4 IMAGE BANK TO GO RIGHTS READY
April 23, 2007
Getty Images has announced that in mid-May they will move virtually all the Image Bank collection (approximately 90,000 images) out of Rights Managed (RM) and into Rights Ready (RR). Images that are under existing exclusive licenses will be transferred to the Stone or Taxi collections.
The company introduced Rights-Ready pricing in the fall of 2006 with a brand called Riser. Since then they have transferred some Photographer's Choice images and the entire Iconica collection to Right-Ready. And they have added four third party brand and created another new brand called Lifesize. Currently there are 145,695 images in RR. When Getty adds 90,000 Image Bank images they will have approximately 235,000 RR images. The total number of RM images will decrease from approximately 954,294 currently to around 864,000 once the Image Bank images are removed.
Once they make this move slightly over 50% of the RM images on the site will belong to "Image Partners".
Currently there are 8 brands that are being licensed as RR. The two largest are Riser with 87,973 images and Iconica with 42,533 images. The remaining brands - Photographer's Choice, Stock Food, Panoramic Images, Lifesize, Blend and Altrendo - have a combined total of 15,189 images at the present time.
Getty has said that the RR has been a success, but so far it is difficult to see what measure they are using to gage that success. Part of the reason for this is that so far they have not reported RR numbers separately, but included them with RM, thus masking the results.
Getty's overall revenue for RM plus RR for Q4 2006 as compared to Q3 2006 was down very slightly despite the fact that total revenue for the company was up $5.4 million. The total number of units licensed was up 11,038 from the 142,949 in Q3, and considering that Getty's number of units licensed per quarter had dropped 14,892 between Q1 to Q3 2006 this is a significant improvement. But given that the average price per unit is so much lower ($506 in Q4, compared to $546 in Q3) this growth in units licensed did not result in increased revenue. Getty's first quarter numbers that will be announced on May 1st may provide a clearer indication as to why the company believes moving more images from RM to the lower priced RR will increase revenue.
One theory is that the move is not designed so much to increase revenue as it is aimed at cutting costs and thus increasing margins. The sales staff should be able to handle more RR transactions in less time than it takes to handle the average RM transaction because no negotiation is involved. If this is the case, Getty should eventually be able to reduce staff in the sales department and as long as total revenue stays the same, increase profits.
Another reason for the move may simply be an effort to retain market share in this highly competitive market. So far none of the other portals are offering a pricing model similar to RR, but if it seems to be gaining traction the majors could certainly implement something similar quickly.
Others have argued that the move may be designed to increase editorial usage since recently Getty has been adding more images aimed at the editorial market to the Image Bank collection. However, this argument seems unlikely. One of the advantages of RM over either RF or RR is that the price for usage can be negotiated LOWER as well as higher. With RR, like RF. the price is fixed regardless of the use and for many editorial uses RR fixed prices are simply too high.
For some time editorial users have been shying away from using RF because it is too expensive. They tend to want to negotiate prices that are much lower than current RF prices. RR pricing presents the same problem. Getty's price to use an RR images from the Riser brand for print editorial purposes is $200. If the image is being used for editorial on the web it is $150. (See Story 869) for a full explanation of what these prices cover and Story 865) for more analysis). Image Bank images are expected to be priced at $250 and $200 respectively for these uses. Getty has been testing these $250 and $200 price points with Iconica and Photographer's Choice, and presumably there is good acceptance of this price point but it is hard to imagine that many of the buyers at this level are purchasing images of editorial use.
Compare these numbers with the price to purchase an RM image from Alamy.com where 90% of their RM sales are for editorial use. The average price for an editorial usage in the last quarter was $130 meaning that many images were licensed for less than $130 to offset those that were licensed at a somewhat higher price. If price is an issue, as is frequently the case with editorial users, then the better deal, by far, will be with Alamy than through Getty's RR offering.
Another interesting question is why Getty has decided to lock in a bottom price point for Image Bank images when they have already been licensing a number of these images for significantly less. Do they think customers will be willing to pay more to use an image simply because the customer can now use the image in more ways? And will this benefit Getty Images in the long run?
One of the other things to take into consideration when thinking about editorial prices is that in order to meet the needs of volume users Getty may be discounting the price of RR images despite the fact that there is a list price. One of the theories behind RF and RR has always been that the price is fixed anywhere in the world and thus there is no need for negotiation. However, many larger image users have wanted to negotiate a fixed price to use any image in a collection - RM, RF or RR - and the bigger portals have been competing with each other for such deals.
Consequently, the only thing that is fixed on RF and RR is the top price. It is still possible to negotiate a lower price in certain situations. It is unclear whether Getty is doing this with RR and to what degree. If Getty were willing to discount its list RR price by 30% or more then they would be competitive with Alamy and most of those selling RM for editorial use. If this is Getty's strategy they may still be able to make significant editorial sales of their RR imagery and the only thing they are giving up is the chance to license Image Bank image for higher than the top price for RR usage.