Alamy has announced that early next year they will be lowering the royalty rate from 50% to 40%. Early in January they will send all contributors an official announcement signaling the beginning of the standard 45-day notice period before a new contract change goes into effect. The new royalty rate is expected to take effect in February 2019.
CEO James West has provided a
13 minute video explaining the need for this change.
In the video there is a gross revenue chart that tracks revenue for the company from 2002 though 2018. The chart shows that the company had steady growth from 2002 through 2008 from basically $0 to around $21 million. Then after the recession, and when the whole traditional stock photo business began to decline, gross annual revenue remained relatively flat in the $20 to $22 million range until about 2015.
(One confusing aspect in the figures shown on the current chart is that it shows gross revenue in 2008 at about $22 million. However, in early 2009 Alamy reported revenue at “just under $31.2 million for all of 2008.”)
In 2010 Alamy lowered the royalty rate from 60% of 50% in order to have more resources to invest in growth. They expanded their operations in the U.S. and Australia and heavily invested in engineering.
By 2015 this investment seemed to have kicked in and the company had significant growth for 2½ years to about $30 million for 2017. However, in 2018 gross revenue seems to have plateaued again. James didn’t mention this, but the same plateauing seems to be happening for the other industry leaders – Shutterstock and Getty Images -- due to a continued decline in the average price charged for still images and the increasing availability to customers of many FREE image sources.
It is worth noting that since 2008 there has not only been a dramatic and steady increase in the number of images available for licensing, but also a steady decline in the average price per image used. Alamy has made more of an effort than many others to hold the line on pricing, but in order to compete they have also been forced to drop their prices. Nevertheless, in my opinion, the average prices charged by Alamy are still much higher than Getty’s. (Good data is not available to make this judgment.)
The Alamy chart on the video also show a trend line for the gross royalties paid out over the years. This shows about $10 million paid out in 2010 and about $15 million to be paid out this year. However, this does not take into account the dramatic growth in the size of the collection since 2010. At the end of 2010 they had about
20 million pictures. Today, they have 155 million. Thus, in 2010 a photographer might have expected to earn on average $0.50 annually, per-image-in-the-collection. In 2018 the average earning would be about one-fifth of the 2010 rate at $0.097 per-image-in-the-collection.