Reproduction charging models & rights policy for digital images in American art museums

Mellon Foundation funded studies in Europe and America

Simon TannerDirector

King’s Digital Consultancy Services

Email: simon.tanner@kcl.ac.uk

Web: www.kcl.ac.uk/kdcs

Overview

Final report – PDF and Web

www.kcl.ac.uk/kdcs/USart.htm

Key conclusions of the study

A way forward and some recommendations

Note: This US study is an extension of Simon Tanner's previous work for the Mellon Foundation at HEDS, which looked into pricing policy within UK and other European libraries and museums.

Looking to America

The Mellon Foundation invited a study in the USA.

Considered Art Museums to have represented the most mature market when surveying Europe – thus focus of the US study.

US study looked in great depth and asked very searching questions, plus it studied the rights issues whilst European

studies tended to avoid that area.

100 US art museums surveyed.

20 interviewed in depth (sometimes over 2-3 days)

Over 3,000 data points for comparison and analysis gained

Opinions expressed on pricing

“don’t like to charge people money, it makes me nervous”

“image quality is the foremost concern, though we hope to make some profit”

“do not wish to restrict use – have evidence to suggest that price does effect the amount of use”

“charges act as a natural break on the activity level”

“review the market prices and charge slightly lower to encourage more use”

prices recognise that “scholars and educational use deserve a lower barrier to access to images”

“providing images helps educate the public and reach beyond the museum”

“to be fair but to be part of the market”

USA Art Museums: Survey Results

Museum Governance

Number in survey

Average Operating

Budget

Average Attendance

Average Number of

Staff

Public 34 $7,956,500 178,000 69

Private 10 $17,700,000 309,500 89

Private non-profit 56 $10,439,327 1,841,302 150

Totals 100 $10,567,039 981,785 115

Museums interviewed Art Institute of Chicago Asian Art Museum Fine Arts Museums of San Francisco Harvard University Art Museums Isabella Stewart Gardner Museum Jack S. Blanton Museum of Art Los Angeles County Museum of Art Metropolitan Museum of Art Minneapolis Institute of Arts Modern Art Museum of Fort Worth Morris Museum of Art Museum of Fine Arts Houston Museum of Fine Arts, Boston Museum of Modern Art, New York Museum of the American West Pierpont Morgan Library and Museum San Antonio Museum of Art San Francisco Museum of Modern Art Smithsonian American Art Museum Tampa Museum of Art

Motivations and objectives of services

Museums do not carry out image creation or rights and reproduction activity because of its profitability

Revenue raised from reproductions and rights services are relatively small

Revenue very rarely exceeds expenditure

Serving mostly internal needs and external requests for publication

65% of those interviewed do less than 500 transactions a year.

56% of those interviewed received less than $50,000 a year from rights transactions.

99% of those surveyed charge less for educational use than commercial use

0 1 2 3 4 5 6 7 8

Number of responses

Acquisitions

Curatorial / conservation

Development / fundraising

Education

Exhibitions

General & administration

Publications

Salaries & staff

Storage

Technology

Maximum Areas of Museum Expenditure

0 1 2 3 4 5 6 7 8 9

Number of responses

Admissions / tickets

Endowment / grants

Exhibitions

Fundraising

Image sales

Membership

Publications

Rental of museum space

Retail & shop

Sponsorships

Maximum Areas of Museum Revenue

0 10 20 30 40 50 60 70 80

Primary Driving Factors for Providing Services

serve public & educational use

serve publishers / commercial picture use

meet public demand

services for the museum

make money

recover service costs

promote the museum / collections

manage the image collection

protect copyright

0 10 20 30 40 50 60 70 80 90 100

Primary Driving Factors for Providing Services by Museum Governance

Private

Public

Private Non-profit

serve public & educational use

serve publishers / commercial picture use

meet public demand

services for the museum

make money

recover service costs

promote the museum / collections

manage the image

protect copyright

Cinderella services

Essential to a museum’s operation and engagement with its audience…

but not very highly valued

Distinct disconnect between the museum audience and those served by imaging and rights services

The disconnect between imaging & rights services and the museum’s core audience means

they do not receive the credit they deserve

for enabling the wide dissemination, retailing and publication of the collection.

Money and management

Centralized rights services raised more revenue and did more transactions for their museum

More able to manage, plan and establish policy across the whole museum

The largest revenue earners were those museums where money was assigned directly back to the service department to offset or recouped against costs.

The lack of business planning and clear cost accounting for the actual cost of service provision is undermining museum efforts.

Most museums are setting pricing on the perceived market rate rather than with reference to the cost of actual service provision

A way forward and recommendations

Defining museum priorities

Management structures

Professionalize the rights function

Revenue assignment

Pricing model

Digital imaging

Museum priorities: some questions

Is control over use, fidelity and credit the most important priority to the museum?

Is promotion of the museums collections as important a priority?

Does scholarly and educational use of an artwork ever contradict or supersede the need to control its representation and use?

Does serving the internal needs of the museum ever contradict or supersede the need to control the representation of artworks?

Does recouping service costs or making a surplus ever contradict or supersede the need for control?

Is there a sum of money at which the museum would relax such control?

Are providing high fidelity images with an appropriate license for the museum and the wider communities use more important than how much the service costs to run?

Management

Centralize the rights function

Ensure it is functionally impossible for other areas of the museum to give away or license rights

Professionalize the role

Invest in training

Plan in a business like fashion whilst understanding this is not necessarily a business

Assign revenue

Internal markets (even virtual ones) provide for evidence based management

Pricing: a suggested formula

C x V x R x NP x D = price offered consumer

C = actual cost of service provision the cost of imaging data or photograph storage curatorial time getting object to and from studio the averaged cost of staff time for a transaction overheads depreciation materials management costs.

V = the viewer figure or print run size

R = the revenue figure – how much revenue will the image use generate for the consumer?

NP = the non profit factor – if set to less than 1 this offers a discount to non-profit uses

D = Discount value – allows discounts to certain classes of client

Case study: Art Institute of Chicago

1 0-100 no revenue 0.52 100-10k breakeven 24 10k-100k moderate revenue 46 100-500k significant revenue 87 500k+ very significant revenue 12

Base Price

Viewer Multiple Revenue Factor

Academic Discount

NFP Discount TOTAL

indy film $150 2 2 1 1 $600 commercial large print run $150 7 2 1 1 $2,100 annual report, public company $150 1 2 1 1 $300

book interior $150 2 2 1 1 $600

AOL advertising CD $150 7 12 1 1 $12,600

museum $150 4 0.5 0.5 0.5 $75 school/ classroom presentation $150 1 0.5 0.5 0.5 $19 newspaper - lower base cost $100 6 0.5 0.5 1 $150 exhibit of reproductions $150 6 8 1 1 $7,200 large size lustre/ matte for home use $150 1 0.5 1 1 $75

Academic / museum / scholar 0.5

non profit 0.5Alisa Schwartz 2004

alisa@alisaschwartz.com business 1 business 1

Viewer Multiple Revenue Factors

Reproduction charging models & rights policy for digital images in American art museums

Mellon Foundation funded studies in Europe and America

Simon TannerDirector

King’s Digital Consultancy Services

Email: simon.tanner@kcl.ac.uk

Web: www.kcl.ac.uk/kdcs

Survey Results: Digital Activity

Digital asset fee

Analogue asset fee

No Charge!

Totals 76% 97% 2%

Digitisation Activity

Inhouse Outsourced Mix of both None

Totals 67% 9% 12% 12%

Service Profiles: payment & delivery

Payment method

E –commerce

Credit card

Check or bank

transfer Invoice Account Cash

Totals 0% 65% 86% 36% 3% 7%

85% demand payment in advance

20% willing to charge after delivery

5% did both depending on the client

Average delivery time offered: 2 weeks (range <24 hours to 6 weeks)

Service Profiles: rights & finding images

Rights and licensing

In-house only = 71%

External agency exclusively = 2%

Mixture of both in-house and external agency = 27%

Agents listed include: Art Resource, Bridgeman, Corbis, Davis and Scala

Methods used to find images:

WebsiteCatalogue /

libraryLocate for

clientPersonal research

Publications / exhibitions

Totals 56% 37% 43% 24% 26%

Interview Responses: Museum profiles

20 interviews:

11 private non-profit museums

6 public museums

3 private museums

Range from 2,000 – 2,000,000+ works in collections*

60% have <5% of collection on public display

85% have <20% on public display

15% have 21%-100% on public display

* >4 million works owned by the 20 museums

Museum profiles

Museum operating budgets range from $3 - $160 million

Majority receive significant endowment support

All public and some non-profit museums receive money from the community – city/county/federal/government.

Museum audiences (in order of precedence):

1. Local community and citizens

2. Tourists and general public

3. Academe - scholars and students

4. Education – schools and colleges

5. Other museums

Profiling the imaging and rights services

Asked about how the imaging and rights services served the museum’s mission, who are the primary audiences, how do you serve them and when do you say no.

Also asked about staffing, resources, number of transactions and the services relationship to other parts of the museum.

Serving the museum’s mission

To educate and advance the knowledge and appreciation of art:

“bringing art to life”; “to tell stories of the American experience through images as well as physical objects on

display in the galleries”; “what is an image without context?”

Serve scholarly research and teaching (12)

Promote and publicize the collections (10)

Disseminate widely - especially to new audiences (9)

Improve access to the collection for everyone (8)

Provide images for publication (4)

Leader in the community (3)

Enable retail and revenue (2)

To ensure use is appropriate (1)

To help administer the collection (1)(Brackets show number of responses)

Primary audience for services

1.Internal to museum – the biggest audience is internal

2.Text book publishers

3.Scholarly publishers

4.Commercial publishers

5.Scholars including art historians and individual research

6.Web use

7.Museum to museum – to support exhibitions etc.

8.K-12 and other education use

This list is a sharp contrast to most museum’s core audience of the local community, tourists and the general public. The services are thus always one step distant from the museum primary audience, behind an intermediary.

Image creation and volumes

Reasons to create images:

New acquisitions or accessions photography

Fulfil requests and orders for images

Internal demand

Charges for new imaging range from $25 to $250 for 2D

Volume and coverage of images:

9 museums have < 25% of collection imaged

4 museums have between 25 – 50% of collection imaged

5 museums have more than 50% imaged

2 museums have 100% imaged

Note: the amount digitally available is very variable across

these responses.

Reasons to deny use or not create image

Reasons to deny use or not create image:

Inappropriate use – many definitions of this!

Alter image – e.g. crop or overprint

No payment

Compete with other commercial/retail endeavour

Purely for profit – e.g. tee shirts or mugs (not sold in museum)

If endorses a product, is for advertising or corporate branding use

The artworks donor or gift may stipulate acceptable uses

If in storage (one site had storage in different State!)

If artwork will not fit in the studio

If artwork is too fragile

Relationship to other museum processes

The majority of museums responded that services are centralized with all requests going through one person or unit.

This provides a clear advantage to the museum more efficient

focus of experience for imaging and/or rights

enables more control (reduces rogue curator actions!)

allows for the possibility for an internal market

When not centralized then is more difficult to control use or to manage the process effectively.

Common conflicts: Rights given away for free

Digital images considered less desirable for printing

Non sharing of revenue

3rd party rights sometimes abused in-house

Business practices for images and rights

Asked about how services charge, whether they charge differently to different sectors, what was the purpose behind charging and what happens to the money they gain.

Volume of sales (annually)

20% <50 transactions

5% 50-100 transactions

40% 101-500 transactions

15% 501-1000 transactions

20% >1000 transactions

One museum reported greater than 4000 external transactions

Average completion rates are 86%

88% of education use is for publication

Most report a top 10 of images that attract the most attention:

example 1: top 100 account for 60% of requests and 90% of revenue

example 2: top 10 used 30x more than next 90 in their top 100 list

Rights and Revenue

All interviewed did their own rights negotiations for non-commercial use

6 museums use an external agent for commercial activities

Revenue with external agents usually divided at 50% but

35% also reported

Commercial transactions are on average 31% of total volume

Revenue recorded for both image and rights activities*:

< $2,500 = 14%

< $5,000 = 7%

< $10,000 = 7%

< $50,000 = 28%

< $100,000 = 7%

> $100,000 = 28%

No museum reported significant surplus or profits

* Based on 14 responses

How was the price tag reached?

Vast majority of service use is internal

Asset fee price tags are usually set according to market prices not the cost of service provision unless new photography

New photography is either charged wholly or in part to external requesters

In most cases there was no active measurement or accounting of the cost of service provision

All differentiate pricing in favour of education and non-commercial use

Those that did measure the cost of creation then generally ignored this as differentiating to keep prices low for education/scholars

Only 2 reported an internal market where services where charged across departments

Most reported that scholars and education werenot the slightest appreciative of the discounts

Differential Charging

99% of survey respondents charge less for education than forcommercial use

1% charge the same for both and differentiate pricing based upon the volume of usage/print run etc.

Interview respondents explain the reasons as:

to help scholars and education

to “profit from the profit made by commercial uses”

“same principle as the graduated income tax”

focus upon the integrity of art and thus want education to use the best possible image

commercial rates subsidise service costs to enable non-profit rates to be lower

Text books are considered commercial by most interviewed

How was the pricing structure gained?

For 90% by direct reference to the market

Most compared prices with the RARIN or ISGM surveys or through informal surveys of other museums

A couple just reused a neighbouring museums price structure

Most made minor adjustments to enable some direct costs (like materials) to be recouped

One made open reference to commercial agents prices

Market pricing is deciding at which point on the scale of prices you would like to be positioned in relation to those charged in the market. Many factors drive this choice – lower prices might drive more sales, higher prices might convey more prestige, a mid price might show fairness?

Revenue assigned

In >60% of museums revenue is assigned outside of the departments delivering the services – usually to the

general museum operating budget

In most of these cases will show up as a budget line item but cannot be used

For the remainder the revenue is assigned back to the department providing the services

The highest revenue earners where those where the revenue was assigned back to the service department to be offset or recouped against costs

Those with an internal market (even if virtual) were most likely to recoup the most against costs

“it comes to this Dept and I’ll kill anyone who says otherwise!”

“expenditure far exceeds our profits”

Offsetting and recouping

Everyone wants to recoup costs but almost none claimed to actually achieve or expected to achieve this

Internal transactions often account for 50-75% of service activity and is uncharged. Thus recouping from external transactions usually only offsets direct/visible cost items such as contract photography or materials.

Even those that claimed to recoup full costs generally did not account fully for salary or overhead costs.

Commercial transactions are vital to offset the costs of providing discounted services to education and non-profit sectors

There is pressure from senior museum management for all aspects of the museum to make more money – but revenue assignment means that some departments are making money at the expense of others and not sharing those rewards equally.

Without clear policy, managerial structuresor financial planning recouping costs is not possible.

Reasons why – motivations & objectives

Why does the service exist?

to service internal need – exhibitions, education, collection management, publications, retail etc.

to meet the demand from external publishers

promote the museum and use of its collections

protect copyright

support collections management

to control the way the art works are represented

“if we do not have a presence on the web then the institution does not exist to a certain

extent”

“we want the best possible image of our object to be

available for reproduction. We want people to come and see our collections and they wont come if the images they see are ugly”

What motivates the pricing structure? (1)

to make images affordable and accessible

to recoup direct costs and to offset some service costs

to charge those who can afford it as much as the market can bear

to make it easy to use the collection

service would exist even if no revenue due to internal usage thus money not the driving factor

some revise prices yearly to maximise academic levels of use

Why charge anything at all for scholarly or non-profit use?

avoids over use of service

many waive all rights fees

service must be seen to make some money even if not profitable

What motivates the pricing structure? (2)

“image quality is the foremost concern, though we hope to make some profit”

“do not wish to restrict use – have evidence to suggest that price does effect the amount of use”

“charges act as a natural break on the activity level”

“review the market prices and charge slightly lower to encourage more use”

prices recognise that “scholars and educational use deserve a lower barrier to access to images”

“to be fair but to be part of the market”

“providing images helps educate the public and reach beyond the museum”

“don’t like to charge people money, it makes me nervous”

“Fair use”

Q: Does the museum chase unauthorized educational use of

public domain works or is this "fair use"?

90%+ stated is fair use if museum is properly credited

All would defend educational use as a good thing but a few interviewees were concerned about losing control over the way the artwork might be depicted and also losing the credit line

One museum stated that they do not chase unauthorized educational use but feel it is definitely not fair use

Another museum stated that if used in a publication then it doesn’t matter if they are educational or not they would be chased and this would not be considered fair use.

3rd Party Rights

A very difficult area for museums – often controlling their own use is more difficult than controlling external use

Dealing with VAGA and ARS is time consuming and quite variable in terms of the licensing deals offered

Vast majority will direct the external requestor to contact the 3rd party directly for rights.

About half interviewed will ask for documentary proof of the right to reproduce from a 3rd parties work before releasing an image

The other half do not check on permissions but the onus is on the client due to clauses within the license agreement

Rights - problems

Risk being exposed where 3rd party rights are concerned

Payment in advance necessary – delays service

Not enough resources and staff

Acting as agents or intermediaries for artists – have to maintain a good relationship with the artists

“Have to be cleaner than clean as seen as a rich target for litigation”

“Copyright law is complicated and sometimes conflicting and in many museums licensing is the responsibility of staff (like me) who have no prior knowledge of these issues and are learning as they go. The prevailing view at our museum for many years was that because we owned the artwork, we also own the copyright. Although our overall attitude has changed, it is

still difficult to get other staff members to understand and take copyright seriously”.

Rights - problems

Levels of antagonism experienced from clients

An assumption that museums should provide images for free – even for commercial uses

Making legal judgements

Time consuming

Quality – if museum is not happy with the quality of publication reproduction then may have to refuse permission

Artists and their estates: “there’s three types - the alive, dead and the good and dead”

The future?

Most wanted to increase the amount of images available or improve access to images through the Internet

Many also wanted to get more of their application forms and processes online to streamline requests and workflows

Some wanted to move towards print on demand services

Many who are using a mixed model for imaging wanted to move to totally digital imaging but resources are tight to buy equipment

Funding:

2/3 see external grants and project based funding as only way develop technology and services

Remainder will look to internal museum money, revenue from sales and specific fundraising