79. School Photos

Zachary Crockett (0:02)

Every fall, kids across America take part in a strange ritual. In the middle of a school day, they're corralled into a gym or cafeteria, organized into lines, and photographed one by one. This is done by a for-profit photography firm that charges top dollar for 8x10s and wallet-size prints.

For the parents of these kids, it's an annual tradition. And for the companies that take all the pictures, it's a lucrative one.

Ken Murphy (0:36)

You walk into a school, you've got 500 kids organized in 25 different classes. Teachers need to get them in and out very quickly. It is mass chaos.

But if you can deliver, you can generate a very profitable business.

Zachary Crockett (0:51)

That's Ken Murphy. He's the CEO of Life Touch, the largest school photography firm in America.

The company photographs 30 million students each school year, from preschoolers to high school seniors.

Ken Murphy (1:05)

There is this interesting bell curve where families are quite keen to preserve imagery of their children early on. And then again, as they're graduating, there's a new class of preschoolers every year. You have graduating seniors, so you have a replenishing customer base. The opportunity is really great.

Zachary Crockett (1:24)

By one estimate, the school photography industry is worth $1.6 billion a year.

People who work in the trade say it's more of a high-volume profit machine than an art form. But to survive in the business, you have to appease your customers. Not one, but two of them.

Ken Murphy (1:43)

First, we must earn the business of the school. They ultimately make the decision whether to invite us in or to keep us in. And then, we've got to deliver a benefit for parents as well.

The school votes with, yes, you can be my picture provider or not. Mom and dad vote with, yes, I'm going to buy this picture or not.

Zachary Crockett (2:04)

For the Freakonomics Radio Network, this is The Economics of Everyday Things. I'm Zachary Crockett. Today, school photos.

For-profit photographs have been a part of America's school system for more than a hundred years.

Public schools and photography both became prevalent around the same time in the mid to late 19th century. By the early 1920s, schools began taking students' photos for record-keeping purposes, and an industry emerged to handle the work. Photography companies provided photos to the schools for free, and made money by selling copies to students and parents for 10 cents apiece. Dozens of other companies would later form to serve regional markets around the country, and one of them came to dominate the industry. National School Studios, later renamed LifeTouch.

Ken Murphy (3:00)

We were not actually the first to the party.

Zachary Crockett (3:03)

Again, that's Ken Murphy, the CEO of LifeTouch.

Ken Murphy (3:07)

Our company was founded in 1936 by a couple of traveling salesmen who had an opportunity to work for a much smaller regional school photography business in the Midwest. And as those two saw that business, they had the thought to start their own thing.

Zachary Crockett (3:26)

Over the ensuing decades, LifeTouch rose to national prominence.

They did this partly by developing special technology, like a camera that automatically printed data on a negative, linking it to the student being photographed. Until then, photographers had to manually keep track of which shot depicted which student.

Ken Murphy (3:47)

That invention was one of the really breakthrough moments for LifeTouch, because it now could go at great speed. It could churn these images out.

Zachary Crockett (3:57)

Today, LifeTouch contracts with around 50,000 schools and childcare centers across the country. It controls somewhere between one-third and half of the entire market. That business is so valuable that, a few years ago, the internet-based photography company Shutterfly purchased LifeTouch for $825 million.

Although there are still hundreds of regional school photography companies in operation, LifeTouch is the only one with a robust national presence. It's acquired more than 250 smaller firms over the years and has often been called a monopoly.

Ken Murphy (4:36)

Yeah, I probably shy away from the monopoly word, but I do take a ton of pride that LifeTouch categorically and irrefutably is the market leader. The next largest competitor probably is five, six, maybe seven thousand schools.

Zachary Crockett (4:55)

The school photo market encompasses many different products. There are yearbook photos, commencement photos, sports photos, preschool photos, senior portraits, and spring photography, where students can do silly free-form poses.

But LifeTouch gets the bulk of its business, around 50 percent, from fall picture day. Think those formulaic sheets of awkward teenage headshots buried somewhere in a box in your attic.

Ken Murphy (5:22)

When folks think about fall picture day, it's largely your child every year in a similar image. It presents for families the opportunity to look back and see the evolution, the growth of their child.