The Lava lamp

February 7, 2008 by pmelcher.

It’s all about to change. Prices are going down while supply is increasing. Big retailers are suffering from the advent of easy to launch website. Quality content is being challenged by an ever increasing flow of new talents and revenues are spreading like over a high volume rather than on a few top names.

Producers are becoming their own clients by launching blogs or consumer oriented website where they by pass their own distributors in order to create a buzz. Some are even organizing free concerts in order to get a grass root movement going. Concerts ? yes, this is a description of the music industry. Sounds familiar ?

Like the music industry, which interestingly enough some photo agencies are now entering ( Jupiter, Getty), the photo industry is also affected by a lot of the same trends. Sure, there is much less stealing and copying than in the music industry, but still, the digital evolution has brought forth a new wave of unexpected challenges. No need to review them all here as we are all familiar with them.

In some countries, the music industry is shifting to new models that will soon hit the photo industry. One of the most interesting is consolidation. We are familiar with the ones that involve a buyer and a seller, but soon we will see another type.Mid size and smaller agencies, unable to compete, and mostly unable to maintain a strong enough workforce, will seek alliances and pool there resources. We will see more and more mergers with less acquisitions. Most will be trans national, at first. In order to expand in international markets, and unlike the sub agent model, agencies will start creating their own wholly owned office with other partners. For example, it would not surprise me to see an agency from France and england forming an economic alliance to open an office in the United States. less cost, less risk for each, more revenue for both.

But soon, we will see struggling mid to small size agencies seeking partnerships within their own country or territory. Especially with none competing agency. One does news, the other commercial stock : lets pool our efforts, reduce our cost of operations and proceed full sail ahead.

This year, 2008, should start seeing the beginning of these forced economic marriage. They will seem a good idea and will salvage some agencies for a while. We might even seen the birth of a 4th giant, should one of these groups successfully manage their relationships. Most will probably happen in Europe first, as some countries, like Germany and the UK seem to have reached a breaking point in the number of agencies ( 400 plus in each country). But the United States will certainly not be spared. The results will be many layoffs in the staffs, and maybe the end of some brands. Pro Photographers will have less places to choose from or to be accepted. Quality might rise, because regardless of anything else, it should.

There is no saying what the end result of the consolidation might be. All we know for sure, is that it is going to be a slow and difficult process .

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