Not a pretty picture

Over the last five years, professional photographers have weathered the twin storms of a declining industry and an economy-wide slowdown. Consumers and amateur photographers have readily adopted digital camera technology, which threatened to make professional photographers’ work obsolete.

Manufacturers have continued to add more user-friendly features to digital SLR cameras and market them to hobbyist photographers, while the amount of photography short courses and online tutorials has grown. In the current environment, everyday citizens are taking on work that working photographers would once have done, fostering a growing cultural aversion to employing professionals.

This has resulted in a pronounced, sustained dip in revenue for the industry, which shrunk by an annualised rate of 3.7% over the last five years, to $861.8 million. However, many professional photographers have shown they can adapt to these conditions. A renewed focus on services that individuals are unlikely to replicate is set to slow the decline in industry revenue.

The industry is overwhelmingly dominated by small and non-employing operators, many of whom work part-time to supplement income from another job. Industry players also tend to focus their operations on specific geographical or demographic areas, such as child portraiture in a certain shopping centre, or in niche areas, such as wedding photography for a particular religious or ethnic community.

As wedding photography makes up 40% of industry revenue, changes in the number of marriages have a substantial effect on this industry. Marriage rates hit a 20-year low point in 2001, but have trended up since. However, in 2008 and 2009, weddings dropped off as couples postponed their weddings for more certain economic times. Wedding photographers’ revenue suffered as a result and consumers cut expenditure on luxury services. But the industry’s real losers during this period were those doing corporate and advertising work, as businesses cut expenses during the slowdown.

Industry revenue is expected to decline between 2010 and 2015. Photographers who wish to remain profitable will focus on areas where they can differentiate themselves from amateur photographers with superior shooting and image editing skills, or through providing services such as school portraits or wedding photography, where professionals are considered necessary or worth the expense on an important day.

After nearly a decade of steadily falling revenue, the industry’s decline is expected to moderate over the five years to 2014-15 to $775.3 million. However, it is unlikely that the industry will be able to stem this constant decline.

Key success factors

• Production of goods currently favoured by the market: Being able to offer digital services and video as well as stills photography will attract more potential clients.
• Effective use of online marketing: Having a well designed and appealing website is crucial to operators’ success. Operators may also find success using online social networking sites like Facebook to help market their services.
• Ability to effectively communicate and negotiate: Communication skills, especially in relation to clients, are important for photographers wanting to meet customer expectations and build a favourable word-of-mouth reputation.
• Access to niche markets: Developing expertise in a niche market can help generate income from repeat jobs and ‘word of mouth’ recommendations.
• Proximity to key markets: Operating in urban centres, where the age profile lends itself to more marriages, will assist photographers in finding more customers.
• Use of specialist equipment or facilities: Purchasing or having access to a full range of technical equipment is important for high quality photographs.
• Effective quality control: The quality of the end product is very important for ongoing success.

Barriers to entry

Prior to the late 1990s, when digital camera technology started to emerge, startup costs for a professional photographic studio were quite high. Photographers had to purchase camera equipment and also development technology, including dark room space and development chemicals. It was also time consuming to develop pictures in this manner and expensive to hire someone else to do it. Since industry-wide adoption of digital cameras, establishment costs have fallen as professional photographers were able to ply their trade using a camera, some basic accessories like lenses, lighting, and a tripod, and a personal computer.

Robert Bryant is the general manager of business information firm IBISWorld.