The Perfect Storm Has Arrived
A few of you may have read the article “The Cloud is Falling” that discussed my outlook for the photography industry in some detail, less than half a year ago. That article was the impetus behind this blog in fact. My overall thought back then was that the still/print industry was fundamentally changing – both due to technological advances and market forces – and that still photographers needed to embrace new ideas and technologies.
A lot has happened in the past 6 months – most notably the economy (and on a more positive note, game changing technological advances such DSLRs that shoot 1080p video.) My outlook for the print industry is now quite dire – in many ways this economic downturn may lead to an incredible series of layoffs and failures in the upcoming year that our industry has never seen before. What I assumed would happen over the next 3-5 years – may happen in the next year or two – precipitated by this economic downturn that we’re experiencing. (The stock market (INDU) in case you haven’t noticed – is approaching its lowest level in more than a decade.) The purpose of this post is to make sure that all photographers are aware that 2009 may be an incredibly tough year for everyone – and for you to make sure that you prepare yourself for it.First of all, let me be clear: I am not an economics major nor do I portend to be able to see the future. The signs are so crystal clear however, that I feel obliged to share them here.
Ironically, my business is currently experiencing the most incredible growth and excitement amidst all of this negativity – but it should be a sign to you that I am nonetheless choosing to be quite conservative. Things have been so busy that I have literally not had a single day off in 7 weeks – and new opportunities seem to pop up almost daily. (I’m sorry that I haven’t been more prolific with this blog as well – I have a lot of content on the way however)
I just spent the last two weeks in the midwest (Leo Burnett, VSA Partners) as well as the west coast visiting Industrial Light and Magic (one of George Lucas’ complexes,) Dreamworks Animation, Apple, SmugMug, Disney with a few incredibly talented people at those organizations and a top Hollywood director/producer in Los Angeles. By all means, I should be ecstatic. And if the economic outlook were good – I’d be bouncing off the walls. But truth be told, I’m just positive, but realistic given the economy’s outlook.
So why does this matter to you? Well – I’m not going to try to predict what is going to happen to the stock market here. I will tell you that while I’m not a market wiz – I’ve been quite lucky over the past few years and this was my best year in the stock market – of all years… (and no I wasn’t shorting.) I sold all of my tech stock on the day before the worst 4 day decline of the Nasdaq for the year (at the time!)- and this ensuing downturn. What I will discuss, is what I’m seeing around me, and how that may possibly impact all of us.
First of all – newspapers and magazines are facing the absolute perfect storm – which is by definition a contradiction in terms – a perfect storm of course is a devastating one. The old world print media relies on advertising, and readers – and I went over that in the “Cloud is Falling” article. The problem is that as we all know, both subscribers and advertisers are seeing a very very sharp decline. This is why you’re seeing incredibly cut backs in budgets, and massive layoffs. Publications are cutting the fat – and more often than not – into the bone – and guaranteeing their extinction long term.
In fact one of the major magazines in the US (that must remain nameless) one that we all look up to and hold up on a pedestal – is in absolute panic. I was told by that magazine’s top management that “we haven’t sold a single ad for next year!” I responded incredulously: ”Not a SINGLE ad?” And he clarified – that sure some ads had been sold – but their major backers were the automobile Giants of Detroit – and that they had not bought a single ad for 2009. As you know most of the large automakers in Detroit are on the verge of bankruptcy, begging for a federal bailout as I type…
Therefore – I’m not surprised at all to see the massive layoffs, and magazines folding. In fact there’s a site dedicated to the dead magazine of the week – MagazineDeathPool.
These days I don’t fight too much for higher day rates or huge production expenses when it comes to magazines – the writing is on the wall: they simply don’t have it and are trying to find a way to survive the storm. A few weeks ago – I didn’t even bother asking a print client to charter a helicopter – I suggested we charter a small boat. Believe it or not – they weren’t even able to afford that… these are the signs that things are dire. And this was no small publication mind you…
Here’s what has me ultimately concerned, and this is the real sign of bad things: companies are slowly (I’d say rapidly) completely clamping down on their advertising budgets. And when companies stop spending money on ads, things get REAL bad, real quick for everyone. The ad agencies suffer, the producers, assistants and commercial photographers suffer, and the newspapers suffer – all the way down to newspaper staff as there are no ads to run, and there is no money to pay salaries….
One recent example: I’ve been working with one of the world’s top “talent” (I’m being vague on purpose.) He and I are going to do a project together, and all along our plan was for him to reach out to his numerous sponsors to pay for the project. One by one, each advertisers has expressed great excitement, only to come back to tell this top “talent” that their HQ has told them that all advertising money has been frozen. It’s one thing for them to turn me down – it says a lot for them to turn the “talent” down who is one of the hottest commodities out there.
This has me truly worried and I’m quite pessimistic to be honest. I’ve met a lot of top advertising agencies, and production companies, and heard the same things: their staffs are being cut (Disney cut 50% of their staff in one division, and Pixar 30% in another) and their budgets are being SLASHED. They were all already being asked to do more with less – but now that’s being taken to a new level. You’ll also see that a lot of the startups that rely on Venture Capital cash flow – are going belly up. No one has “cash lying around” to invest in anything right now…
What this means for me is that although I haven’t had a day off in weeks, and that common sense would have me hiring 1-2 new people on my staff – I’m holding off. My business has grown 30% or more year to year since I left my staff job at The New York Times – and is showing no sign of slowing down. YET – I am preparing myself for a 50% cut in income next year (that of course if my worst case scenario – I’m hoping it will be more in the 15% – 30% range.) Sure – that’s drastic. But it should be a sign of how pessimistic I am – or in my opinion, I think that I’m just being realistic. In fact I spoke with a top commercial photographer who makes over a million dollars a year – and he said he wouldn’t be surprised to see his income go down to between $100,000 – $200,000 in 2009. I’m afraid that many studio managers and assistants will lose their jobs in the upcoming year.
So are we crazy? I certainly hope so! I hope I’m DEAD WRONG. But my advice to you (the readers of this blog and fellow photographers) would be to save your money, not spend or expand too quickly right now, and make sure to treat your current customers like gold. Don’t hesitate to negotiate with them (to their favor) during these times, because when they tell you their budgets have shrunk – they’re not making that up. Be happy that they have any budget at all. Also – if you’re eyeing that $30K digital back – now is the time to rent it and bill that to your client… by no means should you be voluntarily entering in to debt right now. If you’re a student – understand that I feel your pain: I’ve seen a Pulitzer Prize winning journalist who is unable to get a job right now… and if you’re in business school – well, Wall Street isn’t going to hire anyone anytime soon – so it’s time to go move in with the folks for a year or so… or in some cases go back to school and pick up a Masters in another area as I’ve seen a few family friends do…
I’ll be publishing a LOT of updates on this blog in the upcoming two weeks. Both on some of my recent trips – and also on some of the recent work I’ve been doing. I’ll discuss some developments on the film project I had mention with SmugMug as well as projects that I’m currently working on or have just wrapped. It’s been an incredibly busy few weeks, filled with great excitement and opportunity and wonderful creativity – so only positive news to come from hereon out.
I do find it necessary to publish and share these thoughts for now. Take it for what you will. As I said: if I’m dead wrong – I’ll be very happy to eat crow and celebrate with each and every one of you. It’s not just a question of “if” things will eventually turn around – just when. My guess is not in the next 3-6 months – and that’s why I’m being careful. Shelter yourself through this storm – and be in good position to spread your wings when the sky clears.