Explaining Why 'If We Charge, People Will Pay' Thinking Is Misguided

from the go-King-go dept

Rose M. Welch points us to a wonderful writeup by King Kaufman at Salon (whose sports column I miss -- but the value of his work about the future of journalism more than makes up for it), concerning the news that Time Magazine used a stock photo it bought from iStockPhoto for a recent cover story. The photographer whose photograph was used was thrilled (as were some of the other photographers). However, there was also a group of photographers who went on to berate him (the photographer) for getting screwed over by a "multi-billion dollar company." Except, of course, they've missed the point. The photograph had already been taken (it didn't take any more work by the photographer to do this) and he was perfectly happy to get money he wouldn't have received otherwise -- even if it was a small amount. From there, Kaufman goes into beautiful beat down mode, and explains how the complaining photographers are flat-out wrong... while also comparing the situation to journalists who say the answer is to just put up a paywall and magically people will pay. It's so good, that I'm quoting a large portion of it, but go read the whole thing as well (and then follow that blog):
Saying that if photographers all refused to do stock photography they'd all get paid more is like saying that if restaurants all refused to give customers napkins without charging they'd all make a bundle on napkin sales. It's like saying that if local bands refused to play for drinks at dive bars, they'd all make good money playing music.

It's also like saying that if news organizations stopped giving away content on the Web, people would pay for news content online. It's absurd.

The posters in that forum who are making that argument are failing, or refusing, to understand basic economics, if not human nature. All photographers are not going to refuse to do stock photography. The ones who do refuse will simply be opening up the market for those willing to sell their pictures cheaply, either because they're not in it for the money or because they can make a profit on volume.

And those arguing that Time should have paid more for this stock photo because it sometimes pays more for other photos, or because it has a lot of money, are forgetting a little thing called supply and demand.

We should note, though, that because Time prints so many copies, it is likely it had to pay iStockphoto for an unlimited-run license, and that its cost was more like $125 than $30. Still nowhere near thousands, and we should also note that Lam, the photographer, was thrilled with his Time cover at a price of $30, and plenty of his colleagues were thrilled for him.

The same pricing dynamic is in play in journalism. The price is not set by how much time, effort, talent or experience went into making the product, and it's not set by how much money the customer has. It's set by supply and demand. The supply of stock photography is very large. The supply of general news content is huge.

If Time hadn't found Lam's stock photo of coins in a jar for $30, or $125, it would have found a similar photo for a similar price. If news consumers can't get their news online for free from their favorite news organization, they'll find it for free somewhere else.

What happened with Lam's photo is not a failure of the system, not a case of photographers eating their own and not a matter of big, rich Time magazine taking advantage of the little guy. I doubt those photographers would expect Time, because it has such a big budget, to pay $3 for a postage stamp or $20 a pound for the office coffee.

What happened with Lam's photo is simply the way the industry works. Time paid what it paid for that image because that's about what it was worth.

When the barrier to entry is low, the supply of goods is large and the alternatives available to the buyer many, the price is going to be low. Wishing it were otherwise, as the photographers are doing in that online forum and as opponents of free content do in Future of Journalism nerdland, will not make it otherwise.
Indeed. What Kaufman describes is the same sort of economic illiteracy that we run into in conversations all the time. People feel that because they don't like the way things work, they need to either blame those who are happy with the way things work or to blame those of us who are simply explaining the economics of supply and demand to them. It's a blame the messenger sort of thing. If I could create a world where photographers and journalists could magically make tons of money, I would. That would be great. But, that's not the world we live in, and pretending it is (or pretending you can simply start charging high amounts and people will keep paying) doesn't help matters. Instead, figuring out ways to understand the economics at play, and then looking for ways to take advantage of those basic economics, seems to make the most sense. This is not about what "should" happen or what people would "like" to happen. It's about what is happening, and learning to take advantage of it.
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Filed Under: business, demand, economics, journalism, king kaufman, magazine covers, paywalls, photographs, supply


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  1. identicon
    Richard, 31 Jul 2009 @ 7:21am

    Supply and Demand

    A quick Google image search reveals over 300000 image results for "jar of coins". Looking through the first few pages suggests that 5-10% of these images "could" have been used by Time. I could take a similar usable image in 10 minutes. I reckon $30 is generous...

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