581 RF IMPACT ON STOCK REVENUE
September 22, 2003
A photographer asked me recently, ""What is your take on the theory that the overall
world market for imagery (based on revenue) has been significantly diluted by the
emergence of RF and it's generous licensing terms?"
Here's my answer and some of the issues I think all photographers need to consider.
Since the mid-90's I believe the "overall world market" for stock photography has
been flat in terms of revenues and it has dipped slightly in the last couple of
years due mostly to the state of the U.S. economy. So yes, there has been some
falloff in revenue, but not a significant amount, as I think the question implies. I
estimate worldwide revenue in 2002 at a little less than $1.1 billion which may be
down as much as 15% from what I thought the high was in 2000. I provided those 2000
figures in my book Negotiating Stock Photo Prices , published in 2001. You
can also find the figures at
Overall, revenue is probably moving back up in 2003 as compared with 2002.
Why do I say this falloff is not significant, given what many RM photographers have
been seeing in terms of the decline in their revenue?
To begin, most of the decline occurred in last two years and is more a factor
of the U.S. economy than of any impact that RF has had on the industry. On the
other hand, one might ask oneself why revenue was flat during the late 90's when
there was so much growth in the economy. One would think that the stock photo
industry should have seen growth during that period given the general expansion in
marketing and advertising, but that didn't seem to happen. Companies grew through
consolidation, but the revenue of the consolidated company was seldom greater than
the sum of those companies that were acquired. In addition I believe more sellers
went out of business, or left the market than entered the market. RF certainly had
an impact on the lack of growth, but getting back to the original question, "has the
market been significantly diluted", I think the answer is no, it remained flat.
The question also concerns overall world revenue, not just commercial
advertising revenue. RF has had a greater negative impact on the advertising segment
of the market than on other segments. On the other hand "world revenue" includes
the sale of a great deal of editorial imagery, particularly in Europe. In general
RF images have not been very applicable to most editorial purposes. (I believe
Editorial represents close to 35% of the total market and this does not include
sales made by the major wire services which I don't consider stock photo sellers.)
There have been other reasons for a falloff in editorial sales, but for the most
part I don't believe this decline can be blamed on RF.
There have been moves by the
publishing industry in the last year or so to find ways to use a lot more RF, but
the price variations between what the publishers end up paying for RF and what they
are willing to pay for an RM picture are relatively minor. Thus the loss of income
here has more to do the leverage publishers are able to exert to get "generous
licensing terms" for all imagery, not the use of RF.
There is no question that many of the customers that might have chosen an RM
image in the past for particular projects have switched to using RF. But I believe
that the loss in revenue as a result of this switch has been offset to a large
extent by the additional volume of RF uses. Many of these RF users would not have
used any photography before because it was too expensive. The RF producers have
argued this point from the beginning, and I was initially skeptical, but I have come
to agree with them because the revenue numbers, as best I can determine them, seem
to support this theory.
It seems clear that stock imagery marketing reaches a broader customer base
now than was the case a decade ago. Getty says they have over one million customers
in their database. In the early 90's we used to talk about 30,000 to 40,000
potential customers in the U.S. for stock imagery, and a maximum customer base
worldwide of 100,000 to 200,000. Many of these new customers may be relying
primarily on RF images, but that doesn't mean they are taking sales from RM sellers
because they might not have been buying anything previously.
Another factor that has limited the negative impact of RF on world revenue is
that RF has steadily raised its prices, particularly since the introduction of
single image RF. RF sellers have increased their prices much more than those
selling RM. Given the discounting that often takes place with RM sales, in some
areas of the world it costs more to purchase and RF image that one that is RM.
The market for RF outside the U.S. just started to significantly take off a
year or so ago. There may be further declines in revenue as RF does a
better job of penetrating the market in the rest of the world.
Despite the fact that RF buyers get unlimited use to the images and discs that
they purchase, it appears that the vast majority of buyers only make a one-time use
of the images they buy. Part of this may be that the next project usually calls for
something different. Thus, even though, in theory, they could make extended use of
an image it seldom happens. It still seems that people who want to make many uses of
an image tend to purchase RM images because they want some rights control, or at
least an image that is not likely to be used a lot by competitors as is the case
with RF. RF also tends to get used more for small projects that generate smaller
fees, although there are exceptions.
(On the other hand there has been a decline in the total number of images used in
the last year or so. This could be a function of the state of the economy. It might
also indicate that the "generous licensing terms" are really having some impact and
that customers are making more multiple uses of images than we thought. Unfortunately,
there is no way to develop usage statistics that would prove the point either way. We
probably won't have a strong indication until the economy comes roaring back and we
can determine whether photo usage comes roaring back as well.)
There are factors other than RF that have had an impact on the lack of revenue
The consolidation in the book publishing industry has had a major impact. Book
publishers are major users of imagery and while the prices they paid in the past
were never all that high, the usage fees in this market have dropped significantly
recently. The publishers use their size to demand lower prices, and they refuse to
work with agencies that won't agree to their established prices. Couple this with
the fact that Getty and Corbis go along with these deals because publishing sales
represent significant revenue for them, and there is little that the small agency or
individual seller can do, but agree to the publisher's demands, if they want to make
any sales at all -- unless they have a very unique image that the publisher
absolutely has to have.
The faster and more widespread distribution that is possible with digital
technology has made it easier for the wire services to present a much deeper
offering to their subscription customers. Thus, many editorial customers have less
need to look to stock agencies for additional images that are not included in their
regular subscription fees.
Part of the falloff that photographers have experienced results from the
decline in their royalty share of the gross fee, not a drop in gross revenue.
In summary, the market for imagery has declined somewhat, but RF is only one of many
factors that are responsible for this decline.