Earlier this month, Selling Stock published statistics showing that many of the leading microstock sellers have begun to see substantial drops in the number of images licensed. Rumors abound that traditional sellers have been experiencing similar declines. Several of Getty Images’ leading photographers have provided Selling Stock with detailed breakdowns of their March 2009 sales, which offer some insight into the current state of the industry.
Getty licensed a combined total of more than 700 royalty-free and 100 rights-managed images for these photographers in March 2009. About one third of the rights-managed licenses were made in the U.S., while the other two thirds were non-U.S. licenses. About 25% of the royalty-free licenses were in the U.S., and almost 75% were non-U.S. sales.
We were also able to do some comparison with previous years. In 2006, the average royalty per rights-managed image licensed was about $145. This would put the average gross sale price of these images at around $420. In the first quarter of 2006, Getty reported that its average gross sale for a rights-managed image was about $578. The combination of the two figures could mean that the revenue generated by the sample group of photographers is lower than average. It could also mean that none of these photographers had any huge sales in March 2006, and a few major exclusive sales by Getty for other photographers could have skewed the company’s overall average upward.
On a year-to-year basis, the rights-managed average remained about the same, although there was slight downward movement. However, the number of images licensed by Getty for these photographers has dropped dramatically. Between March 2006 and March 2007, there was a 19% drop in the number of rights-managed images licensed, and a 21% drop in royalties received. Between March 2006 and March 2009, there was almost a 50% drop in the number of images licensed and a 51% drop in the royalties received.
There may be some misleading aspects to these figures. Certainly the state of the overall economy is having an effect. In addition, most of these photographers have continued to produce aggressively, but due to Getty’s current editing strategies it has become increasingly difficult to get new images accepted into the Getty collection. Consequently, much of their new production has ended up in the Getty royalty-free or other third-party collections. Still, the Getty collection has grown substantially, both in terms of suppliers and images, and the images belonging to this sample group of photographers may now be appearing further down in the search-return order. The result: gross revenue is divided among a greater number of photographers, with the sample group getting a smaller share.
Such factors play an important role in the declines experienced by the sample group. However, it seems clear that the rights-managed revenue falloff is due more to a reduction in the number of sales at traditional rights-managed prices than to price declines.
Another factor to be considered is Getty’s Premium Access. About 15% of the sample group’s sales were through the Premium Access offering, with an overall average royalty of about $11. The royalties paid on a significant number of non-U.S. Premium Access sales were under $1, with the average non-U.S. royalty of $3.54. The photographer’s royalty is 20% of the gross sale price. As such, another factor that can explain the downward trend in photographer earnings is that customers who were formerly buying rights-managed images at traditional prices are now fulfilling their needs with royalty-free images at Premium Access prices.
It also seems clear that Premium Access is not reaching out to any great degree to that huge base of people who first came into the market as microstock customers. Rather, it is providing large commercial organizations with the images they need at prices that are substantially discounted from what they used to pay.
The royalties on images licensed at traditional royalty-free prices were a little better than those licensed as Premium Access, particularly in non-U.S. territories, where 28% of the total sales other than Premium Access were made. The average 20% royalty the photographer received for non-U.S. sales was $40.52, making the average gross royalty-free sale about $203.
Yet the major problem is with traditional royalty-free sales in the U.S., which represent 72% of all single image royalty-free sales other than those licensed through Premium Access. The average photographer royalty for such sales was $17.65, making the average gross royalty-free sale $88.25. How could it be so low? It turns out that almost one third of the images were licensed for a gross fee of $8, generating a royalty of $1.60. A number were also licensed in the $49 range. While there were a significant number of images licensed at prices between $150 and $1,000, the high volume of the low-priced sales skewed the averages—and, of course, photographer revenues—down.
Thus, Getty’s worldwide average price per traditional royalty-free single image, excluding Premium Access, is $112.75. The photographer’s share is $22.55. It is interesting to compare this with Alamy’s $172 average royalty-free gross per image in the first quarter 2009. Alamy’s contributors also get a higher royalty.
One final number rounds out Getty’s royalty-free sales. There were 13 Virtual CDs sold in March. Photographers receive 10% of these gross sales, generating about 2% of all royalty-free revenues earned by the sample group.