I meet most of my models through modelmayhem. Sometimes they approach me and sometimes I approach them. I don't put up ads or casting calls. Since I don't market, a lot of it is word of mouth. The only time I pay a model is if it's commercial (client gig, workshop, etc). The rest of the time I do prints and websized images.
My advice is that if you want good results then work with good people. That means networking with makeup artists, hair stylists, wardrobe stylists, agencies, quality models, and so on. If you're doing anything commercial with the shots then get a release to stay in the clear. And if you're submitting to stock then do the right thing and make sure your models get paid.
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