Choosing A Licensing Model

Posted on 1/29/2014 by Jim Pickerell | Printable Version | Comments (1)

It is getting harder and harder to decide which stock photography licensing model to use if a photographer’s goal is to maximize earnings.

For a long time it was generally assumed that the way to maximize revenue was to license your images based on usage (Rights Managed). In this way the seller could charge a lot of money – sometimes many thousands of dollars -- when a customer wants to make extensive use of an image. The fatal flaw in the RM licensing strategy is that when every sale is negotiated, there is a tendency to accept whatever a customer is willing to pay. More and more frequently RM images are being licensed for extremely low prices. It is not uncommon for photographers to receive royalties of less than $1.00.

The second major licensing model is Royalty Free. It comes in three flavors – Traditional RF, Midstock and Microstock. Traditional RF prices are based almost entirely on the file size delivered. With very few exceptions -- like using the image on a postcard, calendar or as a company logo, or giving it to someone else -- customers can do anything they want with any RF image they purchase.

Customers love this model because they don’t have to worry about negotiating a new fee if they decide to make additional uses of the image later. Also, the most expensive RF license is less than $1,000 so if there is the possibility of a really big use they don’t have to worry about paying very high RM fees. As a result, over 98% of all stock image uses are licensed are RF.

It used to be that the published RF price for each file size was fixed. There was no negotiation. Initially, fixed prices were a major selling point compared to the negotiations required with RM. However, as we’ll see a little later the top price top price is still fixed, but for a high percentage of uses the bottom price is often negotiated way down.

Midstock and Microstock sellers also use an RF licensing strategy, but it tends to be somewhat more restrictive than the Traditional RF license. Customers that want to print more that 500,000 copies of the image must purchase an Extended License in addition to the basic license. This can add significantly to the basic license fee. A few other uses also require an Extended License and these uses can vary from seller to seller. Nevertheless, the total fee – particularly for Microstock, not necessarily for Midstock – is usually less than a Traditional RF priced image.

The other licensing model to consider is Subscription. About 60% of the images licensed in 2013 were licensed through some type of subscription. The allow uses of the images are similar to Microstock. But there is no segmentation of price based on file size or any other factor. All images are equal. The customer pays a fixed monthly or yearly fee for access to any image in the collection and can download up to any 25 images a day. Image creators are paid a fixed royalty, usually $0.25 to $0.40 per download.

Most creators find that they get a much higher volume of downloads from Subscription sites than selling individual images at Microstock prices, but in terms of revenue generated the higher volume usually doesn’t make up for the lower royalty received. Most creators who put images on Subscription sites also license the same image through several Microstock sites as well giving them the best of both worlds. But, there is a growing tendency for customers that used to purchase Microstock to switch to lower cost Subscriptions. As this happens it tends to cannibalize revenue from the Microstock sites that charge higher single image prices.

Comparing Numbers

Recently I had the opportunity to analysis the 2013 sales of one of the leading contributors to Getty Images. This photographer is a full-time stock producer (at least for now), and has significant collections of both RM and RF images with Getty.

If we compare the average royalty per-image-licensed that the photographer receives, RM is a clear winner with an average of $104.55 compared to $26.64 for RF. (It should be noted that while the photographers gets an average 35% royalty for RM and 20% for RF these percentages have no bearing on the above figures since they are royalties received, not gross licensing fees.)

Based on Getty’s historical records when they were a public company, they licensed about twice as many RF uses as RM so we need to take that into consideration. This photographer had 2.46 times the number of RF licenses as RM. If we multiply the $26.64 by 2.46 we get $65.53, a more reasonable comparison to the $104.55 for RM.

Jumping back to RM a few really big sales (over $1,000) really skew the average. In this photographer’s case less than 3% of total RM licenses generated 35% of his RM revenue. If we back out these licenses the other 97% generated an average of $67.77 per license.

So, RM photographers are betting they will make a few huge sales. But such sales are very rare. If the big ones don’t come through then the average revenue generated by RM is about equal to RF - $67.77 to $65.53.

We also need to take a look at prices being charged and the royalties for the vast majority of RM and RF images licensed. Getty received less than $25 for 35% of the RM uses licensed. In many cases the royalty the photographer received was less than an average Microstock royalty.

The gross fees Getty accepted when licensing RF uses for this photographer were less than $10 for 20% of the images licensed; less that $25 for 32% of the images licensed; less than $50 for 46% of the images licensed and less than $100 for 66% of the images licensed. Either most customers don’t need anything larger than a 502KB file for web use or Getty is offering some substantial discounts from its list prices.

Many photographers believe they will get better prices, and thus make more money, for their images if they license them as RM rather than traditional RF or microstock. But that is becoming less and less true. Agencies tend to accept whatever customers are willing to pay. There are so many similar images of reasonably good quality that customers keep playing one agency off against another and driving down prices.


Midstock is a relatively new phenomenon. Basically, it is high priced Microstock that ranges in price from about $10 to $240. Most of the sales seem to be in the $10 to $60 range. The largest seller is iStock. All the images of its exclusive contributors are in the Midstock category and they represent 75% of iStock’s total revenue. From what iStock exclusive shooters tell me, I think the average royalty is somewhere in that range of $16 to $22 depending of the percentage of a contributor’s sales that are from the Signature, Signature+ or the Vetta collections.  Royalty shares for exclusive contributors can range from 30% to 40%.

There are indications that sales for many exclusive contributors are declining and particularly for images in the higher priced Vetta collection. Customers seem to be looking elsewhere for cheaper images. Fotolia licenses some images at Midstock prices, Most of Midstock images on Fotolia have been supplied by production companies, rather than individual shooters.

Stocksy, founded by Bruce Livingstone, is the newest entrant in the Midstock space. Usage fees range from $10 to $100 and probably best define the Midstock price point. Contributors receive a 50% royalty and 100% of any Extended License fee. Livingstone has a thorough understanding of the stock photo market as he was iStock’s founder. He sold iStock to Getty Images in 2006.

Another new entrant that might be classified as Midstock is Offset from Shutterstock. In my opinion it’s prices at $250 for a 3MB file and $500 for a 50MB file are way too high considering what customers are paying for RM and Traditional RF today.

While $16 to $22 is below the $26.64 average that the Traditional RF contributor received, it is important to consider volume. Earlier this month I published (See here) a list of 420 of the top sellers at iStock with an estimate of the number of download each contributor had in the last two years.

One of the people in the mid range on this list had more than 10 times as many downloads as the photographer licensing his work as RM and RF. That probably means that even though he was getting a lower royalty, his total earning were much higher than the RM/RF photographer. For a rough estimate of earnings multiply the number of downloads for exclusive contributors by $16. Non-exclusive contributors will have earned much less due to much lower fees per download and lower royalty shares.

I estimate there were something in the range of 3.5 million RM licenses worldwide in 2013, (and remember many of them were for very low prices), about 7 million Traditional RF and between 10 to 12 million images at Midstock prices. That leaves roughly 42 to 45 million images that were licensed at Microstock prices and roughly 110 million Subscription licenses.

In deciding what licensing model to use photographers need to consider that they can put the same images on several Microstock sites, Subscription sites and on some of the sites that sell images at Traditional RF prices. In this way they dramatically increase the odds that image buyers will at least see their images, even though the royalty per-use is much lower than RM.

Take Aways

1 – Royalties will continue to decline.
2 – As royalties decline a combination of sales volume and average price per license becomes more important than royalty rate.
3 – It is no longer guaranteed that RM licensing will generate the most revenue for the image creator.
4 –Test different licensing models.
5 – Focusing on high dollar sales is a very risky strategy because such sales represent such a small percentage of total sales.
6 – For most image creators stock photography should be viewed as a supplemental source of income, not ones primary source.
7 – If income is important concentrate on something other than stock as a way to earn a living. 

Copyright © 2014 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


  • Ron Levy Posted Sep 9, 2014
    Very interesting comparison, thanks for the numbers. My only criticism is a rather superficial but annoying recurring problem in all the articles I've read -- lack of proofreading. There are so many typos, grammar and punctuation mistakes that it becomes hard to read without re-reading many parts. This article is no exception. It requires more than just spell-check.

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