Expert Advice: Forming A Photo Cooperative

by Bill Cramer, Wonderful Machine

With the recent shake-up at Luceo Images raising questions about the viability of photo cooperatives, I thought I’d share my own experiences with the photo cooperative business model.

Wonderful Machine didn’t always have 600 photographers. Back in 2004, we were a group of 3 working photographers (Chris Crisman, Ryan Donnell and me), a studio manager, a marketing director, a bookkeeper and a dozen interns. Unlike many of the cooperatives that have since appeared on the scene, which are primarily made up of photojournalists spread far and wide, we were all based in Philadelphia and we were interested in portraiture as much as photojournalism and commercial assignments as much as editorial.

I had been thinking of forming a cooperative for years before that. Every time I saw a successful law firm or medical practice, I wondered why photographers couldn’t do the same thing. I figured why not share facilities, staff, equipment, insurance, marketing and refer assignments back and forth in a way that would increase everyone’s revenue and decrease everyone’s expenses? I foolishly tried this years earlier when we were still shooting film, but it was too onerous to reconcile all those costs. When digital came along though, the whole dynamic changed. Without film, processing, Polaroid (and gels and filters for that matter), the variable costs dropped to near zero. And even though the fixed costs of cameras, computers and software increased dramatically, they were no more than the expendables we were used to paying for and they were much easier to share. (A busy commercial photographer might shoot 2-3 days/week, so that leaves 4-5 days for the others to use that equipment.)

While our cooperative only lasted for a few years before everyone went their separate ways and Wonderful Machine transformed into a marketing company, I thought we got most of the arrangement right, and I think it could be a good starting point for others to try. In a nutshell, each photographer billed all of his assignments and stock sales through our company. When a payment came in, the photographer and the company would be reimbursed for any out-of-pocket expenses related to the shoot and then the photographer and the company would split the remaining “effective fee” 50/50. The photographer was paid as an employee, through a payroll service, with taxes taken out. The company would cover all of the common costs: rent/utilities, staff salaries, photographic equipment, office computers/software/furniture/equipment, insurance and the employee portion of the photographers’ payroll taxes. Each photographer would pay for business expenses that were unique to them, including their personal computer and their promotional materials.

The logic of a 50/50 split was that the cost per photographer would scale up and down as the photographer was busy or slow. And with any luck, some photographers would be busy when others are slow. You could just as easily set up a system where each photographer would contribute the same dollar amount rather than percentage. But that would make it hard to have anyone in the group that made a lot less than the others. And if you had different people paying different amounts, you would find yourself constantly renegotiating.

Rather than hiring freelance assistants, we had a number of “apprentice photographers” who gave us two days of their time each week in exchange for being part of our group, with access to our equipment, facilities, supplies and insurance. We also gave them professional guidance and passed along assignments when appropriate ones came along. Those apprentices would help out on shoots or in the office depending on the needs at any given moment.

We found that there was definitely power in numbers. We ended up attracting several clients who liked the idea of coming to one place to solve most of their photographic problems. At one point, we had five different photographers working for a single client that we were billing as much as $90,000 a year. Clients liked the fact that we had full-time staff on hand to help set up shoots and process files when the photographer was out of the office. And as our more established photographers began to grow out of certain clients, rather than losing that revenue, we had younger photographers ready to step in to fill the void. Best of all, we were able to help each other out in lots of ways. There were many occasions where we referred clients to one another, shared creative ideas and even collaborated on shoots.

Also, many individual photographers would have a hard time justifying a studio manager, marketing person and bookkeeper. But our combined revenue afforded us that, which freed us up to concentrate more on photography and promotion and less on administrative work.

Here’s what our contract looked like (you can download a Word version here):

We also created a spreadsheet to keep track of the revenue from each job, which we called a Split Sheet. It had spaces for the invoice total, all the expenses, and who was to get reimbursed for what (you can download an Excel document here):

But before you get too excited about all the upsides of a cooperative, you should also know about the potential downsides. Photographers tend to be lone-wolf types (which is why they aren’t doctors and lawyers in the first place). Getting them to cooperate can be like herding cats. So it’s crucial to work with people who are smart, creative, generous, understand the risks and are willing to give it a good try. Also, unlike doctors and lawyers who are prone to take a business-like approach to their careers, many photographers view their photography in more personal terms. That mentality can tend toward possessiveness about equipment and clients, and work against a spirit of cooperation. And any time human beings share anything, some will feel short-changed or resent the success of others.

Taxes and insurance were also issues for us. I know this may come as a shock to you, but many photographers tend to overstate their expenses, under-report their revenue, avoid paying sales/use taxes and insurance. Individual photographers can get away with murder, but as a proper company, we couldn’t operate fast and loose like that. So for some photographers, the cooperative approach will not be as attractive as a life of crime.

The most important part of our contract was that all photography revenue went into the pot. Naturally, every photographer thought that there was revenue that shouldn’t be shared – whether it was from weddings or pre-existing clients or from stock sales. But our logic was that the organization (and everyone participating) was there to support the photographer in all things related to photography, so all the revenue should be shared. And the minute you exclude one kind of revenue, there will be no end to the negotiations. And if there’s no revenue to share, there’s no revenue to provide the support that everyone wants in the first place.

Of course, this agreement just covers the relationship between the photographer and the company. Forming the company is a separate matter. In our case, my wife Adrienne and I paid for all of the start-up costs and guaranteed the rent, salaries and all the other ongoing costs. So we owned all of the shares. In cases where you have more than one established photographer coming together, you’ll want to form a corporation (probably an LLC) with each person getting shares in proportion to the cash and equipment they contribute. Those partners will then assume the profit or loss of the company.

Tips:

• Pick your partners and employees carefully.
• Create a set of rules that apply to everyone and stick to them. Then update that agreement once a year.
• Have enough cash in reserve to get started and to get you through the slow spots.

If you decide to go down this road, our producer Jess Dudley can assist you with any questions you might have.