RM: Adapting To The New Realities

Posted on 7/10/2014 by Jim Pickerell | Printable Version | Comments (2)

After reading my recent series of stories on iStock (?See here, here, here, here and here) a reader asked, “What are the implications for rights managed?  Does it mean placing one's images with a number of websites is actually a self-defeating exercise and one only needs to place them with one super star agency and wait for the high returns to roll in?  Or does that conclusion not apply to rights managed?  Or are rights managed images dead in the water these days?”

All good questions, here’s my take.

What are the implications for rights managed?

RM is in serious decline. Prices are falling because there are so many good images available at microstock prices – or just available to grab off the Internet without paying anything. This trend will not turn around. Part of the reason for iStock’s decline is that they have pushed their prices up to the point where they are no longer competitive with the rest of the microstock offerings and subscription.

The only way for traditional RM agencies to maintain any kind of volume has been to dramatically discount prices. But even with the discounts, they are not seeing much in the way if increases in use. For most RM agencies, the best they can hope for is making the same number of sales they were making 5 or more years ago at an average of half or less of what they were charging them. Read this story. The only growth in paid image usage is in the microstock and subscription area.

One of the interesting things about iStock is that the more they have tried to raise prices to get closer to traditional RF or RM pricing, the more sales have fallen off.

There will continue to be a few cases where the customer absolutely needs an image that is only available at an RM price, but those cases are becoming increasingly rare and there are not enough of them to sustain an RM business for the average image creator, or even for an agency that has no image production costs.

It is important to recognize that RM isn’t just about licensing a few great, unique images for multi-thousand dollar usage fees. Those fees alone have never been enough to sustain any of the RM businesses. In order to sustain their businesses RM sellers have needed to also sell large quantities of more common images, for smaller uses, at much lower prices. Now, those sales are gone, or the RM agencies have been forced to try to match microstock prices in order to hang onto the customers.

In the last few years we’ve seen a dramatic shift in customer buying habits. No longer is Getty Images, Cobris or one of the “superstar” agencies the customer’s first stop when looking for images. Getty has lowered prices and done all kinds of  “Premium Access” deals to try to hold onto these customers, but the indications are that not only have Getty’s prices dropped, but the number of units licensed, have also dropped.

Now, the first stop for customers is a subscription or microstock site like Shutterstock, iStock, Fotolia, Dreamstime, etc. If they can’t find what they want there then they may go to Getty, but increasingly they do find what they need at their first stop and there is no need to look anywhere else.

Does it mean placing one's images with a number of websites is actually a self-defeating exercise and one only needs to place them with one super star agency and wait for the high returns to roll in?

It no longer makes sense to put images exclusively with a “super star agency.” First of all there are no agencies that only charge high prices for RM images. The vast majority of images licensed by Getty and other super stars are licensed for fees that are comparable to what many microstock agencies charge. Often they are lower than what iStock charges.

Some of the smaller, specialized RM agencies still try to hold the line on pricing, but as a result they don’t make many sales.

Consider this. I believe the 6 top revenue-generating agencies in the world (the super stars) are in order, Getty Image, Shutterstock, Corbis, Fotolia, Dreamstime and Alamy. Number 2 is primarily in the subscription business and 4 and 5 are primarily microstock.

Most producers are finding that the “returns that roll in” from the super stars are not enough to sustain their business and justify continued production. This is true for many of the top producers who have been earning their living from stock photography for a decade or more, as well as the vast majority of people engaged in producing stock photography. Exclusivity is not the answer. Even Shutterstock tells its contributors not to depend on it as their sole source of revenue, but to also place the same images with other distributors.

At current prices stock photography can generate a nice supplement for some producers, particularly those who have unique access to certain subject matter that is not easily available to the public at large, or an in-depth knowledge and understanding of a particular subject. However, in most cases the demand for the pictures that can be produced as a result of having such special access or knowledge is not enough to sustain a full time business.
Thus, placing images on one website alone is not the answer, but placing images on multiple websites in order to reach a broader base of customers is much more work and still may not generate enough revenue to cover expenses and generate a reasonable profit.

Or does that conclusion not apply to rights managed?

For the most part the decline in unit sales at iStock does not directly apply to RM. But, it does point up that in today’s market pushing for higher prices can be counter productive.

With the Internet, customers have easy access to a number of alternatives. When they perceive that prices are higher at one source than another for basically the same selection and quality, or become dissatisfied with the service they are receiving, they can easily check out alternatives and go elsewhere for the images they need.

Compared to its competitors, iStock has suffered from both higher prices and poorer service. Given the way RM businesses are structured, it is almost impossible for them to provide the kind of price and service options available at microstock sites. In addition, to cut costs many RM companies have had to cut back on staff and the services they provided.

On the other hand companies like Shutterstock that began by licensing images through subscriptions at about $1.25 per image downloaded, have been able to raise prices to between $9.00 and $15.00 for a small percentage of downloads by making it easy for some customers with limited needs to purchase just the images they want to use rather than a full subscription. In a relatively small percentage of cases Shutterstock has also been able to get fees in the hundreds of dollars range by supplying certain customers with additional specialized services as well as the image. It is unclear how much more they will be able to push prices up, and for what percentage of their customers, before those customers start drifting off to cheaper suppliers.

In the RM arena there may still be a place for specialized agencies that can provide, in addition to the image, a detailed knowledge of the general subject as well as additional services that the super star agencies can no longer afford to provide. The question is whether there will be enough customers who will need this knowledge and service to support a business.

Some creators continue to argue that if all photos were exclusive with one agency, or if they were only available on photographer web sites where the photographer could set the price, then customers would be forced to go directly to the primary agency or photographer to get the images they need. The customer would then be forced to pay what the image was worth, not what the customer wants to pay, and image creators might not have to share as much of the gross fee with middlemen.

This utopia is not achievable. There is no going back. Most of all, there will always be amateurs and part-timers who produce some excellent pictures and are not trying to earn their entire living from the revenue their images produce. They are happy with some money and acknowledgement of their work. And with Internet access they will continue to take an increasing share of the market.

Or are rights managed images dead in the water these days?

RM images aren’t necessarily dead, but for the most part they are never seen. Relatively few customers go to RM sites to look for images. When they do they are so overwhelmed with choices that they only have time to review a few, and not necessarily the ones that would be most appropriate for their purposes. There is little, if any, professional editing to aid the customer in knowing what might be best for their particular purpose.

Despite the decline, more and more images keep flooding in making the RM sites less and less useful. It is a marketing system that has outgrown its usefulness.

Remember, back in the old days, there used to be a lot of people who made a good living manufacturing a thing called film. What are they doing today? Times change. Technology changes things, and we must adapt to the new reality.

Copyright © 2014 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 301-461-7627, 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.  


  • Douglas Peebles Posted Jul 12, 2014
    Damn (not really the word I was thinking).

  • Ron Levy Posted Aug 25, 2014
    I have always had the opinion that there was some sort of innate resistance from buyers regarding the higher RM pricing model. Those of us who were active in the market ~30 years ago made a worthwhile living but were always up against the "licensing vs hamburgers" analogy in buyers' minds. Add to that the arguments over whether photography was a "product vs service", and the confusion multiplies.

    ASMP did a valiant job keeping the bar high, but I always felt it was suicidal, based on the resistance across the board from most (not all, of course) commercial, editorial and private buyers.

    Jim's last sentence here still confirms the troubled analogy, by mentioning film and technology changing the pricing market. Regardless of copyright legalities, which are being eroded daily, if most people seriously believed in licensing as a valid model, then exterior factors like technology, delivery methods, film vs sensors, etc. wouldn't be blamed for demise of usage prices.

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