Is An AI Bubble Threatening Your Photography Career
(Image credit: Jason Way Photography / Getty Images)
If you run a photography business, you might feel that the direct impact of AI on your bottom line is still minimal. While AI can now generate things like studio-quality headshots, it is far from replicating the nuanced work of wedding, sports, or fashion photographers. At least for now.
However, a more subtle and potentially significant threat is emerging from the world of AI: the possibility that the current boom is an economic bubble on the verge of bursting. The fallout from such an event could have serious consequences for your photography business.
A Flashback to the Dot-Com Crash
For those who were working in photography during the late 1990s, this situation may feel uncomfortably familiar. The dot-com boom saw tech startups with questionable business models achieve massive valuations. The belief was that the internet would revolutionize business forever, and while it eventually did, it was preceded by a devastating crash.
When the bubble burst in March 2000, tech stocks plummeted, losing two-thirds of their value within a year. It took more than a decade for the market to recover. Today, some economists are warning that we may be in an even larger bubble, this time fueled by the hype around artificial intelligence. The valuations of the top ten US tech companies, relative to their earnings, are currently higher than they were at the peak of the dot-com frenzy.
What Is an Economic Bubble?
In economic terms, a bubble occurs when the price of an asset soars far beyond its actual intrinsic worth. This is typically driven by speculation, hype, and a collective fear of missing out (FOMO). Eventually, reality sets in, and the bubble bursts, causing values to crash dramatically.
This is a concern for everyone, not just investors. A major tech crash would create ripple effects that extend far beyond Silicon Valley, impacting countless other industries, including photography.
How a Bursting Bubble Could Affect Photographers
A downturn in the tech sector could impact your photography business in several ways. Camera and gear prices could increase as manufacturers face tighter profit margins and scale back on research and development.
More directly, commercial photographers are likely to see a drop in commissions from clients in advertising, tech startups, and other related sectors. You might also find that clients take longer to pay as their own revenues are hit. Furthermore, if you rely on specialized AI-powered editing or imaging tools, some of these services could disappear or sharply increase their prices if their financial backers pull out.
How to Protect Your Business
While it's impossible to know for certain if or when this bubble will burst, the risk is real. Investor enthusiasm could wane if AI products fail to deliver on their revolutionary promises quickly enough. Given that the top 10 tech companies represent about 40% of the US stock market's value, any dip in confidence would send shockwaves through the entire economy.
You can't prevent a market crash, but you can take steps to make your business more resilient:
- Diversify Your Clientele: Avoid relying too heavily on clients from a single industry. This will help insulate you if one sector experiences a slowdown.
- Be Smart About Gear Purchases: Think carefully before making large equipment purchases on credit. Consider renting or leasing expensive gear instead.
- Build a Financial Cushion: Aim to have savings set aside to cover your expenses during periods when clients are paying late.
- Have Software Alternatives: Keep an eye on the software tools you depend on. Have backup options ready in case they become too expensive or are discontinued.
- Stay Informed: Pay attention to what's happening in the tech and financial markets. This awareness can help you anticipate potential challenges before they directly impact your bottom line.
