Should the price paid to use a photo cover the cost to produce it? Most stock photographers recognize it is highly unlikely that they will regularly recover the cost of producing an image from a single sale. The profit and loss calculation is much more complicated.
The first thing to recognize is that a high percentage of the images produced and offered for marketing will never sell. For many photographers it is not uncommon to never license 99% of the images they place into the market. Thus, they must earn enough from the ones that do sell to cover the cost of producing the non-sellers.
This might lead some to think that the price to license a single photo should be much higher than what it costs to produce, but if an image can be licensed many times that changes the calculation.
In the RM environment a good selling image may be licensed a handful of times over a period of years. Consider Getty. In 2014 Getty had over 4 million RM images on its site. I estimate they licensed fewer than 500,000 images. Thus, on average in 2014 only one out of every 8 images was licensed even once. Thus, a photographer would need to earn at least enough from every sale to cover the cost of producing 8 images.
Images also have a “useful life” (may sell repeatedly over several years), and that could reduce the amount that needs to be recovered from a single sale. But, given the high volume of new images being pumped into the market useful life is getting shorter and shorter.
On the other hand, in the microstock and subscription environments, it is not uncommon for an image to be licensed hundreds if not thousands of times. On iStock there is one image (
3781332) that has been downloaded more than 24,000 times. If an image is licensed many times a microstock photographer can afford to accept much less for each use than the RM photographer and still make a profit, assuming the images cost the same to produce.
In the above case Anouchka’s 2nd most popular image has been licensed 1,300 times, the 10th only 500 times and the 100th, 100 times. She has over 15,000 total images in her collection and over 100,000 total downloads since 2005. Thus, she has an average of roughly 6.66 downloads for every image in her collection, and those downloads have occurred over 10 year period.
Shutterstock has almost 47 million images in its collection and about 125 million downloads in 2014. Thus, on average every image was downloaded 2.66 times in 2015. At an average price of $2.65 per download that would mean that on average every images in the Shutterstock collection earned $7 in 2014. Image creators get about 30% of the gross sale price or an average of about $2.11 per image.
Cost Of Production
The second thing to look at is cost of production. No two images cost the same to produce when all the general overhead factors are considered. Some days - usually more out of luck than good sense - a photographer can produce many better selling images than on others.
Thus, rather than trying to establish a cost for producing each image, a photographer should look at monthly or yearly costs and divide the total number of salable images produced in the time period to determine the average cost for each images. This would give the photographer some idea of the average per license he/she must earn to show a profit. Of course, costs can vary widely month to month if the photographer occasionally engages in some particularly expensive shoots that include travel, models or props. But if the photographer looks at these numbers on an annual basis at least there is some way to estimate the break-even point.
The other big unknown with stock is the number of times any particular image is likely to be licensed. Most photographers want to believe that every image produced is so great that someone will buy it. Usually that’s not the case. Thus, no matter how creative and talented the stock photographer happens to be, it is necessary for each individual to regularly track his or her over all costs of operation. Then determine the average cost per image available in the market during the time and compare that to the revenue generated by those images.
Recently, I had a discussion with a photographer who was convinced that the more images he produced the more money he would make. He believed that all he needs to do is keep ramping up production while trying as much as possible to keep production costs under control. I couldn’t convince him that given the trends of oversupply and declining prices for use this strategy would eventually lead to disaster.
Producing Photos People Want To Share
What got me thinking about all this was a recent article by Paul Melcher entitled “
Buying An Audience”. He said, “What they (photographers) should be selling is not their ability to create expensive content but their talent in making images that people want to see and share. … What the photo industry should understand is that in order to remain relevant, they have to let go of their manufacturers frame of mind and clearly understand the market forces that define their business today.”
Melcher pointed out that buyers have no interest in what it costs to produce a photo. A photo will have a certain value to them depending on how they intend to use it. That’s what they are willing to pay and it may be nowhere near what it cost to produce the image. Moreover, because there are so many similar photos available for virtually nothing, or free, users may not be willing to pay anything to use the photo.
Melcher continued, “Getty Images also understands this market reality. By switching from licensing to free embeds, they are looking to capitalize on the exploding value of audience revenue. What they will be selling soon is no longer single images but large audiences that their images have managed to capture via millions of embeds. A sort of Instagram, but spread out via the Internet.”
I am reminded of a note I received from a Getty photographer recently who in one month received a sales report with 151 Pinterest sales for 1 cent each. At that rate it will take the photographer a long time to recover the costs of producing those images. And that isn’t even the worst news. While Getty has been able to get Pinterest to pay them something for every Getty image found on their site a huge percentage of the images Getty offers as “free embeds” generate no revenue whatsoever.
In the first six months of the
Getty embed program about 60,000 websites embedded some Getty images (we don’t know how many total) and these websites generated almost one billion page views.
These are images that audiences are interested in looking at and sharing, but as far as we know they generated zero revenue for the image producers.
When it comes to Instagram, I don’t believe anyone who posts an image receives any revenue when their images are viewed or shared. Zero times a million, or a billion, is still zero.