New Business Model - Issue 8

Posted on 9/25/2007 by Jim Pickerell | Printable Version | Comments (1)

Issue 8 - Simple System - Buyers want a simple, easy-to-use pricing system that allows them to use any image they can find at a price they can afford.

None of the existing pricing systems adequately addresses this issue.

Every microstock image is currently at a price that anyone can afford. The biggest problem for microstock buyers is that there are images available through other licensing models they would like to use, but the prices exceed their budgets. The problem for microstock sellers is that a significant percent of buyers would happily pay more to use their images, but existing prices are fixed very low.

Subscription provides images at prices volume users can afford, but as with microstock, many of the images customers want are not available through subscriptions. Also, subscription prices are too expensive for those who do not have a continuing need for volume. In addition, subscriptions buyers are usually required to make an investment before they know how many images the may need in the future, and whether they can find what they will need on the subscription site. Some subscription sites solve some of these problems by also licensing individual uses at microstock prices.

These models are simple, but do not take into account (1) the cost of production and (2) the fact that any image may be used in a host of different ways with different values and economic benefits accruing to the customer.

Traditional RF sellers have priced their product so high that a huge percentage of potential buyers can't afford to use them. Also, basing their price on file size creates a problem in determining how the customer intends to use their image.

Traditional RF sellers are caught in the middle. They are being undersold by microstock, which offers RF at much lower prices. In addition, they cannot get the higher prices that RM sellers command, and many of the RF images deserve, because the RF pricing system is based on file size, not usage. Traditional RF also loses to RM because it has no good system for making images available at lower price points based on usage.

RM suffers because it is not a simple system. Images are priced based on usage and complex negotiations are often required. RM has an advantage over other models - it has detailed information about how the image is being used. RM sometimes has an advantage over RF; when based on usage, it can price its images lower than RF prices.

RM has been unable, or unwilling, to compete at the very high volume, very low-priced end of the market. This inability is due partially to the difficulty in determining who the low-end users are, and defining categories narrowly enough that only legitimate lo- end users can take advantage of the extremely low prices. To compete in the low-end market, RM will need to make images available at fixed prices because such buyers demand a simple transaction, and at such price points RM can't afford the overhead of negotiation.

RR's advantage over RM is a much simpler pricing structure that takes usage into account to a certain degree. However, in the belief that customers demand a very simple system, Getty (the only company selling RR presently) has over-simplified the model. RR has an advantage over RF in that it offers fixed prices based on use rather than file size. For certain uses, RR prices are lower than RF.

RR has tried to pick one fixed price in each of several broad fixed categories of use, and has tried to pick a number that is in the middle ground of normal RM pricing. As a result, for a large number of uses, the RR prices are too high and customers have no choice but to turn to RM or RF. For larger uses, RR loses the advantage RM offers, because there is no way to negotiate a higher price. In addition, RR has made no attempt to address the really low end of the market.

All of these models have flaws. A new model needs to try to incorporate the best features of each of the existing one without repeating the problems.

Copyright © 2007 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 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, 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:  


  • Betsy Reid Posted Sep 26, 2007
    Hi Jim,

    You write:
    "RM suffers because it is not a simple system."
    "RR’s advantage over RM is a much simpler pricing structure that takes usage into account to a certain degree."

    It may be more useful to discuss RM, RR, and other types of use-based licensing as variations of the same business model, albeit extremes.

    All are based on the general principles of rights-based licensing. The license is defined and limited by usage parameters. All are limited to one end user. All enable rights management.

    Interestingly, Getty Images has chosen to separately market collections under RM and RR. Alternatively, they might have introduced a simplified option within their RM collections.

    Offering two types of licensing options under the RM banner - one more granular, the other simplified - could work and evolve RM licensing without huge risk taking. Let the customers decide which approach they prefer.

    This way, customers would have more choice of the best quality images. Photographers and distributors could appeal to more customers with "RM" collections.

    For example, Digital Railroad has done this in their Marketplace. Customers have the choice to license RM images either as PLUS Packs or traditional RM licenses.

    Why aren't we seeing more innovation around RM licensing, when customers have clearly made their prefereces known?

    Betsy Reid
    SAA Executive Director

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