The major stock agencies seem to have reached a revenue plateau. It is time to consider a major change in marketing strategy. There is a strategy that should be relatively easy to implement which could result in higher, overall revenue from licensing the same number of images.
Why We Need A Change
1 – There doesn’t seem to be significant revenue growth overall in the worldwide market.
2 – There doesn’t seem to be significant customer growth. There many still be growth in the number of people who want FREE images, but that isn’t going to help agencies make money.
3 – Agencies have tried to take market share from each other by lowering prices, but we are to the point where it is impossible to lower prices much more without just giving the images away. The big 5 – Getty Images, Shutterstock, iStock, AdobeStock and Alamy seem to be in static positions with regard to market share. They are no longer able to take share from each other and acquisition of smaller industry players isn’t making a significant difference.
4 – Growing the size of image collections isn’t doing much to increase image use or revenue growth. Shutterstock is the classic example. In 2017 their number of downloads grew by 3% compared to 2016. The number of images in their collection grew by 46%.
5 – The growing size of collections is making it harder, not easier, for customers to find the images they want. Customers want smaller, curated collections of the best images.
The new strategy should involve (a) segmenting the huge collections into a series of smaller collections based on the demand for certain images, (b) doing away with the idea that all images are of equal value regardless of the skill of the creator, the cost of production, or the demand and (c) pricing based on that demand.
Advantages of the new strategy:
1 – Make it easier for best customers who can afford to pay a little more to quickly find the images they need,
2 – Make it easier for creators to determine what is in demand, and
3 - Make it more likely that some of the most productive creators will stay in the business and continue to produce.
Here’s How It Could Work.
1 - Segment the collections into the following 7 categories and allow customers to search each collection individually, or a combination of collections such as collections 1, 2 and 3 or collections 6 and 7. The “Never Licensed” images should be separated into at least 3 categories.
In collection more than 1 year
In collection more than 3 months but less than 1 year
In collection less than 3 months
Whenever an image from the never licensed collection is licensed it is automatically moved to the “Licensed 1 to 3 times” collection and remains there until it needs to be moved to the next higher collection.
2 – Change the pricing structure from “all images being of equal value” to a system based on the “number of uses.” This could be easily done by changing licensing packages from number of “image downloads allowed” to “credits purchased.” I’ll use some of the Shutterstock numbers to demonstrate how this might work.
| Collections |
Image Licenses
|
Credits
|
$2.58 |
$2.00
|
$1.50 |
$1.00 |
| |
|
|
Value |
Value
|
Value |
Value |
1 to 3
|
Images Never Licensed
|
1 credit
|
$2.58 |
$2.00
|
$1.50 |
$1.00 |
| 4 |
1 to 3 times
|
2 credits
|
$5.16 |
$4.00
|
$3.00 |
$2.00 |
5
|
4 to 7 times
|
3 credits
|
$7.74 |
$6.00
|
$4.50 |
$3.00 |
| 6 |
8 to 12 times
|
4 credits
|
$10.32 |
$8.00
|
$6.00 |
$4.00 |
| 7 |
13 or more times
|
5 credits
|
$12.90 |
$10.00
|
$7.50 |
$5.00 |
Shutterstock offers packages that allow customers to download 50, 350 and 750 images per month. Instead of allowing the customer to download a certain fixed number of images the customer will be given a number of credits that can be used to purchase images from any of the 7 collections.
If the customer chooses to purchase 50 credit for the $129 currently charged and gets 50 credits each credits would be valued at $2.58. If the customer can find everything she needs in one of the “Never Licensed” collections she can download 50 images.
But, suppose she finds 2 images in collection 6, 1 in collection 5 and 1 in collection 4 that she wants to use she will have used up 13 credits and will now only be able to get 37 images from the “Never Licensed” collections for a total of only 41 images.
Based on the 50 image pack the $2.58 per-credit isn’t so far off from the $2.18 per-image customers are paying now. But for customers buying 350 or 750 image packs even $1.50 or $1.00 might at first seem a huge increase over what they are currently paying.
| |
Annual
|
Per Image
|
|
Month to
|
Per Image
|
| |
Commitment |
Value |
|
Month |
Value |
| 50 Images |
$109 |
$2.18 |
|
$129 |
$2.58 |
| 350 Images |
$169 |
$0.48 |
|
$199 |
$0.57 |
| 750 Images |
$199 |
$0.27 |
|
$249 |
$0.33 |
However, we need to keep in mind that based on the total annual downloads most of the people purchasing these larger packages seldom download all the images they are allowed in a given month. I have estimated based on the total number of downloads (172 million in 2017) that on average customers purchasing the larger subscription packs only download 25% to 30% of the images they are allowed.
If that is the case then $1.00, or ever $1.50 would be a reasonable value for a credit and not cause a dramatic increase in the cost each customer must pay for the images they need unless they consistently want to use images in the higher priced collections. If they are regularly using high demand images they should be willing to pay a little more.
Another way to make the use of credits more attractive is to extend their life beyond a month, or never allow them to expire.
The agencies have the data to figure out exactly what the price of a credit, or credit pack should be in order to maintain current income based on current usage. Once established the credit prices can be slowly raised.