Lower Prices: Last Thing Industry Needs

Posted on 10/23/2018 by Jim Pickerell | Printable Version | Comments (0)

The last thing this industry needs is lower prices. However, it often seems that whenever someone wants to start a new business, or grow an existing one, they conclude that the most important distinguishing characteristic compared to their competitor must be lower prices.

The new Onepixel offering clearly illustrates this point. A group of people with experience in the industry put together a new site. Based on their experience they are well aware of the type images in greatest demand by customers. They have previously built relationships with many of the creators of such images. They have a good idea for offering a small highly curated collection of images that will make it much easier for customers to quickly find what they need.

But that is not enough. They also feel that they have to offer this collection at a price point that is lower than anyone else charges.

They have two major competitors that are offering smaller curated collections – Stocksy and iStock Signature. Of the two, Stocksy is the smallest and possibly better curated. iStock Signature is much larger, but still relatively small and better curated when compared to iStock Non-Exclusive or any of the other major microstock sites.

The weakness of Stocky and iStock Signature is that they require that all the images they represent to be Exclusive to their companies. RF customers seldom, if ever, purchase images because they are exclusive. Onepixel accept images if they are Non-exclusive and available for purchase in other collections.

A huge number of photographers producing quality work, that customers regularly buy, will only work with agents on a Non-exclusive basis because they have found that no agent – not even the most productive ones – can produce enough revenue to justify the photographer’s continued production of new work.

Onepixel will accept their work. Stocksy and iStock Signature won’t.

Customers are anxiously seeking better curated collections. Onepixel is making it possible for many talented photographers to make their images available in a well curated collection. Isn’t that enough?

Setting The Price

Onepixel has decided that a well curated collection of top quality images is not enough. They have determined that in order to attract customers they must also offer this service for less than anyone else is charging.

It will cost them much more to deliver the collection than the sites that allow anyone to upload every image they have ever produced regardless of quality, but that seems irrelevant.

Thus, they have established a price of $1.00 per image regardless of the number a customer buys. This is lower – although in some cases not that much - than anyone else charges. Nevertheless, they seem to believe that lower price is a key selling point.

The cheapest image on Stocksy is $15, but prices go up from there depending on file size and whether the customer needs an extended license. A single image from the iStock Signature collection is $33, but several volume discounts are available depending on the number of images the customer needs.

Being somewhat cheaper may be better, but does it have to be just $1.00 no matter how many images the customer buys?

Is Making More Sales Always Better?

One of the problems may be be that many sellers are trying to reach every potential user rather than aiming at a segment of the market that is actually worth pursuing. The overall market for stock image is not growing. It’s flat.

There may be somewhat, more people using images, but they are using Free images. $1.00 is still more than free. And PhotoClaim that searches the Internet for images their client photographers are trying to license says that 94% of the images they find (these are images the photographers are actively trying to license directly and through stock agencies) have not been properly licensed.

Is it possible to lower the price enough so these customers will begin paying rather than stealing?

Let’s assume that Onepixel could get every Shutterstock customer to switch to them. Shutterstock is expected to license uses to about 175 million images in 2018 at an average price of $3.41 per image licensed. Onepixel would earn $175 million for licensing 175 million images. They would pay out $61 million to the creators leaving about $114 million. But, Shutterstock will spend almost $150 million in marketing this year to keep those customers coming to its site. Presumably, Onepixel would have to spend a similar amount to get customers to switch. At the $1.00 price it doesn’t look like there will be anything left to pay for operating the company or paying the staff.

At some point the economics don’t work.

In 2006 Getty earned about $634 million from its Creative Collection. In 2018 they will earn about $280 million. In 2006 they licensed rights to about 1.7 million images (about one license for every image in the collection). In 2018, based on an average of $29 per image they will license rights to about 9.7 million images (about one license for every three images in the collection). They are selling many more images, but it isn’t generating more revenue for Getty or their photographers.

Photographer need to think about whether making more sales no matter what the price really benefits them.

Copyright © 2018 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 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, 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: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  


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