People magazine’s upcoming iPad application has hit a major hurdle. Photograph companies that supply paparazzi pics to the magazine are withholding the snapshots, unless People agrees to give more money for the iPad application version of the magazine, reports The Hollywood Reporter.

“I do think it’s an important moment as far as the photo-agency business model,” said New York bureau chief for World Entertainment News Network Jill Stempel to THR. “We need to take a stand.”

According to THR’s report, Stempel’s agency is considering joining the alliance. It’s a battle over what the industry is calling “the future,” and assuring that the photo agencies get what they can from the new products.

But with only $3 billion coming from the entire tablet sector by 2014, and $1.3 billion in incremental revenue, I can’t imagine the photo industry can demand that much more money, even if magazines, like People, rely so much on those glossy photos.

But, no doubt, the other star-centered mags are watching closely.