All image sellers win with MRR. Possibly the biggest benefactor of such a pricing strategy is traditional RF (TRF).
With its current file-size-based pricing strategy, TRF is forced to sell its images for large commercial uses at prices significantly below what customers can afford, or would gladly, pay. The top price for the largest TRF file is nowhere near the price commercial customers pay to use RM images when the distribution of the project is large. And yet, RF images are equal, and often superior to, RM images in quality. Customers with large planned uses that don't require exclusivity (the vast majority) search for the best image, regardless of whether it is RM or RF. They rejoice when the right image happens to be RF, thus offering them usage for much less.
For several years, RF has attempted to solve this problem by raising the price of the larger file sizes under the theory that larger uses require larger file sizes. But since file size really has no relation to the value a customer receives from most uses, TRF simply priced itself out of certain markets. Markets that are particularly price-sensitive include book publishing, general editorial, nonprofits and most Web sites.
By converting to a simple usage based pricing structure, TRF would have the ability to charge many commercial customers much more for certain types of usage, while still keeping their fees for editorial and nonprofit low enough that those segments could afford to use RF images.
MRR enables producers to charge higher fees to those few customers who intend to make large uses of the image. Such fees more adequately reflect the real value received by the customer.
On the low side, under the current file-size system, TRF sellers can easily start offering their images as microstock, as well as through traditional outlets. Microstock then becomes just another RF price point. Many TRF sellers are already beginning to test out this strategy. But the microstock strategy also has great risks.
A significant number of TRF's current commercial customers may start buying the images they need at microstock prices of $2 to $10 per image rather than at the current TRF prices. In fact, many TRF customers seem to be headed in this direction. They are finding that certain microstock images are satisfactory.
In addition, as TRF suppliers increase their participation in microstock, they will begin to raise the level of quality and variety of the microstock offering, making it even more likely that TRF buyers will search on microstock sites.
As a result, TRF is caught in the middle. It will steadily lose customers because its prices are too high, and dollars because its prices are too low. TRF needs to find a way to reach out to the huge number of new customers microstock has identified without losing any of its existing ones. A pricing system based on use rather than file size seems the only solution. Pricing based on file size has served TRF well for 15 years or so, but the realities of the market have changed dramatically. It is time for a major adjustment in strategy.
One small consideration is that MRR, as I've designed it, only allows unlimited use for one particular project within a category, and for one particular customer when an image is licensed. While this is for the life of the project, it is slightly more limiting than traditional RF. This may be a problem for a few customers, given that in the past, some TRF sellers have allowed RF images to be used in multiple projects for multiple customers. However, only in very rare cases do customers want to use the same RF image in unrelated projects, or for different customers, and it seems unlikely this will be a major issue.
TRF will find it difficult to grow unless it modifies its pricing strategy. MRR seems to be the best available and least disruptive option. While MRR is a slightly more complex than the current RF strategy, it is still very simple compared to traditional RM and much more equitable to RF sellers. To grow, TFF must find a way to extract more revenue from the customers who receive great benefit without pricing themselves out of the small user market.
Tomorrow: MRR benefits RM producers and sellers.