Dealing With Deflation
Every day on the radio, on TV and in the newspapers "they" talk about the impeding disaster of the coming deflationary era.
Deflation in economics is a persistent decrease in the general price level of goods and services.
— Wikipedia
Deflation happens when next month's price will be lower than today's. This means that not only I should wait to buy "it", but I should wait "forever" until I really need "it". What's got deflation to do with the photography business? The photography business has been in a deflationary mode since the start of the digital era. Actually, it's not the photography business in general, just a few sections with very noisy photographers/complainers. The 2 major areas that have been hit the most are:
- Stock photography
- Editorial photography
Other photographic areas have been booming: weddings, events...
Deflation is not bad by itself, if you learn to adjust. We need to learn from the industries that have very successfully adapted to deflation: The high tech/computers industry has been in deflation for the last 25 years. And we are all better for it. Every month the price of an item comes down. Every 6 month, the CPU speed increase by 33% and the prices stays the same or goes down. Every 6 month, the hard drive capacity goes up by 50%... Does this sound familiar, it's the same with cameras, except for the specialized, high end cameras. The major problem with deflation is the pain and dislocation that occurs for the people and industries that relied on prices always increasing.
What the computer industry has shown us over the years, is that:
- For the most common denominator, it's a race to the bottom.
- For the most unique differentiator, i.e.: the more you differentiate yourself, the higher the profits.
We can see this in action in the stock photography business. If you are the run of the mill... unless you are very specialized in esoteric fields such as David Kirkland with Park City Utah.