9 RETURN PER IMAGE
November 28, 2005
I would like to encourage every photographer to begin tracking his or her average return-per-rights-managed-image on a semi-annual or annual basis.
It is my belief that few photographers do this, and yet it is a much more reliable predictor of the potential for future growth of one's business than just tracking revenue. Tracked over time it can provide an important early warning to changes taking place in the industry.
As I noted in Story 775, Getty's average return-per-RM-image has been steadily dropping. In 2003 the average return per RM image was $775.29. In 2004 it was $673.54, a 13% fall off from the previous year, and recently it was only $413.19, a 47% drop from two years earlier. Since the RM photographer only receives about 35% of the gross revenue the photographer's share would be about $271.35 for 2003; $235.74 for 2004 and $144.62 for 2005.
Agencies can show growth in revenue and profits while return-per-image is falling by simply adding more images to their file, but individual photographers find it much more difficult to continually ramp up production just to stay even in revenue. In fact, there is an advantage for an agency to continually try to add more images because in doing so they provide greater choice for customers looking for something different. But decreasing the odds that any particular image will be chosen for licensing does not necessarily work to the advantage of the photographer.
Photographers, even those not represented by Getty, need to start measuring their personal trends in order to properly plan for the future. Too often, the only measurement photographers use is their gross revenue, and this does not account for the new images the photographer is adding to the system each year. It is entirely possible for a photographer to have a slight increase in revenue, but still have a lower return-per-image. Tracking return-per-image helps the photographer measure the progress of his business as compared with the competition.
If revenue is flat, or down, most photographers believe all they have to do is produce more images and get more into the online databases. While that may help, it may not be anywhere near enough depending on what the competition is doing
Let me look at the Getty numbers in another way. Let's say you had 300 images on the Getty site at the end of 2003. Given the gross revenue for Getty that year, and assuming your return was average, the gross revenue Getty would have earned from your images would have been $232,587 and your 35% of that would have been $81,405. received a percentage of that.
Supposed you added 80 images to the site through Photographers Choice in 2004. That would have given you a total of 380 images on the site at the end of that year. At the average gross of $673.74 Getty's total net from your images would have been $256,021 and your 35% would have been approximately $89,607. While this is a slight increase in total revenue your average return-per image has been going down and this would be a cause for concern if you had been tracking return-per-image carefully. If the 380 images you had on the site in 2004 had earned the same per-image return as 300 did in 2003 the gross revenue generated would have been $294,610 with a photographer's share of approximately $103,113.
But, then let's move on to 2005. Suppose you added 200 images in 2005. Now you have 580 images on the site and the gross revenue generated by those images would be
$239,650, or a photographers share of $83,877. This is only slightly better than 2003 despite the fact that the number of images you have in play has almost doubled.
Some would argue that this is because images go out of date quickly and consequently the photographer must keep adding new images just to stay even. On the other hand, if you closely examine the images that are selling most photographer will discover that a significant amount of the total revenue comes from the older images. With most subjects it is not a matter of how current the image is, but of how many similar images it is competing against for a customer's particular use.
There are a couple other problems. In 2005 you wouldn't have been allowed to put up 200 images, although in 2006 some photographers are allowed to post that many. You also have to take into account, not only the production costs of the 200 new images, but the $75 per image, or $15,000, cost of posting 200 images on the Getty site.
If you're a Getty photographer maybe your returns are better that the average and you could be doing all right. But, if your returns are average or below you're in trouble and you have a lot of company.
If you're not a Getty photographer this same technique can help you in several ways. While your numbers may be a lot lower with other portals it gives you an indication of what you might need to do to significantly increase your revenue. If the trend is downward, how many more images will you need to produce annually just to stay even? Can you do that? If you produce them will they be accepted?
On thing that is certainly happening is that all the major portals are currently adding a lot more images to their collections. And there are some strong indications that the numbers are about to explode in the next year or so. Thus, each photographer's proportional share of the total is declining unless he is pumping new images in at a faster rate than the overall growth of the collection, and it is almost impossible for any individual photographer to do this.
You can begin tracking what is happening in this regard simply by monitoring your average return-per-image on a regular basis. You can then use this return-per-image figure to determine the minimum number of images you will need to get accepted into the file in the following year just to stay even, assuming the average return-per-image stays even.
Assume that you want to earn $50,000 a year from your agency and your average return-per-image is $30. Divided 30 into 50,000 and you will need to have 1,667 images in the file. This assumes that the average for the agency stays constant which it may not. If the average return-per-image declines you will need to put many more new images into the system to reach your goal.