Pricing Electronic Uses

Posted on 4/20/2011 by Jim Pickerell | Printable Version | Comments (0)

In the rights-managed (RM) environment the price charged to use an image in a printed product is based on the type of use, the size of reproduction on the page, circulation and in some cases the length of time the image is available to be seen by the public. Circulation is a key element but it is hard to apply that same principle to electronic use.

When customers first requested rights to use images in both print and online it seemed reasonable to charge a supplemental fee for the online use that was much less than the print price. Today, electronic use is at least equal to print and tomorrow it will be the predominate use of all imagery. If we continue to price electronic as a lesser usage we will be offering a huge discount on the price for the majority of our future licenses.

Therefore we must come up with an entirely new strategy for licensing electronic uses. In the stock pricing section of his web site John Harrington seems to be on the right track when he bases his prices on the size of the organization.  He breaks organizations down as follows:  

    Multi-National Corporation
    National Corporation
    Small Regional Corporation
    Industry or Professional Association
    Charitable Society or Association
In addition to these categories there are some other types of uses that ought to be considered and possibly built into any new pricing strategy. They include: Small Local Businesses, Editorial, Education, Commercial Power Point and Social Network or Personal Blogs.

I believe Harrington’s listed prices are higher than most of today’s customers are willing to pay for stock use, but I’m not prepared to provide alternative prices for each of his use categories. However, I want to discuss some of the elements photographers need to consider when developing their own pricing strategy. Once they have a template they can insert their own numbers. In all likelihood there will be a period of trial and error until they can discover what the market will bear for each category.

License Term

In the electronic environment the one factor that can be easily determined and controlled is the length of time the customer has use of the image. The standard license should be 2 years. In most cases a shorter license would be too much of irritant to customer who would then constantly receive invoices for continued use. Making the time period longer would either give the customer too much for the initial payment or require that the initial fee be too high for many customers. In establishing a 2 year fee photographers should recognize that a certain percentage of customers will only want to use the image for 2 years or less while some customers who will want to continue to use images for long periods and renew licenses over and over.

The photographer or distributor must accept the burden of renewal notification. As an industry we have learned in the last few years that we cannot trust clients to kept track and tell us when they need to renew licenses. A renewal system is critical to getting reasonable compensation for the value the customer receives. At the time of initial licensing most customers have no idea how long they will want to use an image, or if it makes sense for them to pay a large fee to cover long term use. The only way such a system can ever work is if the seller tells the customer when renewal is due.

That means that each seller must maintain a database of licenses with renewal dates and monitor that database regularly. The database must contain the customers contact information, invoice number, date of license, amount of license and date to send the renewal email. A separate database with customer name, invoice number, and the complete terms of each license would be advisable.

Language in the initial license should include something like the following:
    Photographer will notify (client) 30 days prior to the date the license is due to expire. If you are no longer using the image do nothing. If you don’t want to continue to use the image, simply remove it from your database. If you wish to continue using the image for an additional 2 years you will need to pay the renewal fee listed in the notice. In the event you receive no renewal notification you may continue to use the image free or charge until the photographer sends you a renewal notification.
This way the customer doesn’t have to worry about forgetting to pay a renewal fee. If the seller were to put the responsibility on the customer the likelihood is that most customers would go elsewhere to get the images they need. It becomes a much easier decision for the customer if once every two years she receives a small bill and is only liable for unauthorized use if she fail to pay the bill and continues to use the image. All the customers to do is decide whether to pay the bill or remove the image.

At the time of initial purchase many clients will want some idea of what they might be charged in two years for a renewal and what it would cost to purchase unlimited rights. In the article “Extended License for Web Use”  I suggested that the fee for renewing for an additional two years should be the same as the original fee, and that for unlimited future use a fee of five times the base fee would be charged. These rates could certainly be negotiated and discounts offered, but the decision may need to be made on a case-by-case basis and terms built into the original invoice.

If the image is to be used on a public site sellers should try to get the web address where it will be displayed as an aid to tracking future uses. This is not a perfect solution as there will be password protected sites and other methods of electronic use that will not be easy to track from a URL address.

In one sense this is lot of extra work for the seller, but if photographers expects to be reasonably compensated for their creative work it will be necessary. The following are a few things to consider relative to particular categories.

Corporations By Size

One of the problems that will arise in determining which category a corporation should fall into is distinguishing between Multi-National, National and Regional. Given the current tax laws, many corporations that sell anything overseas are becoming Multi-National. A better way to categorize may be by gross annual revenue, i.e. Over $100 million, between $20 and $100 million, between $1 and $20 million and under $1 million for Small Businesses. The numbers may need to be adjusted, but they explain the principle.

It should also be clear to the customer that it is possible to negotiate a different price for special circumstances. For example, a small division of IBM may need a picture for recruiting staff for a specific regional office. The site will be seen by a limited number of people and only online for 60 days. Something less than the Multinational price may be appropriate.

The price charged for use of an image designed to be accessed by internal staff only may need to be different from the price charged when the image is on an advertising and marketing site.

Charitable Society or Association

I don’t think you can have one price for all charitable organizations. It will be necessary to make some distinctions. Americans give to more than 1.5 million charities around the world. Some have huge paid staffs and budgets. Others are struggling to keep their doors open. If you give every charity an equal break you will soon be out of business. There will be some charities that you particularly want to support and that’s fine, but you shouldn’t feel the need to give the same break to every organization that calls itself non-profit. American Red Cross had gross revenue of $3.32 billion in 2009. Many organizations post financial information on the web which will give you some idea of the size of the organization. The same is true for Industry and Professional Associations.

Educational Use

Educational publishers may want to pay for extended use, but the fee should be much larger than for 2 year use. The publisher will continue to charge schools and students additional fees for each year they have access to the image. The longer a particular program is in use the more popular it may become. In some cases discounts may be appropriate, but not the huge discounts many distributors are offering today for continued print use. For example, if a license for educational use for two years is $100, I would think it ought to be $175 for 4 years, $250 for 6 years and so on, offering a slight discount for paying upfront, but not much. If the publisher chooses to pay every 2 years the fee would be the same for each term. (In effect the publisher would receive a slight discount because cost of living wouldn’t be taken into account and probably the publisher would also be raising the price of its product.) The percentage increase, or decrease, could be locked in as part of the initial deal.

Non-Educational Use

If the use is for non-educational editorial I would think the initial term should be shorter – maybe 3 months. After that the re-use fee could be adjusted depending on the subject matter. An image that is becoming an icon and is likely to be accessed repeatedly over a long period of time should earn higher re-use fees. The vast majority of editorial images are dead after three months even if they continue to reside on the web site forever. A minimal fee might be charged for images that will just be buried in an archive forever and seldom accessed. In each case the re-use fee will need to be a judgment call.

Commercial Power Point

If the image is being used in a commercial power point presentation it is probably appropriate to license for an unlimited time for a single presentation. (Most presentations won’t be used for long period of time and as long as the usage is limited to a single presentation that puts sufficient limits on the use.)

Personal Blogs and Social Network

The fees for personal blogs and social network uses will probably need to be so low that it may not be worth the trouble to license such uses. At the very least a fully automated system for purchase would be necessary in order to make licensing at these prices practical. And it would be impractical to try to place a time limit on such uses. A license clearly explaining the limits would need to be emailed to every customer. However, the number of uses is likely to be astronomical and it may not be wise to simply ignore this market.

Another thing to think about is whether it is better to refuse to license images for these uses and encourage consumers to steal what they want, or adopt the iTunes model of making a product available for limited personal use at a price the consumer is willing to pay. Do we encourage illegal activity by not providing a legal option?

Copyright © 2011 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, 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:  


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