9RETURN PER IMAGE
December 27, 2004
Photographers trying to earn a living from producing stock images need some sense of how much they might be able to earn from each image they can get into a marketing channel. Average figures are relatively easy to calculate for some marketing channels like Getty Images because, as a public company, they supply such detailed data.
While individual photographer results may vary widely from the averages, averages can help the photographer know:
- how his returns compare with others using the same marketing channel,
- revenue trends on a per-image basis, which for an individual producer are much more important than gross sales for the company, and
- the relative relationships of various marketing channels.
- what the photographer can afford to spend in producing images and preparing them for marketing.
Another important thing to understand is the likelihood of increasing ones revenue from stock by adding new images to any given marketing channel. In many businesses, if you produce more product sales will generally increase on a more-or-less proportional basis to the amount of new product added. That is not necessarily true in the stock photography business.
In order to determine average return-per-image you need two figures - gross number of images in the file and the revenue for a period of time. On November 16, 2004 Getty Images had 686,507 images on the "Creative" section of its site. In September 2003 I did a count of the images on the Creative section of the site and came up with a number of 535,614. The breakdown for RM and RF is as follows:
Since we don't have the numbers for Q4 2004 yet, I will run my revenue comparisons from October 1, 2003 through September 30, 2004, and call that number 2004 revenue. The revenue from the previous four quarters will represent 2003 revenue. Thus, in millions of dollars Getty had:
(The single image RF revenue for these periods does not include revenue from disc sales. During 2003 the guidance generally given was that 20% of total RF revenue was for disc sales so the number above is only 80% of total RF sales. In 2004 the guidance was usually around 17% for disc sales so the $160.03 is 83% of total RF sales. I expect the actual numbers vary slightly, but these should get us into the ballpark.)
Thus, the average return-per-image-on-file is:
These numbers are gross sales for Getty. The share that sub-agent suppliers and photographers receive will be much lower. These numbers are only averages. Some photographers will see much better results and others much worse. (One thing that adds to the inaccuracy is that images were being added to the file throughout the year. They did not suddenly jump from the September 2003 figure to the November 2004 figure. If I had been able to base my averages on a monthly, or more frequent basis the results would undoubtedly have been different, but I believe the general trends would have remained about the same.)
As we pointed out the numbers may not be totally accurate, but the relationships are interesting. The average return per RM image has declined significantly. The average return for RF has also declined, but not nearly as much as RM. The average drop overall is about 10%. It is also significant that the average return per RF images is very close to that for RM. Many photographers will ask, "How can this be because the average license fee for RM is so much higher than RF?" (In the last quarter Getty's average license fee for RM was $591 and for RF it was $202.)
The answer is simple. There are a lot more RM images than RF to choose from on the site so even with RM revenue being higher it is not high enough to raise the averages. In addition, each individual RF image sells much more frequently (on average) than an RM image and we are concerned with the average we can earn from a group of images on the site, not the average license fee.
[Many photographers tend to think that the fee charged for usage of a single image is the most important metric when, in fact, what they really care about is the dollars they will have in their pocket at the end of a month or year.]
RM photographers who still believe it is better to be able to license their images for high dollars rather than offering them at RF prices need to give these numbers some serious consideration. It is also worth noting that RF producers tend to get a higher percentage of the images they produce into marketing, than is the case with RM producers, particularly if the company accepting the images for marketing is Getty Images.
Another RF advantage that should be considered is that once an image is sold as RF it can be licensed through many distributors. With RM Getty requires that they be the exclusive distributor of the images they represent. With RM Getty's revenue figures are all you're going to get, but most of the RF sellers on the Getty web site also sell their RF images through 100 or more other distributors. I don't have accurate figures on how much the combined total revenue of non-Getty distributors might be, but it is my general understanding that other distributors tend to represent 20% to 30% of total revenue for most RF companies that have images on the Getty web site. Getty represents 70% to 80% of the total revenue they receive. If you can add 20% or 30% to the average RF revenue Getty is producing that makes licensing images as RF that much more attractive.
Granted, if the image producer is getting a higher percentage of the gross fee collected from RM sales than he could get from RF sales that may still weight the choice in favor of RM unless he can get significantly more RM images into marketing than RF, but the spread between the two types of licensing is getting narrower and narrower. Officials at Getty have also stated that they "see no ceiling" on the amount that RF single image fees can be raised. I believe we can expect RF single image prices to continue to rise, but we may be very near the ceiling that RM images can command.
Trends In Number Of Images Licensed
Let me focus a little more on the number of images licensed. Many of the images in a file are never licensed. During the periods outlined above Getty generated the following numbers of individual image licenses.
The first thing we notice is that there were almost twice as many RF licenses as RM images. The number of RM licenses went up slightly while the number of RF licenses actually declined. (Remember these are number of licenses, not numbers of images licensed. In some case an individual image may have been licensed many times so the actual number of unique images licensed is likely to be much lower in both cases.)
It is also important to note how little the number of licenses changed despite the fact that 28% more images were added to the site in this single year. This, I believe is very significant. Adding more images does not necessarily generate more sales - particularly when you already have a huge share of the market. Adding more images may work better for smaller companies because it may help them take market share from someone else that is not so aggressive. Statistically, Getty Images suppliers will probably need to add 28% more image in 2005 just to stay even in number of units licensed. Those who add more images in 2005 will probably take market share from those already on the site who add fewer images.
There also seems to be a steady decline in the average number of times-per-year an image is licensed. As more and more images are added to the site this figure can be expected to continue its downward spiral. The average number of times any given image was licensed during 2003 and 2004 are as follows:
This decline occurred in a year when business in general was improving, and Getty's gross revenues were also improving. As we move ahead Getty plans to add a lot more images next year from existing 3rd Party suppliers, new 3rd Party suppliers and their own production. I would certainly expect the trend to continue downward in 2005.
On the other hand, despite this bad news, there is no better place for a seller to have his images than on Gettyimages.com. Consider the alternatives.
It is difficult to truly compare other companies with Getty because we know so little about their actual numbers. But even with the wide generalization that we have it is easy to demonstrate that the return-per-image of most other companies falls far below that of Getty.
For example Corbis has said that their 2003 revenue was around $140 million and that they are having about 15% growth in 2004 giving us something like $160 million for 2004. However, to determine single image sales we must subtract from the total revenue number sales of CD's, footage, their rights clearance business and assignments which I would guess gets us down to $130 million. Since a very large percentage of Corbis' business is editorial, and we didn't include Getty's subscription editorial business in the single image numbers above we need to drop out subscription sales at Corbis. My guess is that this gets us to something like $100 million plus or minus $10 million or so either way.
I believe Corbis has in excess of two million scanned images in their database. Thus, the average gross sales per-image for Corbis would be around $50 per image. It would be less if there is more than 2 million images and slightly higher if the gross revenue is actually more than $100 million. Photographers get 45% of the gross by contract or an average of $22.50 per image if there are no sub-agent charges.
Compare the $50 with Getty's $658.25 and it is easy to see how much better it is to have an image on the Getty site - if you can get it there - than on Corbis' number two site. This is true, even if you are getting a significantly lesser percentage on the Getty site that is often the case.
Another popular site for those who can't get their images on Getty or Corbis is Alamy. I like Alamy and think it has a lot of potential, but photographers need to put it in proper perspective. I believe Alamy's current sales are probably in the range of $17 to $20 million a year with very significant growth. Others in the industry estimate their 2004 sales at somewhat less. Alamy has close to 2 million images in its database. That means that the average gross sale per image is about $10 per year. Photographers get 65% to 75% of that depending on their contractual agreement. It should also be noted that these are averages. Some photographers with tightly edited files do quite a bit better than this and some photographers who are trying to dump as many images as possible onto the Alamy site don't do as well.
It's nice to get a bigger percentage of the gross sale, but percentage alone is not the answer. A photographer who only got 5% of Getty's gross sale (and even with all the cuts most do better than that) would be earning more per image than those on Corbis or Alamy. Of course, another thing to consider is that it may simply be easier to get more a lot more images on Alamy than on the other sites.