In 2007, two years after selling her royalty-free brand Bananastock to Jupiter Images, photographer Cathy Yeulet was free of a non-compete agreement and wondering what to do next. RF production no longer looked like a winning proposition: the market was flooded with producers and distributors, sales and revenues were flat, and prices were starting to fall.

"I decided, that's it, we're doing microstock," she says. No matter that microstock was the pariah of the stock business at the time, and microstock prices start at $1. Yeulet was convinced there was money to be made. "I took on RF [royalty free] when a lot of photographers were scared of it. You might as well join them rather than get beaten by it [and] I thought it would be fun to get into something new."

Her company, Monkey Business Images, had amassed 15,000 new images when she started uploading them to various microstock distributors this past June. With 12 employees, including two staff photographers, she's now producing 1,000 images per month for both the RF and microstock markets.

In a stock industry sector originally built on the small contributions of thousands of community-minded amateurs, Monkey Business Images is among a growing class of producers churning out microstock images in high volume, at low cost, and at the quality levels of RF stock.

Other notable producers in the category include Dutch photographer Yuri Arcurs, who generates more than 500 images per month with a staff of ten, and Iofoto, launched last year by stock photo veteran Ron Chapple. Iofoto has three full-time employees and about 15,000 images in distribution so far.

"People are trying to scale. It's pretty much a natural progression," says Shutterstock founder and CEO Jon Oringer. "We do find [contributors] who are learning exactly what sells, being very efficient about what they're producing, hiring teams of people, and producing lots and lots of images."

One obvious effect of these pros entering microstock is a rise in production standards and image quality that is attracting buyers from higher up the stock photo food chain and boosting sales volume and revenues, distributors say.

Dreamstime CEO Serban Enache says volume producers have raised the company's image acceptance standards, which "motivates old contributors to increase their skills."

"There were images that were able to compete with traditional distributors before, but the number has increased a lot in recent months," he says. "We're enchanted by this trend."


Following the Money

What's motivating volume producers is the growth in micro-stock, as well as stagnation in rights-managed (RM) and RF sales. Leading microstock distributor iStockphoto, for instance, earned $22 million in 2006, $72 million last year and has projected revenues of $122 million this year, according to its owner, Getty Images. By 2012, iStockphoto revenues will be $262 million, according to internal projections, while Getty's RM and RF revenues are expected to shrink 25 percent—from $461 million currently to $348 million.

Chapple says he started his microstock production company because he believed "microstock would be the dominant resource for RF image needs within a few years."

Yeulet also believes in the growth potential for microstock because buyers are mostly U.S.-based; international markets have yet to fully develop. (RF also started in the U.S. before catching on overseas.) "Microstock has a long way to go" before revenue growth tops out, she says.

Still, microstock is one tough business. Prices are lower—much lower—than they are in the RF sector. Margins are thin, competition is fierce, and market growth is slower than it was for RF. More than a few pros have tried microstock and retreated. The obvious question is: How can it pay enough to entice and sustain big producers?

Yeulet says the sales volume that Monkey Business Images is realizing through microstock more than makes up for the lower prices. And she says professional high- volume producers have an opportunity right now to dominate the business.

"Although there are good producers, good pictures are very much in the minority. Our stuff shines. It's professional, so people will download that."

But technical skills alone aren't enough.

Mastering Efficiency

Given microstock's slim margins, volume production "is only successful for photographers who have really good business sense, and who know how to control costs," says Shutterstock's Oringer. "You have to be more efficient in this marketplace."

Arcurs, who started as an amateur contributor, uses sophisticated analysis to figure out what images to shoot—and what not to waste his time and money shooting. He explains that his analysis is based on figuring out the archetypes—or stereotypes, as he calls them—for common search categories and concepts.

For instance, 90 percent of people think of a hammer when you say "tool," or red when you say "color." And an image of someone pointing, he explains, is a stereotype for business interaction. By knowing those archetypes, he explains, he maximizes his image sales by incorporating them into his shoots.

One way Arcurs figures out archetypes is by looking at microstock bestsellers (which distributors publicize on their Web sites), and figuring out what people are looking for when they buy those pictures, he says. But he also analyzes reams of image-search data to identify archetypes.

"If you can get lists of searches, you will see patterns," he says. He has collected data on 90,000 searches on the Lucky Oliver and Dreamstime microstock sites. Another site, called Cray Search, gave him 5 million search requests, he says. "I was able to see what people were looking for and what keywords they were using." The results of all the analyzing, he says, "is a clear-cut idea of what I need in every shot."


Minimizing Production Expenses

Successful producers are not only strategic about what they shoot, they're also careful to pare production expenses to the bone. Arcurs says his production expense target is $10 per image for microstock, compared to $50 to $100 per image for RF and RM production. "Production companies will come into microstock spending what they spend on RF production, and find they can't do that," he says.

To cut his costs, he tries to shoot in the studio rather than doing location shoots as going on location requires more planning, travel and post-production clean-up while yielding fewer selects, he says. He also avoids shoots that require a lot of models. "I stick to generic themes that require two or three models at a maximum," he says. He uses non-professional models whenever he can, and goes without extras such as having a stylist or a make-up artist on the set—but not both, he says.

Chapple says he's cost-conscious, too. "We do have to maximize budgets with good pre-production planning," he says. He uses Craigslist to find less expensive models and locations, and has outsourced retouching to cut overhead expenses.


In Microstock, Nothing Succeeds Like Success

For microstock contributors who can produce quality images in volume and do it cost effectively, the advantages start to add up. The reason is that distributors have search engines that rank and return images according to their relevancy, but also according to their quality, popularity and freshness. Some distributors also increase the price of an image—or allow the contributor to increase it—as the popularity of the image rises.

The system makes no distinction between good images from a small contributor and those from a large production company. And distributors insist that they grant no special deals or give any special treatment to volume producers.

But Enache of Dreamstime says the volume producers, especially those with a background in RF production, generate higher levels of revenue relative to the size of their portfolios and do it much faster "because they can submit more images, and better images—they know what types to submit, and how to keyword them. . .the volume producers already know the business very well."

"With volume, you make more, so you can afford better models, go to better locations, and buy better equipment," says Oleg Tscheltzoff, co-founder and president of Fotolia. "Volume producers are able to produce better images because they have more money."

The proof is in the image acceptance rates, for one thing. Fotolia accepts about 90 percent of the images that the leading volume producers submit, compared to about 40 percent for all contributors on average, Tscheltzoff says.

(Not surprisingly, RF distributors are dumping their surplus on microstock distributors. Image Source recently unloaded thousands of outdated and non-selling images into Fotolia's "Infinite" collection. But Dreamstime's Enache, for one, says microstock quality standards are becoming too high for RF rejects.)

Volume producers tend to have higher download rates, too. In August, for instance, Monkey Business Images topped iStockphoto's list of contributors with the highest average number of downloads per image. The statistic is a rough measure of contributors' efficiency at producing salable images. (Others who are regularly among the top ten on that list include individual contributors who specialize in shots of clouds, a perennial best-selling subject in the stock business.)

Arcurs, whose images regularly make the bestseller lists on various microstock sites, says he averages more than $5 of income per image per month, compared to an average of $1 or so per image per month that microstock contributors typically earn. The difference is attributable to the higher frequency at which his images are downloaded, compared to other photographers, and higher prices distributors charge for his images because of their popularity.


A Quandary For Distributors?

Distributors are all too happy to see volume contributors driving up image quality and attracting more buyers to microstock. But they also have to worry about the morale of the small contributors who made microstock possible in the first place—and who continue to account for the lion's share of production.

Those contributors are feeling the pressure of higher standards, and they either have to get better or get out, says Arcurs. "A lot of photographers are not really uploading anymore."

"I have seen a lot of people complaining," says Andres Rodriguez, another successful microstock contributor who was producing about 600 images per month until last June. To succeed in microstock, he explains, you not only have to be a good photographer, "you need to produce volume." (Discouraged by low microstock prices and misuse of his images, Rodriguez is now trying his hand in the RM market instead.)

Distributors counter that volume production isn't necessary, unless you want to make a living in microstock.

"There's always going to be tons of independent, pro-am, borderline professionals who [produce microstock] on the side, and who are happy to do it for the extra cash, but don't want to quit their day jobs," says Oringer.

Even so, distributors are mindful of how volume producers could change the dynamics of the business.

"We have to bring in enough revenue to support the production of high-volume producers, but we also have to motivate the hobbyists and amateurs who helped us build the community as it is now," Enache says.

Dreamstime recently reduced the maximum number of images contributors can upload each week. That enables the company's image screeners to keep pace with the rising volume of submissions. But the new limits were also intended to keep the collection from being overrun by volume producers, Enache says. "They were a good compromise to keep the channels open for everyone."

iStock also restricts weekly uploads depending upon a contributor's skill and exclusivity status, though a top-selling, exclusive contributor could upload as many as 200 images per week. And the company has always had the highest editing standards, so high-volume contributors have hardly had any noticeable impact on the iStock collection, says COO Kelly Thompson.

Another check on volume producers, Thompson says, is the strong community of long-time iStock contributors.

"When it becomes that much of a business and it loses that community feel, they [volume producers] will suffer in other ways. There's that real camaraderie in our community. When someone steps out of that, I wouldn't be too surprised if some of them get ostracized a little bit."

It may be so, but in the stock business, money talks. And right now, it is calling loudly from the microstock sector to producers who can shoot RF-quality images—and lots of them—at a low cost.