RF Seat Licenses

Posted on 7/17/2003 by Jim Pickerell | Printable Version | Comments (0)

568

RF SEAT LICENSES



July 17, 2003

Think RF prices are too low? Some photographers who shoot RF for
Getty brands are finding that sales reports show single image licenses of over $1,000 and
others in the $850 and $650 range. How's that possible? Nobody has list prices for single
images that are that high!!


Most photographers think that once someone buys a RF image at the standard list price
they can use it for anything they want forever. However, according to the Licenses
Agreements of most RF suppliers that's not exactly true.


Most companies selling RF place some restrictions on what can be done with an image
purchased at the standard rate. These vary somewhat from company to company, but
occasionally the restrictions result in the customer paying a rate that is significantly
higher than the standard single image rate.


For example, most companies limit the right to use an image (or any image on a CD) to 10
authorized users (designers or art directors) unless the buyer purchases an Extended
Rights License. This is also known as a Seat License. This number might seem generous
enough to cover all the needs any company might have, but, in fact, what many large
international corporations or advertising agencies want to do when they select an image
is to make that image available on their internal company database so anyone within the
company may use it for their custom internal designs.


Over a period of months, or years the image might be used in many different products and
have various sizes and prominence within each product. If one person were designing all
these products then all they would need to pay is the basic RF fee, but that's not the
way the design work usually happens. Often there are many designers working on different
products, and in different locations around the world. Instead of using totally different
images for each design, the company likes to use the same image in a variety of products
because its cheaper and it also reinforces the identity of the company or the product in
the buyers mind.


In some cases there are large numbers of designers/users with access to these databases.
One RF company has told me that it is not uncommon for them to license rights for 100,
200 or even 500 seats.


Digital Vision lists "Seat Pricing" rates for CD's on their web site. Not all companies
show this kind of information on their sites, but according to RF industry sources
everyone uses a similar method for establishing seat prices.


DV's prices for their discs are 399, 499 and 549 pounds for various products. This
translates into $633, $792 and $871 (at today's exchange rates) for the basic fee that is
good for up to 10 users.


For an additional 1-9 users, the price is $47.93 per person. If the number of additional
users is between 10 and 100 it is $44.73 per user, and if the number of additional users
is over 100 it is $38.34 per user. While this provides a ballpark idea of what the
charges might be, sales people say that in virtually every case where additional seats
are concerned it comes down to negotiation.


It should also be noted that these prices are for access to all the images on a CD. When
we're talking about single image price that are much lower than CD prices the free per
additional seat should also be proportionally lower. If we look at the ratios of these
seat fees to the basic fee, it appears that each additional seat above 10 should be
valued at about 4% to 6% of the basic 10 seat license.


While these prices may not be as high as those that would be charged if the buyer were
going to offer the same type of access to a RM image, they are certainly a lot better
than basic RF prices. They also put some limits on how much is being given away for the
lower price.


Some customers are very open about the number of users, while others are not as open.
Some RF suppliers have heard that in the past Getty has not actively pursued seat license
upgrades. And if Getty doesn't do it, it is difficult for others to do it. On the other
hand, since the data available to me is from Getty suppliers, it would appear that Getty
may be getting more aggressive in pursuing such upgrades.


(I should also not that the sample of data I have is small compared to Getty's total
sales of RF so it may not be representative. On the other hand it is a statistic that
bears watching and it is good news if they are becoming more aggressive.)


In addition there is also a Commercial Product License that restricts the use when the
"image makes up a significant part of the product" such as with postcards, posters or
calendars. When a customer wants to use an image for one of these purposes they pay an
additional fee.


These rules have been in the agreements for a long time, but were not always enforced. As
the RF industry has matured, and it has become more difficult to grow revenue, partially
due to the bad economy, it appears that some companies are being more aggressive in
pursuing these Extended Rights agreements.


Note To Photographers


Many photographers are so anti-RF that they fail to recognize how RF has changed - and
the whole industry as a result. RF prices are going up and while they may not be what you
might like they are a lot better than they used to be.


However, one of the biggest issues is that it is getting harder and harder to make a
Rights Managed sale, no matter how great your image, because buyers can easily find very
good RF images that fulfill the vast majority of their needs. If they find what they want
and it happens to be RF they are not going to insist on paying more.


Also, most RM agencies are finding that if they don't also offer RF they can't get many
customers to come to their site to even look at their RM. Consequently, most online sites
now offer both RF and RM.


It has become almost impossible to get buyers to request traditional research because so
much is available online. Thus, if your images aren't in a good on-line database they
aren't going to sell. You may only sell your images as Rights Managed and you may insist
on 50% of the gross sale, but 50% or zero is zero and 50% of the rare sale, even if it is
for big dollars, is still not very much.


It is difficult to get images into online database as either RF or RM, but if your goal
is making money from stock photography then you may need to be more open to at least
testing the RF market and seeing if some of your images don't earn you more money as RF
than as RM. There may be a balance that works as Tom Grill pointed out in Story
548 .


A lot of the stories I have been doing in the past two or three years have been pointing
toward this trend. Still many people trying to make money in stock don't seem to get it.
There are no signs that the volumes of RM sales are going to pick up and they will never
get back to where they once were. On the other hand there are indications that RF may
become more and more dominant.


You can complain about this, but that will not change anything. The only solution is to
adjust your business model to something that fits with the new realities of the market.


Copyright © 2003 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

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