How much would we have to raise prices to begin improving the pricing situation?
Not all that much.
Many image creators would like to see the industry return to the much higher prices of old. While it is easy to justify those former prices based on the cost of production and the value the customer receives from using the image, a return to such prices is not likely to happen. On the other hand, if a strategy could be developed that would increase prices by just a small amount, it could begin to move the industry in the right direction.
In the last couple years several of Getty’s top producers have been willing to supply me with their detailed sales reports. I decided to create a database of all the individual sales to see what kind of a picture it would present. These contributors represent a very small percent of Getty’s total Creative sales, but given who they are, I believe their sales are probably representative of Getty’s total collection.
Of their total sales 46.6% of the images were licensed for fees of $5.00 or less. That’s the gross fee reported, not the royalty. The average price for this group of images was $2.52. Another 11% of unit sales were for prices between $5 and $10 with an average price of $7.33. Thus, almost
58% of the images Getty licenses are for prices less than $10. Combined, this huge number of uses generated only about
2.53% of Getty’s total revenue.
| Price |
Percent |
Average |
Percent |
Possible |
| Range |
Licenses |
Price |
Total Revenue |
Price Increase |
| $0 to $5 |
46.6% |
$2.52 |
1.50% |
100% |
| $5 to $10 |
11.0% |
$7.33 |
1.03% |
50% |
| $10 to $20 |
10.5% |
$13.70 |
1.84% |
35% |
| $20 to $50 |
8.3% |
$34.18 |
3.60% |
25% |
| $50 to $100 |
5.4% |
$72.06 |
4.96% |
20% |
| $100 to $500 |
14.4% |
$265.35 |
48.83% |
15% |
| $500 to $1000 |
3.2% |
$631.22 |
25.72% |
10% |
| $1,000 plus |
0.5% |
$1,844.16 |
12.53% |
0% |
So, if Getty’s total Creative Revenue for 2016 was $280,000,000 that would mean that almost three-fifths of its customers generate about $7,084,000. What would be lost if a significant percent of these customers disappeared because the per-image prices were increased?
What would happen if Getty doubled the price for those paying less than $5.00? If the customer had been paying $1.00 now they would have to pay $2.00 for each image they purchased. If they had been paying $5.00 they would now have to pay $10. What percentage of these customers would leave and go somewhere else to buy their images? How badly would that hurt their bottom line?
If they have been paying between $5 and $10 what about just pushing up the price by 50%. Those paying $5 would now have to pay $7.50 and those who formerly paid $10 would now be paying $15. Would all of them leave?
If Getty kept the same prices for images that had never sold, but raised the prices to a new level for images that had sold at least once would that help? Tell the customers, “If an image no one else has found useful will work for you we’ll sell it at our existing prices, but if you want to use an image someone else has found useful then you must pay a little more.”
If Getty would allow its customers to search through a much smaller collection of only those images that had been licensed previously, the customers would likely save enough in research time (staff salaries) to more than cover the additional cost they would be paying to use the images.
Other End Of The Spectrum
The biggest revenue generators are the images that sell for between $100 and $500. They represent only
14.4 percent of total sales but
48.8% of revenue. Again, assuming $280 million in gross creative revenue– and that my estimates are representative – the images that sell in this price range would generate about $136,640,000 of Getty’s gross revenue.
Most images that license for these prices are single image sales rather than being part of a subscription or “Premium Access” deal. If Getty could raise the prices of these sales by just 15% they could generate an extra $20.5 million in revenue.
All the images that sell for prices above $100 represent 87.08% of Getty’s revenue, but only 18.1% of total images licensed.
A higher percentage of the high priced images are RM, but particularly in the $100 to $500 range a significant number of the sales are for RF. RM producers also need to recognize that only one-half of one percent of Getty’s sales are for prices higher than $1,000. While every photographer dreams of making a blockbuster sale, such sales are very rare. Hoping for such winners is no way to build a business.
If prices are raised only slightly on these higher priced sales (see chart) it could be a huge improvement to Getty’s bottom line. If Getty were to raise prices as outlined on the chart, and not lose any sales or customers, it would increase their total annual revenue by 14%.