How low can prices go? Is the volume of images used more important than earning money when an image is used? Must we accept whatever the customer is willing to pay, or is it possible, at some point to say NO? If there is such a point where is it?
Most photographer will agree there is a point where the people representing our images should say NO, but there is big disagreement on where that point should be.
I’ve had the opportunity to examine sales data from some of Getty’s major contributors. Over 13,000 RF images that can be found on the Creative section of gettyimages.com and belonging to these contributors were licensed by Getty in 2015. These images generated almost $1.6 million in revenue for Getty or an average of $119 per image. The image creators received a small percentage of this number, in most cases 20% or less.
Approximately 17% of the images were licensed for fees of over $200, but a
full 51% were licensed for fees under $25. The average price of these under $25 licenses was
$6.36 and a significant percentage of them were for gross fees much lower than $6.00.
While the revenue generated by these images probably only represents about 1% of Getty’s total RF sales in 2015, given who the contributors are I believe this relatively small amount of data is representative of Getty’s overall sales.
While the under $25 licenses represent over half the total sales they only represent about 5% of total revenue generated.
Based on these figures I believe the total RF images licensed by Getty in 2015 was less than 1.5 million. In business an argument can be made that if you sell enough volume at a low price the activity can still be profitable, but these low prices aren’t generating anywhere near enough volume to produce profits for the image suppliers.
Consider Shutterstock subscriptions. The average price per image downloaded is somewhere in the neighborhood of $1.25 and in 2015 they licensed over 133,000,000 subscription downloads.
A number of Getty’s images were licensed for less than $1.25.
It is also worth noting that Getty currently has 9,318,111 RF images in the Creative section of gettyimages.com and 4,907,688 RM images. RF represent about 65% of the images on the site. Thus, for every image licensed in a year creators have 5 other images in the collection that are never licensed.
Premium Access
Many, but far from all, of these lower priced images were licensed as part of what Getty calls Premium Access deals. It has been reported that any customer who spends as little as $6,000 a year with Getty qualifies for a Premium Access contract.
It is unclear exactly how such contracts work. The negotiated terms of each one are probably unique. However, given that prices are not only very low, but tend to vary from month to month for the same customer, it appears that Getty makes a determination of how many images a customer uses, or is likely to need over a period of time and then negotiates a deal for a fixed monthly payment. It appears that in at least some of these deals the customer is allowed to use as many images as they wants for one fixed price (in effect, a subscription). At the end of the month Getty determines how many and exactly which images were used and then divides that number into the amount paid to determine a gross sale price of each image.
For example, a customer has budgeted $6,000 a year for image use and believes it will need about 1,000 images ($6.00 per image) during the year. The customer pays $500 a month and can use as many images as it wants whenever it wants. In the first month the customer uses 50 images and the average price of each image is $10. In the next month the customer uses 100 image and the average price is $5.00. In the third month they use 150 images and the average gross sale price is $3.33.
Getty’s share of the amount paid remains constant month to month, but different images will be used each month. Some photographer’s images may be used in a low use month and they could get a significantly higher royalty than the photographer whose images are used in a high use month.
The other thing that may be happening is that there may be no cap on the number of images that can be used in the year. The initial figure agreed to is based on an estimate of what the customer will use. Maybe 1000, maybe 500. But, in fact during the year the customer uses 2,000 or 3,000 images. Getty still makes the same amount of money but the individual contributor’s share can fluctuate dramatically.
I suspect the Premium Access salesman goes to the customer thinking, “What is the maximum I can get out of this customer?” Once he gets that maximum he doesn’t care how many images are used.
It also looks like the bigger the customer the better the subscription terms he will be willing to negotiate. A customer willing to pay $60,000 a year will get the right to download a lot more than 10 times the number that someone paying $6,000 would be allowed. In one sense this is understandable, but it has driven the price-per-image to ridiculously low numbers.
Is There A Solution?
At the very least as part of the subscriptions, there should be a fixed maximum number of images that can be downloaded in any given month. If the customer needs more then he pays an additional fee, or waits till the next month to download more images. Getty should have a minimum number that they know they will get for every image downloaded. That certainly doesn’t seem to be the case now.
If I’m right that gross revenue for Creative RF sales is about $170 million and 5% is for under $25 sales the 5% would represent $8.5 million. If the average under $25 sale is $6.38 then $4.25 million (maybe even a little more) could be at risk. Do the image creators really need that 20% royalty share of $4.25 million, or would they rather see some type of fixed base price ridiculously low as it may seem to be?
But, the next question is how much of that revenue would Getty really lose? How many of those customers are really so poor that they can’t come up with $6.00 per image for the extra images above the maximum allowed that it turns out they need? (Or $5.00, or $4.00, if Getty feels they need to go that low?) In fact, it seems to me that while they may lose some real bottom feeders, they might very well generate more revenue by establishing some type of a bottom price. They might not license 1.5 million images. They might only license 1.3 million. But they would make more money because some of those paying lower prices before will now pay a little more money. And the people whose images are used would make more money.
Not only should Getty establish a base minimum price for Premium Access or other subscription deals, but over time they should begin to push that price up if they expect professional creators to stay in business. Getty may feel they will be able to sustain their business with User Generated Content created by people who are only interested in seeing their images used, not in any revenue the images might generate. If that’s their goal, then they are right on track.
Supplier Survival
Both Getty and its suppliers might want to read this “
The Wal-Mart You Don’t Know” story about how Wal-Mart makes it impossible for many suppliers to stay in business, particularly if they live and work in high cost-of-living countries. Wal-Mart has survived and thrived, even though many of their suppliers haven’t. However, I doubt that a company that relies on suppliers continuing to supply with no guarantee that they will be paid anything for their product, can survive using the Wal-Mart strategy.