Digital Product Economics

Posted on 2/15/1996 by Jim Pickerell | Printable Version | Comments (0)


Digital Product Economics

In one of the VISCOMM seminars in October 1995 a plaintive
question came from one of the CD-ROM producers in the audience. He asked,
"When will the stock agencies learn how to price for digital use?"

The panel basically had no help for the questioner. My answer would be,
"I hope, never!"

Let me explain that response.

The general subject matter of CD-ROM discs - that is the content - is going
to be similar to what is currently in books, although CD-ROMs may need many
more images than picture books. There are some books -- novels for the most
part -- that sell hundreds of thousands of copies.

However, ten thousand copies is usually a best seller for most photo books.
Encyclopedias sell more copies, but they have many more photos. A narrow
focus book on, lets say a vanishing culture, is not likely to be a best
seller because there simply aren't that many people who are interested in
this subject matter. A book on wines of the world might do well if it were
the only book out there on that subject, but on a hot subject like this
there are many books that share the market and no single one of them is
a huge seller.

At the moment, Corbis is concentrating some of their photo assignments on
vanishing cultures in an effort to document these peoples, and they have
a photographer doing an extensive shoot on wines of the world. I would anticipate
that they will come out with such digital products in a year or so. These
products may do well if they have no competitors and are the only way digital
users can get this type of information.

Corbis' "A Passion for Art" - The Barnes Collection, is an excellent
product and breaks ground on how such titles should be designed. It will
probably do well as long as there are only a few art titles. But, as more
and more competing titles appear on this, or any other subject, there are
likely to be fewer sales of any particular product.

Creative Percentage Of Retail Price

I used to think photographers were going to be able to get a higher percentage
of the gross sale price of these digital products than they are currently
getting from books, if they would produce and market the titles themselves.
However, after some experimentation this year, I've come to recognize how
difficult it is to market such products. In most cases the content creators
will have to rely on publishers to market CD-ROM products for them.

I have resigned myself to the fact that the amount of the gross sale price
of any digital product that will be available for the content creators will
be about the same as is currently available for any photo book. That's roughly

So let's look at the economics.

We take a product that is going to retail for $39 and 10% of that is $3.90
per disc. Let's say it has some text and sound so half of the content fee
has to go to pay for that. Now we have $1.95 to be divided among 500 images.
That's .0039 (39 hundredths of a penny) per image per disc. If the producer
sells 10,000 copies he can afford to pay $39 per image, 20,000 copies and
he can afford to pay $78.

Of course, if he uses 1,000 images he can only afford to pay half that much.
If an agent is involved in the sale the photographer gets 50% of these numbers,
or maybe less.

Can you afford to shoot images and make them available in the marketplace
for that kind of fee? What if they only sell 5,000 copies?

Because of the way the marketing chain is structured, if you double the
royalty to the photographer you have to double the retail price to the consumer.
It is generally believed that consumers will not pay $80 each for such discs,
and yet even at that price the photographer probably isn't getting enough
to justify producing images.

The reason I say, "I hope the agencies don't figure out how to price
these products," is that if they do they will undoubtedly offer low
prices for volume sales. There is a big range where the price works for
the agency because they have no production costs, or fixed cost of product
to offset. The photographers lose on a percentage basis when there is no
minimum because they must offset their production costs, particularly if
the images have been produced on speculation, not as outtakes from assignments.

Copyright © 1996 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 301-251-0720, 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:  


Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive our FREE weekly email listing new stories posted.

Follow Us

Free Stuff

Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More
Finding The Right Image
Many think search will be solved with better Metadata. While metadata is important, there are limits to how far it can take the customer toward finding the right piece of content. This story provides...
Read More
Where Is The Stock Photo Industry Headed?
For new readers, or those who may have missed some of what I have written over the last few months, the following are a list of stories worth looking at to get a sense of where the industry is headed.
Read More
Photography As A Career
It’s that time of year when high school seniors are waiting for college acceptance letters and thinking about future careers. If you know someone who is thinking about photography as a career you mig...
Read More
2014 Stories You May Have Missed
For many the end of the year is a time to review past experiences and consider whether it makes sense to chart a new course in the year ahead. Stock photography has changed dramatically for professio...
Read More
More Stories In 2014 You May Have Missed
Every so often I put together a list of the most important stories we’ve published in the recent past. If you are engaged in the business of stock photography the links below are to stories that we’v...
Read More
Getty: A Three Month Review
In all the excitement about 35 million FREE images it is worth looking back at some of things that have been happening at Getty Images in the last three months. After watching revenue decline for the...
Read More
State Of Stock Photo Industry: 2013
If you’re looking for an overview of the state of the stock photo industry as of October 2013 the stories listed below are a good place to start. Regular readers of Selling-Stock will have seen all t...
Read More
Education Market Shifts To Digital
If supplying pictures for educational use is a significant part of your business plan you need to be aware of how the market is trending toward digital delivery and how that is likely to affect the p...
Read More

More from Free Stuff