I spent monday evening talking about business. Wanna know what I said?
After the usual introductions we plowed into the general topic that Bill wanted me to address to his class and that was The Business of Photography. Basically, how to cut thru all the conflicting stuff you pick up on the web and on the street and put together a strategy to have a sustainable career. The talk was pretty much non-linear but I'll put it down in the order I remember it.
1. We are not creating a product for a one time sale, like plastic flowers or beer or a meal. We are creating intellectual property which we own. We keep the copyright and we license uses of that intellectual property (cleverly disguised as photographs or movies) to our clients. They pay us to create it and then they pay us to use it. And we can sell it over and over again. Just like all the software you "buy".
2. Why would companies pay a lot for photography when they can get it cheaper? An ad project is like a big inverted pyramid. The huge costs are for the actual placement of ads or commercials. Next down is the huge cost and overhead of the advertising agency. Next down on the pyramid are all the costs of production. From printing to all the crew and models you'll use to create the photography. At the very bottom of the cost pyramid is the photographer's fee. If the project budget is $100 million dollars then a fee of $10,000 is way less than one percent of the total budget. In fact $100,000 is way less than 1% of the total budget. Incredibly, even if you were to charge $999,999 it would still be.......less than 1% of the budget. But if the image in the ad is the biggest and most important element in the entire ad isn't it the most important lever to move the intended audience? If the agency screws up and hires a photographer who can't get just the right image then they've actually blown the entire $100 million dollar campaign.
So if they have a choice between a really good photographer at $10,000 and the "almost the best" photographer at $25,000 and the ultimate (done this before and everyone loved it) photographer at $50,000 do you really think they'll take a chance in order to save less than one tenth of one percent of the budget? I didn't think so. BMW didn't get to be BMW by scrimping on parts. Right?
3. So one of our biggest challenges when we're starting out is not to confuse the amount of money in our own pockets (meager though it may be) with the amount of money other people have to play with. You have to come into the game knowing that people have money to spend and they are going to spend it with someone. Rarely in the this world do things other than commodities get chosen by consumers based solely on price. And if your work looks exactly like everyone else's then you've got a vision problem and not primarily a business problem. Just because you're broke doesn't mean clients are broke and "need a deal". You need to price your usages based on the value of the intended use.
4. We talked for a while about how to find your cost of doing business. What does it cost you to be you and to keep the doors opens and the lights on and your bills paid? How will that affect things like the rate you'll charge for doing work? How do you figure that out? This was by way of review since they were required to read the book.
5. At some point we moved on and I introduced the curve of efficient money generation as predicated by time in the market and the "aging asset"; meaning "you". My curve goes up from 20 to 30 or so years old, hangs in a straight line till 55 and then begins to descend again. The curve is an indication of the money you can expect to earn from commercial photography assignments. The first part of the curve is the ascendency you experience as you learn to business more and more efficiently and as you make more and more friends in your age range in the business. Things hum along (barring economic catastrophes) pretty well for about 20 years and then, in your 50's you begin to experience your art director and art buyer friends moving on and retiring or taking teaching positions or being moved up into management, where they are not responsible for hiring creative talent. You also lose cool as you age and it is a business of implied coolness.
The take away is that you better start saving now so that you can deal with the declining income from this part of your business as the Kirkian Curve comes home to roost at your studio. That means generating good income in the "hot" years and investing it in something other than your business. It might also mean diversifying into other products, services and market sectors.
6. #5 brought up #6 which is "handling your money" and saving intelligently. I introduced them to the concept of "opportunity costs" with a real story from my checkered past. In the mid 1990's my business was going crazy. Dot com clients were tripping over themselves to spend money. And in a fit of ego and business stupidity I bought a five series BMW automobile. A quick tally on a napkin revealed that the total cost to buy, maintain and own that car for five years was nearly $100,000. That's money that was just flat gone. Back then Apple Computer stock was trading for $12 per share and all my friends were buying it. Hey, we're all artists and we drank the Kool-Aid and we were sure of the second coming of Apple. I couldn't buy the stock in any quantity because I lost my financial opportunity by putting my money into the depreciating asset of a car. I missed the "inverse bubble" of Apple. If I'd put the same $100,000 in Apple stock at $12 per share I would have made some $24 million dollars at this point in time. I lost that opportunity because I spent the money on something else. I'm still kicking myself. But it's certainly something to remember when you are considering big purchases, like cars and houses and studios. Opportunity cost is real and it is part of your business decision making every day.
7. Someone asked how a "broke college student" could put together the capital to get started today. The implication being that no one has any money. I asked for a show of hands. "Who has cable service?" "Who has an iPhone with an unlimited data package?" "How much do you spend at happy hours and how often?" And on and on. All hands went up for most of the questions and we went back to the whiteboard so people could see that all those purchases add up to significant dollars and none of them are necessary expenses. My question to them: "Why are you wasting time watching TV if you've got a business you are trying to get off the ground.
8. The we talked about your best friend and your worst enemy and the fact that they are one and the same. That entity is: Compound interest. If you owe money you're getting beat up by compound interest every minute of the day. If you have money and you invest it your money makes money even as you sleep.
9. We talked about the quality of photography. There are more great photographers "out there" than ever before. That's the consensus. My point to them was that there might be hundreds of people in my market who are better at using the cameras, at visualizing, at making pictures. I am not afraid of better photographers. I am afraid of better marketers. Marketing is the key to just about every business. Only monopolies can get away with doing mediocre marketing. You can't afford not to do it right.
10. When we talked about marketing I was very frank about two things: One. This is a numbers game. The prizes go to the people who have crafted a compelling message, understand their unique selling proposition, target the right audience and finally, who deliver the message to the target. Two. The paradigm of good marketing hasn't changed because of the web. You can't expect to reach very many people any more with e-mail (free) marketing because millions of photographers have simultaneously spammed the e-mail accounts of the handful of art buyers and other ad agency clients. What cuts thru? Alway moving from a new direction. Right now direct mail is hot. But that will get saturated and you'll need to move on to something else in order to avoid the crowds and get through the filter of mail box grid lock. But each iteration will get you clients. At some point, when there are hundreds of thousands of online sourcebooks beleaguered clients may turn back to one or two printed source books. I can't predict the specific future but I learned from the movie The Incredibles, when everybody is special no one is.....
That's why it was a really smart move when the first person showed his portfolio on an iPad. Now, only a few months later, it's already old hat.
I answered a bunch of questions and talked about how my career started. I reminisced about my first show and how I spent my last $13 on jug wine. Thank goodness someone called me and took a chance a day or two after the opening reception.......some times you have to take risks. But nearly always you have to know what it cost you to be in business and who your potential clients are. And always you have to know what your unique value proposition is.
This pretty much sums up the two hours or so that I spent with Bill's students. Bill does a great job teaching them the realities of the market and which tools they need to survive and thrive. They were a bright bunch and I don't think they have any delusions about the business. But there's good reason to be optimistic. The future is unknowable. You step to the edge of the pool, hold your breath and dive in. The water may be just right for you...