A passive income is a beautiful thing. Money that flows to you without any or minimal effort on your part. It is something of a holy grail amongst many Internet entrepreneurs. I suspect there is often too little appreciation of the work that goes into creating such a happy situation; a passive income is usually the result of an asset in some form that took a lot of effort to build. In other words, while it may be passive when received it isn’t often achieved without a significant initial investment of effort, talent and/or money. Photographers producing stock images are effectively working to build a passive income, a photographer’s pension in a sense.

Stock photography earnings rarely come in the form of a payday; the return on your investment of time, money and creativity is usually some way off in the future and over a period of, hopefully, years. Putting your resources into producing stock images is really more akin to making an investment for future returns than working for next months bills. Microstock may be a slight exception to this where good images will often enjoy an instant honeymoon period of downloads due to the sectors general bias towards fresh material. However with micro numbers the payday will be small for anyone other than the seriously committed contributor.

Given the time lag usually involved between doing stock work and earning a return from your efforts it is important for photographers producing stock to consider what they realistically may assume the return on any investment in creating and marketing new images will be. Are you wasting your time or building an asset that will return a healthy passive income for years to come?

For a variety of reasons including migration, hoboing and general laziness, I haven’t added any significant new material to my stock photo portfolios for the last six months. It isn’t the productivity I had hoped or planned for, but it is what I’ve done! That isn’t to say I haven’t been work a day shooting and carrying a camera around, so there will of course be images I can add in due course. However for that period I haven’t really worked on my stock and yet my income from stock photography didn’t stop. Inadvertently I’ve conducted a short experiment to test the financial sturdiness of my current stock photography collection. So how well did it hold up?

Well, I’m pleased to say I have been able to enjoy a reliable and, so far, sustained level of income from my various portfolios. Obviously six months is a relatively short period of time to judge any collection’s longevity in terms of providing a sustained passive income. It is quite possible that if I continued in this dormant mode my income would gradually fall as my images dated and their relative presence in the market declined. While I’m interested in how stock photography may contribute to a photographer’s pension pot I can’t continue this little experiment for much longer without damaging my own pot’s potential!

Obviously every photographer’s collection is different. Currently my own stock collection is around 2500 images; so relatively modest. The fact it has stood up to this period of inactivity I take as a positive sign that it is worth me continuing to build it for the future. I’m spread across RM, RF, traditional and microstock which, arguments re the pros and cons aside, I think probably helps in terms of sustainability of income by evening out peaks and troughs across different sectors.

As I’ve mentioned previously I’m not a big stats man; this post is as close as I’ve previously come to number crunching and a minutiae of stock photography income analysis. However I am going to do some basic analysis of my microstock portfolios over the last six months to a year to see how these have held up. I’m particularly interested to look at my micro portfolios in this regard given the common perception that it is necessary to continually “feed the beast” in order to maintain returns from microstock. To date my micro images have provided a reliable and reasonable return without too much effort in recent years. For me the attractiveness of continuing to contribute to microstock depends on the sustainability of the returns. Stay tuned if you’re also interested to know if microstock has passive income potential.

While plenty of microstock photography blogs publish earnings reports there is less publicly available information on returns and trends from photographers relating to images with traditional agencies. I don’t intend to start publishing regular earnings updates because I’m too lazy that is between me, the Missus and the tax man. However, looking over some reports from 2009 I do feel there is some worthwhile information on sales of my images through traditional agencies to share. For the purposes of this post I’m looking at sales during 2009 through two agencies; agefotostock.com and Alamy.com.

On each of these agencies I have both Rights Managed and Royalty Free images available for licensing and the comparison between the performance of these different licensing models makes for some interesting food for thought.

Here’s the breakdown of the performance of my portfolio on each site for 2009;

AGE

Portfolio size of 51o images. On agefotostock my portfolio is split RM 65% – RF 35%.

65% of revenue came from RM sales
35% of revenue came from RF sales

Average return per sale for RM images was $27
Average return per sale for RF images was $79

Alamy

Portfolio size of 1400 images. On Alamy my portfolio is split RM 74% – RF 26%.

56% of revenue came from RM sales
44% of revenue came from RF sales

Average return per sale for RM images was $44
Average return per sale for RF images was $115

The numbers reported are the net returns after the commissions payable to the agencies. Agefotostock report in Euros which I’ve converted at the rate of 1 euro = $1.44 (10/01/10) for ease of comparison.

The total amount earned from each agency was actually almost equal. While this would seem to indicate a great performance from Age the portfolios can’t be compared simply on numbers. The images concerned on Age are represented exclusively  by Agefotostock and are also probably a stronger collection given I have tended to submit what I consider my better / more commercial work and these submissions are then further edited by Age. Images submitted exclusively to Age also benefit from some in house keywording and optimisation which may well contribute to achieving sales.

It can be seen from the figures above that the average return from sales at Age was actually significantly lower than at Alamy. Given the general concerns over low fees at Alamy and in the industry generally this is disappointing. As stated my earnings from each agency were pretty comparable, so it can also be inferred that Age made up for the lower fees with a lot more sales over the course of the year.

As Agefotostock have now started to accept images on a non-exclusive basis my choice in how to interpret and act upon these results is made somewhat easier. While image exclusivity may help Age generate some sales it didn’t translate into any significantly large ones in 2009. Trading in some modest lost sales through Age for the ability to distribute future images through Alamy and other non-exclusive outlets would seem sensible. The ‘risk’, of course, is that a potential big sale through Age in the future is lost, but then it might be gained elsewhere. While I’m talking about significantly large sales I’m sad to report Alamy didn’t scoop me one either! However, it can be seen prices were better at Alamy for both Rights Managed and Royalty Free sales.

The comparison between RM and RF at both sites is also somewhat surprising given the traditional thinking that Rights Managed images command higher fees. While this is certainly still the potential with RM – the elusive ‘significantly large sale’ – the more bankable reality is in low value editorial sales for which an RM image is often cheaper than a Royalty Free shot. The figures above show that on both Age and Alamy I have favoured RM licensing. While this is sometimes dictated by the nature of the image it is also often down to a call on my part on the best licensing model for each image. My 2009 report cards would seem to indicate I may not always have been making the right choice.

On both sites average returns per sale for RF images were higher than for RM images. While on Age the two sides of my portfolio exactly pulled their weight in terms of overall revenue share, on Alamy my RF images outperformed my RM; contributing 44% of total revenue when making up only 26% of my portfolio. In the defense of Rights Managed licensing there is of course the potential of further returns from one of these sales in the form of extensions, further uses etc. RM does also have the uncapped potential to turn these results around; one big sale could make a year’s data look very different. However, given the results above I’d be wasting my time reflecting if it didn’t make me think hard about building my RF stock.

Obviously the results I’ve seen are in a large part reflective of the content of my portfolios in terms of subject, styles and quality. No doubt other contributors may have different stories to tell?