value of a newly commissioned work allows them to capitalize on their available resources, increase visibility of their work, and potentially leads to new commissions.

For illustrators trying to maximize their assets and diversify their business opportunities, stock art offers an attractive option for making additional money on artwork beyond the original commission fee. Understanding pricing and licensing practices is important not only to increase revenue but also to protect the health of the artist's business and the profession. For clients accustomed to assignment pricing and dealing directly with illustrators, stock art offers an attractive option for finding immediately available and affordable images. Stock art and commissioned art should be complimentary rather than competing markets [1].

The sale of stock art can occur directly from the artist, the artists' representative, or through a stock agency. There are two ways to buy and sell stock art: Rights Managed (RM) and Royalty Free (RF). The basic distinction between the two stock licensing models is that Rights Managed is a license defined by USE, whereas Royalty Free is a license defined by UNIT [2].

Generally speaking, RM commands higher license fees per image, but generates less volume. RF generates higher volume, but on average smaller license fees.

Rights Managed Stock Art

Rights Managed (RM) licenses are for a specific USE and fees are based on the particulars of that use, e.g., size, distribution, and type of media. It is a pricing method where the illustrator is compensated proportionately to how an image is used. The bigger the use - the bigger the fee. The "managed" aspect of RM means that all uses are recorded and a history of sales is available to aid clients in future buying decisions. Since all uses are known, another benefit of RM is the option for clients to license an image with some degree of exclusivity, such as by category or geography for a specified time period, thus preventing a competitor from using the same image. This pricing model reflects the accepted standard for assignment pricing as well, where creative fees are also largely based on usage. Clients understand and respect this business model where image price is tied to value received [2].

Pros

  • RM images can be purchased with exclusivity for a specific time, type of project, or market region. For example, if an author's book is titled New Treatments for Back Pain that image will not be able to be purchased or used by any other author that is writing a book on back pain, ensuring the client a unique image.
  • Clients pay only for the usage rights they need based on the print run, market, size, printing period, exclusivity, and other factors. For example, the cost for U.S. rights is less expensive than worldwide rights.
  • RM images are generally higher-quality artwork with regards to aesthetic, creativity, and a more focused and targeted message.

Cons

  • Clients may be disappointed to find that the image they want is unavailable for purchase because it is being used somewhere in the country for a similar book.
  • Clients can only purchase the images for a limited time, usually a specific printing period (e.g., 1 to 3 years). If they want to use the image to print additional copies after that time, they need to reapply to purchase the rights to the image again and pay again.
  • Images can only be purchased for one purpose. If a client purchases them for a book cover, they cannot use them independently for websites, posters, or other promotional materials. They can, however, use an image of the book cover within a promotional piece.
  • Prices are not fixed - they will vary for each image and will depend on many factors such as print run, market, size, printing period, and other factors.

Royalty Free Stock Art

Royalty Free (RF) licenses are based on UNITS and the fee is essentially a standardized purchase price for that unit. A unit could be a single image, a collection of images, or a subscription period allowing unlimited access to images. It is a pricing method where the illustrator is compensated proportionately to how many times an image is sold. Introduced in the early 1990s, RF stock made a significant impact on the photography and illustration industries. An RF license grants clients virtually unlimited usage rights, so that the same image can be used by any company for any use with few restrictions - all for a one-time price [2]. Originally marketed as "clip art" collections with a number of images provided on CD, most RF images are now sold individually online. RF profits are heavily weighted toward the agencies and distributors, while the artists make a very small share of the overall revenues. Illustrators who produce RF are generally compensated with a flat fee, plus a small percentage from each disc or image sold, usually well below 10%. While RF's original stated purpose was to provide more basic images to low-end clients who had very small budgets, this segment of the industry has now evolved to compete with high-end imagery for high-end clients. In addition, the growth of RF has had profound effects on the Rights Managed segment as well by its overall effect of devaluing images and lowering stock prices [3].

Pros

  • Once purchased, RF images are owned outright and can be used as many times as the client needs - not just on the book cover, but also on the website, bookmarks, and promotional materials.
  • There is no time limit on the use of the image.
  • RF images are a one-time fixed cost. Costs vary depending on the size of the image purchased and the resolution.

Cons

  • Because anyone can purchase RF images and use them multiple times, the client's book may not be the only one out there with that image on the cover.
  • There is no way to know if someone is using the same image for the same type of book as yours.
  • Newly released and popular images are highly purchased and can over saturate the market.
  • Because of its inexpensive availability, branding or visual consistency is often overlooked from one message to the next. This most important aspect of a long-term investment in visual branding can only be protected in RM images.

Clip art & Rights Free

Clip art images differ from stock art in that they can be altered cropped, retouched, and used by the buyer in any way imaginable. Some clip art is public and available for free. Clip art is often offered in vector format and used in newsletters, presentations, and web graphics. Some agencies commission work-for-hire collections, e.g., LifeArt and Mediclip. In this model, illustrators are given a flat fee for the entire collection; copyright of all images is owned by the agency. Some illustrators receive royalties on CD sales and name credit.

How to Sell Stock Art

Artists interested in reselling their art must make individual decisions about the best way to market and manage their image inventory with regard to control of fees and usage, time spent negotiating and fulfilling orders, and record keeping.

Individual illustrator websites

Many artists today have websites describing their services, experience, clients, portfolio, and stock art available for resale. These websites range in complexity from simple portfolio style sites with email or phone contact to fully enabled ecommerce sites with digitally fulfilled shopping carts. Competition for artists trying to sell their medical art on the Internet is fierce. A general Google search for 'medical art' returns over 114,000,000 results, making it unlikely that clients will be lured to one's individual website without the aid of other promotional methods such as click ads or sponsored links. A site that is highly unique, precisely targeted, and well marketed will fair better.

Pros
The ability to get as many images seen online as you can with no middleman. The artist keeps 100% of the usage fees.

Cons
The artist must market and maintain their website themselves or pay an Internet host for this service. The artist must handle all record keeping, paperwork and contracts, invoices, delivery and protect themselves from unauthorized use; or pay office staff to manage these transactions.

Artist representative websites

Artist representatives may sell stock art on behalf of artists as part of the traditional artist-agent agreement, e.g., American Artists Rep. Inc., Shannon Associates. In this model, the agent negotiates the terms and fees for stock in the same fashion as new commissioned work. Artist representatives have well-established connections with clients and art directors and typically have higher trafficked websites than any individual illustrator.

Pros
The agent markets and maintains the website. The agent handles all record keeping, paperwork and contracts, invoices, delivery and protects against unauthorized use. The rep releases the artist from administrative responsibility allowing more time to create art.

Cons
The artist must split the profits with the agent, who takes a commission of 25% to 50% of the fee depending on the artist-agent contract.

Stock directory (artist-managed) websites

Buying space in a collective directory such as indexedvisuals.com, www.science-art.com, or www.folioplanet.com offers an online presence with the ability for clients to be directed to the artist via email or the artist's own website. For a yearly fee based on the number of images listed, artists partake in "collective marketing" of their images to potential buyers. In this model, illustrators communicate directly with clients, negotiate their own license fees, and keep 100% of the usage fee.

Pros
The artist gets the draw to their images from the critical mass of other illustrators' work and the marketing from a printed catalog. Much more advertising can be purchased collectively than by individual artists. The artist deals directly with the client, negotiates the usage rights, sets their own prices, and keeps 100% of the usage fees.

Cons
The artist handles the administrative responsibilities of record keeping, paperwork and contracts, invoices, and delivery; or pays office staff to manage these transactions. The artist pays an annual listing fee based on the number of images listed on the website.

Stock directory (semi-managed) portals

The newest concept in marketing stock art is the e-commerce enabled web portal such as theispot.com or workbook.com. They offer artists an automated shopping cart, payment, and delivery of their stock images 24 hours a day 7 days a week. The artist sets their prices based on different usages, often from a recommended range. For complicated uses, the agent negotiates the fee with the client. Portals will, generally, not offer art direction, market analysis or as much negotiating of usage fees as stock agencies [3].

Pros
The artist gets the draw to their images from the critical mass of other illustrators' work and online marketing. The artist has some control over their fees. Artists who don't have office staff to handle calls, negotiations, and delivery, but want a higher percentage of sales than those derived from traditional stock agencies.

Cons
"Off-the-shelf pricing" structure does not take into account the many variables that can effect price. Since sales are automated, there is no direct artist-client interaction. The artist must split the profits with the agent, who usually takes a commission of 25% to 50% of the fee depending on the contract. Marketing is conducted via the Internet with no printed catalogs. Some portals require exclusivity for a time period. The artist pays an annual listing fee.

Stock houses or agencies

While we commonly call these entities "agencies", it is actually a misnomer. Legally, an "agent-artist relationship" means that the agent is contractually bound to act in the best interests of the artist to represent and market their images with a fiduciary responsibility. Most agencies have switched to an "image exclusive" type relationship, where only individual images, rather than the artist, are exclusive to and represented by the agency. This reduces the obligation of the agent to the artist, yet also allows the artist freedom to develop relationships with other agents and marketing outlets [3].

In this model the artist grants the agency the right, usually exclusive, to resell existing images to specific markets for a certain length of time (usually 2 to 7 years) for a fee determined by the agency. Agencies typically handle scanning, key wording, marketing, and negotiating in exchange for a higher percentage split than the web portal model, ranging from 40% to 60%. Stock agencies market images through catalogs, directories, direct mail, CD-ROMs and Internet. Most sales are made online and are digitally fulfilled. The stock agency and the artists usually split the profit of whatever the agency sells. Most stock agencies have separate distribution contracts for their RM and RF collections with different royalty rates, terms and protections. RM contracts have traditionally offered royalty rates of 40 to 50%, RF contracts offer less than half of this rate, generally 20% [4]. Royalties for foreign or "out of territory" licenses are even lower, since local sub-agents typically receive commissions of 40-50% of the gross license fee off the top. Illustrators earn only 25-30% of the gross sale.

Fees for catalog participation may reduce royalties. Catalog fees are usually taken out of the sales of a particular image being charged for. Some agencies have taken the fee out of any sales or are offering artists a lower percentage on all future sales in exchange for no catalog fees. Many artists feel that catalogs are basically a marketing avenue that drives buyers to the agency's website and, therefore, they shouldn't be paying to be included in catalogs at all.

Pros
The stock house offers the artist potential for high volume sales, handles all paperwork and transactions, and leaves the artist more time to create while the agency does the selling.

Cons
The artist does not determine the fee or usage, pays a higher commission per sale than a traditional artist-agent agreement, and fees are generally lower than the artists would negotiate themselves. Fees for catalog participation may reduce royalties.

Illustrator Advisory

Stock [in the hands of stock houses] means, "Honey, I shrunk the fees." [5] In March 2002, the Executive Board of the Illustrators' Partnership of America (IPA) issued the following Stock House Advisory [6]:

Although many stock houses represent themselves as "agencies" for illustrators, we want to make the following observations:

Your agent's job is to represent the interests of you the artist.

Your agent should see that you, the artist, get the best deal you can get for your services at the best price.

Your agent should NOT sell your work for below market prices unless so directed by you.

If any "agency" representing themselves as such regularly under prices your work and insists on controlling the terms of its sale, then you must consider that the "agency" is acting as your "agent" in name only. That "agency" may at any or all times choose to act as a COMPETITOR, using your work to obtain a share of the illustration market for themselves, perhaps at your expense.

We are opposed to any stock "agency" taking a larger commission from any artist than a standard artists representative would take for the same or similar transaction. We believe that because stock "agencies" do not represent artists as individuals, they should take a lower percentage of sales than a standard artists' representative would take for similar transactions.

We are opposed to any stock "agency" selling rights to any art at below-market prices.

We believe each artist has the right to be consulted about each sale of rights to his work.

We believe no stock "agency" should control the rights to any artist's work.

We are opposed to non-disclosure clauses in stock "agency" contracts.

We are opposed to automatic rollover clauses in stock "agency" contracts.

We acknowledge that each artist is an independent contractor and is free to do whatever he or she wants with his or her work. But as a professional organization, we would be remiss not to declare our opposition to certain controversial business practices that have grown up over the last decade.

Beginning artists and those considering stock should study the issue carefully. Stock houses spend millions of dollars promoting themselves. Don't sign contracts with a stock or clip art house without getting the facts.

For Clients: cost vs. quality

A word on generic stock imagery: not all images sold as stock are generic. But the bulk of it is. While generics can work in some situations, it never replaces the exceptional, specific and unique communications that result from a creative collaboration between artist and art director [7]. Dealing directly with the artist avoids "middleman" markups and gives clients the unique option of customizing images or commissioning new artwork. Research shows that investment in high quality imagery significantly improves the effectiveness and overall success of your marketing, promotional or educational materials. Generic imagery is largely unable to communicate specifics of your unique scientific discovery, new drug or device. Stock houses define excellence by market research. They throw a lot of pictures on the block, see which ones sell, then push artists to do more of the same. The process guarantees mediocrity. Individual artists can do better.