I am constantly challenged on why I think there is likely to be little or no revenue growth in the stock photo business. Many point out that clearly there is a huge explosion in the use of imagery online. Therefore, why won’t that be reflected in the growth of stock photo revenue? They also point to Shutterstock’s consistent 40% growth per year over for the last three years.
Here are 6 reasons why industry revenue growth is and will continue to be in the very low single digits, until it finally turns negative.
Reason 1 – Overall, prices are falling much faster than paid downloads grow. The number of paid downloads is certainly increasing annually. This is particularly true of microstock and subscription sales. On the other hand the number images licensed at anything approaching traditional prices seems to be falling. Overall the annual revenue generated by the industry remains about the same.
Reason 2 – Much of the revenue before 2006 came from licensing for print uses, but print is disappearing rapidly and digital is taking over. Prices charged for digital use are only a small fraction of what is paid for print uses.
Reason 3 – There are lots of ways for image users, to get the images they need, without paying for them.
a - Among these are free images online. There are over 300 million images on Flickr that offer Creative Commons licenses. These licenses allow free use in exchange for a photo credit. Obviously, most of these images are supplied by amateurs.
b - Users can simply grab and download anything they want without paying anything for the use. In virtually all cases the cost of trying to enforce copyright is much greater than any likely recovery. In the case of Getty Images, when they discover an unauthorized use on a commercial site Getty sends out demand letter - about 50,000 a year, but these are a drop in the bucket to the real unauthorized uses industry wide. There is a huge cost in administering this process and such letters have often created bad publicity for Getty which probably results in turning away customers.
In October Getty general counsel John Lapham told Gigaom that, “Our enforcement polices are being ramped down. We’ve changed the program quite a bit to remove penalty and fees.” Getty now does more to distinguish between blatant pirates and “customer who make a mistake.”
In March of this year Getty also started offering images to customers for free if they would allow Getty to embed the image on their site and track viewers rather than just licensing use of the images. In the first six months images were embedded on about 60,000 website and these images received almost one billion page views. (See this story)
c – With improved camera equipment and software like Photoshop it has become much easier for former stock photo customers to produce much of what they need in the way of imagery themselves rather than being forced to buy imagery.
d - And then it is increasing easy to find a photographer to shoot what you need, rather than buying stock. There are thousands of struggling photographers who will work for peanuts. Often customers can find someone who will shoot exactly what they want for very little.
Reason 4 – When customers need an image to communicate and idea there is an increasing use of illustration and proportionally less of photography. If a company wants to create a marketing piece the first stop isn’t a photographer or stock photo agency, they turn to their in house graphic designer, or to an independent graphic design firm. The graphic designer creates the concept for the ad, brochure or web site. At that point he may check the web to see if he can find the illustrations he needs.
These graphic designers have the skills necessary to create many of the illustrations they need without purchasing anything. Increasingly that’s what they are doing. They may choose a stock image for a background, or something that is a small element of the final illustration.
Many of these image buyers also take photographs. Over one-third of Shutterstock’s downloads are for illustrations, not photographs. About half of iStock’s best selling contributors are either illustrators or people who both take pictures and create graphic illustrations. (See
here). There is a declining need for realistic photos when it is possible to easily create an illustration that exactly fits the client’s vision.
When designers need to buy images for their projects they are looking for cheap because they are usually working on a “project budget.” If they can save on the photography they buy, it goes to their bottom line.
Reason 5 – The growth in downloads is deceptive. I believe there were about 185 million paid downloads worldwide in 2013. That number will probably jump to 210 to 220 million in 2014. But over 70% are subscription downloads at an average price of $1.25 or less. A huge percentage of subscription downloads are used for reference and planning purposes rather than as part of an end product. Thus, these download numbers are not reflective of the actual growth of images used in print and online products.
Reason 6 – While there is an increasing use of video, most videos are shot start to finish by the producers. Rarely do they need stock video clips. If you consider the kind of stock clips Getty and Shutterstock are selling, the growth in revenue for the entire 14 years since 2000 has been something in the range of 100-150%. Compared to the growth in the use of video online during the same period, this is insignificant. There is no reason to think that the growth rate for stock clips will be any faster in the next decade than it has been in the past.
Finally, there is one other issue to be aware of. It doesn’t directly affect revenue growth, but it is a basic economic issue that points to a fundamental problem for this industry.
The price paid for stock photography has no relation whatsoever to the cost of production. Currently, it costs more to produce most stock imagery than that imagery will ever earn. Thus, eventually, producers looking for profit must stop producing. Many professional photographers, particularly in the Western world, have already given up and moved on to other things. More and more of the best selling imagery is being produced in third world countries where the cost of living is much lower.
Today, amateurs are the principal producers of stock imagery. For these people profit is not an issue. They are just having fun and any revenue is a supplement. But, eventually, even for the amateur, the time and energy necessary to produce and sell stock imagery may become more trouble than it is worth.