I predict more revenue will be generated by the licensing of microstock than through the licensing of traditional single image RF (TRF) before the end of 2010.
Getty Images' 2007 figures showed a slight decline quarter-to quarter in TRF revenue. Looking forward, TRF sales, by all companies, seems likely to experience similar declines over the next few years. Getty's total RF revenue for 2007 was $327 million, but I estimate that about $57 million of that was generated by iStockphoto and $40 million was for CDs, DVDs, Virtual CDs and subscription. Thus, only $237 million of Getty's revenue was for TRF sales, a 7% decline compared to 2006.
In the chart below, I made the assumption that Getty's average price per TRF image licensed was $250 based on the RPI reported in 2006. Getty stopped reporting average RPI at the end of 2006, but indicated that there was little or no change in 2007. If my gross revenue figure for iStock is correct, their 2007 average price per download was $3.25, a big difference from TRF's average sale price.
But the average price for microstock didn't remain flat, as was the case with TRF. It rose almost 100% in 2007 compared to 2006 and may still have a long way to go before we begin to see any decline in units licensed because prices are too high.
While Getty's prices remained the same, the number of TRF images licensed in 2007 declined about 10,000 units per quarter or 40,000 for the year. Any TRF price increase would likely result in customers moving to microstock at an even faster pace than is already occurring. Consequently, increasing price would probably result in a decline in gross revenue.
My chart assumes the same annual rate of decline in TRF units licensed during the next three years as occurred in 2007. There is a strong possibility the rate of decline will increase as the quality and variety of microstock improves. It is hard to imagine any eventuality that would slow the rate of decline.
| Â Â Â Â Â Â Â Â Â Â Â Traditional RF | | Â Â Â Â Â Â Â Â Â Microstock | |
| Images | Average | Gross | | Images | Average | Gross |
| Licensed | Price | Dollars | | Licensed | Price | Dollars |
| | | in Millions | | In Millions | | In Millions |
2007 | 924,000 | $250 | $231 | | 17.55
| $3.25 | $57 |
2008 | 880,000 | $250 | $220 | | 19 | $5 | $95 |
2009 | 840,000 | $250 | $210 | | 21 | $7 | $147 |
2010 | 800,000 | $250 | $200 | | 23 | $9 | $207 |
At a minimum, the number of TRF images licensed seems likely to
decline 13% in three years, assuming no price increase. On the microstock side, I used a conservative estimate of
31% increase in downloads over the next three years. In 2007 alone, iStock's downloads grew 75% compared to 2006.
Despite the fact that the average price per microstock download rose almost 100% in Q4 2007 compared to Q4 2006, an additional significant price increase was instituted in January 2008. Considering how low microstock prices are compared to all other image options, it seems reasonable to expect the average price to exceed $5 in 2008 and to almost double again in the following two years. If all this happens, the gross revenue generated by microstock will exceed that of TRF no later than the end of 2010.
There are a lot more images in microstock than in TRF, so the average return per image for microstock will still be much lower than TRF. But microstock seems destined to play a much larger overall role in the industry soon.