There is very little likelihood that the overall
market for stock images will grow if the stock photo business continues on its current course. In order to have growth at least four major strategy changes are needed. I see no likelihood that any of these will occur.
1 – Less Focus on More Images, More Focus on the Right Image
Everyone is focused on growing their image collections. But, for most customers more choice is not a benefit. It simply requires that they spend more time searching these large collections in order to find the “right image” for their project.
Shutterstock is the prime example of the problem. If we go back to Q2 2014 Shuttertock had 38.8 million images in its collection and 31.5 million downloads. Thus,
84% of the images in the collection were downloaded. In Q3 2018 they had 233 million images in the collection and only 43.9 million, or
18% were download. (We know that many of the images used were downloaded multiple times so the actual percentages of “unique images” used was much lower in both cases.)
In 2017 their number of downloads grew by 3% compared to 2016. The number of images in their collection grew by
46%. In the first 3 quarters of 2018 compared to the first 3 quarters of 2017 the number of downloads grew by 2%, but were flat compared to Q4 2017. The number of images in the collection grew
36%. (See
here)
Back in 2006 Getty had about 1.7 million images in its Creative collection. In that year they licensed almost one use for every image in the collection. (Many images sold multiple times during the year so a significant number of images did not sell.) Now they have 27,876,564 images in their Creative collection. They may license 9 million images this year at much lower prices, but they have a huge percentage of images no one wants to use.
In 2006 Getty’s gross Creative revenue was
$634 million. In 2018 it will be about
$280 million.
Why do they need all those images no one wants to buy? All the extra images do is make search more difficult for the buyer.
2 – Provide Creators With Better Information About Demand
Creators have almost no idea of what is actually selling. They can see from their own sales reports which images actually sell, but they have no good information about demand in general.
Most people running a business don’t tell their manufacturers to send them anything they want and they’ll see if they can sell it. Instead, they give suppliers specific guidelines as to what they need – what their customers have demonstrated they want to buy. If the distributor doesn’t provide specific guidelines, they at least guarantee to pay the manufacturer a certain price for a certain number of products delivered. Otherwise the manufacturer has no way to cover costs and stay in business.
In the stock photo business producer are simply asked to “produce more,” with either no, or very general information as to “what to produce.”
Creators need to be able to see exactly what is selling and how frequently. The distributors consider this proprietary information and won’t share. iStock, and some other microstock agencies made such information available to producers and customers in the early years of their operation, but they have since removed such information from their search. As a result, creator spend countless hours and dollars creating things no one wants to buy. The creator either needs to be very lucky, or at some point he/she will run out of time and money to produce new work.
Back in 1980s and 1990s there was so much demand for stock images, relative to a very small supply, that photographers could justify producing a lot of images for which it turned out there was no demand as long as they occasionally produced a few images that someone wanted to buy. At that time, prices for those used were also much higher.
Now the supply/demand relationship is totally reversed.
It is no longer possible for image creators who produce pictures for the specific purpose of earning money to justify production without much more detailed information about what to produce. Industry practices that worked well in the 1980s and 1990s are no longer workable in 2018.
3 – Must Raise Prices
Prices have declined dramatically in the last decade. Back in 2006 the average license fee for an RM image licensed by Getty Images was
$536 and
$242 for an RF image. Eighteen months ago it was between
$50 and $60 regardless of whether the image was RM or RF. Now, it is
$29. At Getty Images over 63% of the images are licensed for prices less than $10. (See
here)
Getty and other agencies need to charge
slightly higher prices for the images customers have shown they want to use. If there are customers that can’t afford these prices let them pick one of the lesser quality images that no one, so far, has shown they want to use.
Develop a simple
Two-Tiered pricing schedule for licensed and non-licensed images. For another simple strategy for raising prices of images in greatest demand check out
this story.
Many customers are willing to pay much more than the low prices they are being charged. iStock has two price tiers. Signature images are three times the price of the Essential images. The Signature images are exclusive to iStock, but not necessarily better than the Essentials. Whether an image is exclusive or not is irrelevant to the vast majority of customers. The higher priced Signature images only represent 18% of the total image collection, but they generate about half the total sales and 75% of the revenue. Clearly, many customers are happy to pay the higher price because the price is reasonable and the image they want happens to be in the Signature collection.
How much more could iStock make if every time an image in the Essentials collection sells they move it to the higher priced Signature collection for future sales?
Other agencies should be following this example. But no one is moving in this direction, not even Getty Images who owns iStock and has access to all the comparative data.
4 – The industry needs a better way for customers to determine who owns an image and where to go to license it.
More and more image users are finding the images they want to use through Google searches, or their normal daily browsing of the web. When they come across such images there is often no way to tell who created the image or, more important, whether the image requires permission for use and where to go to get such permission. But the Internet has made it very easy to grab such an image and use it.
I have outlined how an
Image Creator Locator database might work, but so far no one thinks it is worth pursuing. I believe most people want to do the right thing. But when they find an image they would like to use there is usually no information about who created it, or where they might need to go to get permission to use it. If they could easily determine whether permission is required to use the image, and where to go to quickly get permission, I believe most potential users would do it.
PhotoClaim,a company that searches the Internet on behalf of photographers for uses of the photographer’s images says that
94% of the uses they find have not been used properly licensed.
If even a small percentage of these users were turned into paying customers it would dramatically increase the revenue generated from stock photography.
However, the philosophy that “Everything On The Internet Should Be Free,” and resistance from Google, Facebook and al. is preventing a solution to this problem.
5 – Distributor System
Finally, the existing distributor system needs some radical changes. Before the Internet distributors served a useful function for creators by offering a one-stop-shop where customers could easily find a wide variety of the images they needed. The distributors also curated their collections to make it easy for the customers to quickly review the best images. Distributors were also very useful when it came to making copies of the best images available in markets where different languages were spoken, or in specialized niche markets.
Now, in the same way that Amazon has eliminated the need for a lot of local shopping centers, the Internet has made it possible for a wide range of customers from all over the world to find the images they need without having to go through local distributors.
In addition, distributors used to push for reasonable prices enabling photographers to earn a reasonable return for their work. Now distributors take an ever growing share of a smaller and smaller pie and it has become impossible for most creators to earn enough to cover costs. Some who are only interested in recognition are still happy to accept the pittance offered and ignore their costs, but most creators can no longer justify stock photography as a business.
Summary
In order for there to be significant growth in the future licensing of images some radical changes in the way stock photo producers and sellers do business are required.
For all the above reasons, it seems highly unlikely that we will see much growth in the stock photo industry. Some companies may take market share as more and more small companies fold, but the market as a whole is unlikely to grow.
In addition, there is a big question as to how much longer the stock agencies will have the images customers want to buy. Clearly, a smaller and smaller percentage of the images in agency collections are of subject matter that paying customers want to use. (See Less Focus On More Images.) More and more professional photographers are leaving the business because the revenue they can earn no longer covers their costs. They can’t justify spending more time and money producing new images.
Perhaps enough amateurs producing images as a hobby, and unconcerned with costs or profit, will be able to produce what commercial users need and satisfy market demand. Based on current operations that seems to be the hope of most stock agencies.
The number of people who want and expect
FREE images is likely to grow, but that isn’t going to help agencies make money.
The following are links to Related Stories.
http://www.selling-stock.com/Article/why-creators-are-dissatisfied-with-getty
http://www.selling-stock.com/Article/where-stock-photo-industry-is-headed
http://www.selling-stock.com/Article/us-photo-market-trends
http://www.selling-stock.com/Article/industry-growth-1992---2016
http://www.selling-stock.com/Article/microstock-agency-sizes
http://www.selling-stock.com/Article/microstock-market-size
http://www.selling-stock.com/Article/raising-prices
http://www.selling-stock.com/Article/who-are-the-users-of-stock-photography
http://www.selling-stock.com/Article/declining-distributor-sales
http://www.selling-stock.com/Article/getty-debt