Pond5 has launched a new Web resolution in an effort to grow the use of their clips in the social-media space. The price defaults to 20% of the contributors 4K master price (or 40% of HD price if it’s a native HD file). Contributors will be able to adjust this percentage in their account preferences or on the clip edit item page.
The company argues that these buyers are working strictly on the Web or social-media space with short, low-budget production cycles and do not have a need for high-resolution files normally available on Pond5. They say that if they don’t offer the SD versions, the customers will go elsewhere to get the clips they need rather than purchasing more expensive versions.
Their initial testing of Web resolution sales has shown no impact on HD sales. Therefore, it is assumed that the web sales will produce addition revenue on top what they are already receiving.
But as the market changes with more and more marketing done via social media and less via traditional media not only will the revenue per clip licensed decline, but customers who have been paying higher prices pay push for additional discounts.
Let’s look at a few figures from the still side of the business. In 2006 when there wasn’t much use of images in social media Getty’s gross revenue for Creative imagery was
$634 million. They licensed rights to about
1,660, 208 image uses that year. Social media uses were growing and Getty wanted a piece of that action. So they started offering their quality images at prices that customers said they could afford. As more and more of their sales were for web use prices overall begin to decline dramatically. Unfortunately, the cost of quality production has not declined.
Based on recent
analysis of sales figures about 73% of Getty’s sales are now for under $20 which are probably mostly for web use. Of total uses 16% or about 1,506,000 will be licensed for over $50 in 2018. Overall revenue will have fallen significantly from $634 million in 2006 to about
$280 million in 2018.
There may be as many as 9,500,000 images used in 2018 so there has been a steady increase in usage, but a huge amount of additional work has been required to produce the volume of clips now being used.
Getting back to Pond5 the question is whether initial testing has given then an accurate picture of long range trends? Initially, they many not have seen any impact on traditional sales, but as demand grows for web uses and declines for traditional uses, surely there will be pressure to lower high end prices. Getty certainly saw one.
With Getty the average prices paid for traditional uses has declined significantly over the last decade as the business of these users has declined due to the impact of social media competition and web use.
Social media wants everything to be free, and maybe they deserve a lower price if they can generate enough increased volume, but that’s not what happened with Getty Images. The increased volume of uses isn’t anywhere near enough to generate the same revenue as they were earning before. Somehow, there needs to be enough revenue to offset the cost of production of the content.
At current social media prices (average $2.10 per license) Getty would need not 9,500,000 but about
168 million social media sales, plus all the other higher priced sales, to match the revenue generated in 2006.
Once a lower price is established it is very hard to raise it.