Aside from the fact that $125 sounds a little steep, I'm pretty much in sympathy with the photographer on this one. The posts on the forum have generally concluded that it was an honest mistake, and since it would cost the photographer to sue, the writer shouldn't pay anything. Here's my take on it:
There's the law, there's what you can get away with based on practicalities, and then there's the higher standard of ethics.A costly lesson for that writer. Right after I posted a man, who might be a lawyer as well as a writer, posted to say that the photographer couldn't prove damages either through loss of income or beneficial income to the writer as a result of illegal use of the photo, so the writer shouldn't pay. He demonstrated exactly what I said in my post. He recommends the writer fall back on the lowest acceptable behavior, rather than hold to an ethical stand.
By the law, you used a copyrighted photo without permission. You did it inadvertently, but ignorance is never a valid excuse. By law the copyright holder is due compensation for the several months her photo illustrated your article.
But the practical matter is for her to sue you and obtain a judgment against you and then collect that judgment is cost prohibitive. So you can probably get away with it if you will just endure the shouting.
But by ethics, once you were made aware of the situation, don't you need to compensate her? The law defines the lowest acceptable standard of human behavior. Ethics defines something higher, something better, what's really right and wrong. Paying something will be a tough lesson to learn, but it's the ethical thing to do.
I agree with those who suggest making an offer. How many months was the photo illegally used? Offer her so much per month, maybe $5 or $10, in full compensation for the use and for her statement thereto. Print and file all e-mails. The payment will be a tax deductible business expense in the USA, probably in most countries. That should help offset any writing income you may have.
I'd be interested in what my readers think about this.