One of the questions of the Stock Artists Alliance spring survey asked: “What other issues would you like to see SAA address in the year?” The answers, particularly with regard to the general attitude toward microstock, were very revealing.
One respondent said: “I would like to see the industry focus its full attention on RIGHTS MANAGED imagery. SAA should return to its original mission, supporting rights-managed stock as the only approved business model.”
The industry definitely won’t do this. The business is headed toward microstock and away from the rights-managed model. At this stage, there is nothing anyone can do to stop or slow that trend. If the SAA chooses to focus its full attention on rights-managed photography, it would be a recipe for marginalization and eventual irrelevance.
In 2010, gross worldwide revenue from microstock will be in excess of $400 million and possibly approaching $500 million. Based on the last public figures of Getty Images and what has been happening to rights-managed photographer royalties, I estimate that Getty’s total non-editorial rights-managed sales in 2010 will be no more than $174 million, and possibly a lot lower. Add in all the non-editorial rights-managed sales of every other company in the industry, and I doubt such sales will exceed the microstock total. Microstock already owns the market for stock images, and its share is growing. The rights-managed model can continue to fight a rear guard action for the relatively few high-end buyers that are left, but overall rights-managed sales will continue to decline.
Two other respondents said, “Price per image should rise in microstock,” and suggested the SAA focus on “Getting microstock agencies to raise their prices.”
In fact, microstock agencies have steadily raised their prices for the last four years. There aren’t really any $1 images anymore, unless the customer is a major user and ready to buy $2,000 worth of credits. And, of course customers that need to buy that many images are probably big enough users to get Premium Access discount licenses from Gettyand purchase rights-managed images for about the same price as microstock.
The average price for a microstock image has increased between 500% and 800% since 2006, and prices are still going up. The prices are nowhere near as high as I would like to see them, but they are improving. On the other hand, for comparative purposes, the average price of a Getty image has dropped about one-third since 2007, and is still declining.
iStockphoto now has four distinct collections, priced at different levels. The differences are based on photographer exclusivity and whether or not the collection is custom edited. The largest file size in the most expensive collection costs 70 credits, and if you buy the minimum number of credits required to get that image, it costs over $100.00. If the customer wants to print it in more than 250,000 copies of a publication, there would be an additional charge for an extended license. It is a different, and in many ways a more complex system of pricing than rights-managed, but for many users it is not all that cheap. I still don’t like how the royalty-free pricing system works because it doesn’t really take into account who the users are or how the image will be used, but it is unfair to keep spouting the simplistic argument that microstock needs to raise prices. Prices are going up, and many microstock shooters are very happy with the results.
Still another survey respondent says, “The ‘volume’ argument does hold water IMHO.”
I have statistics from one SAA photographer who will license about 2,500 image uses through Getty in 2010. He shoots both rights-managed and royalty-free, and people at Getty have told him that he is one of the company’s top 50 contributors in terms of total sales. I also have information from an exclusive iStock photographer whose images were licensed more than 30,000 times in 2009. That’s 30,000 uses, or 12 times as many as that of the Getty-represented shooter. Hist number of rights-managed uses licensed will be around 800, so the microstock seller licensed rights to 37 uses for every one the rights-managed seller will make. The rights-managed seller receives an average of about $120 for each image licensed; all the iStock seller has to do is earn an average of $3.25 for each image licensed, and he’ll earn more than the rights-managed seller.
This iStock photographer has been producing stock for less than five years and will probably earn more in 2010 than the other photographer will earn from Getty. Fortunately for the Getty photographer he has work with other agencies as well, so he may earn more overall than the iStock photographer. There are more than 100 photographers contributing to iStock who will have more sales in 2010 than the photographer in this example (see “Are Low Prices For Image Use Bad?”) Given these real-life statistics, it is hard to argue that volume doesn’t make a difference. Granted, these photographers are both in the top 1% of their niches, and many photographers earn a lot less. But that is true both of photographers who license their work as rights-managed as well as those who license their work as microstock.
Many professional photographers would like to believe that all microstock is of low quality and has no redeeming value. But that’s not what the customers think. In 2009 Getty licensed rights for about 500,000 rights-managed image uses (including all those Premium Access sales.) I estimate that no more than 1.5 million images were licensed from all RM sources. In the range of 3 million traditionally priced royalty-free images were licensed. Customers purchased between 125 and 150 million images from microstock sellers. Obviously, these customers think that the images they find on microstock sites are appropriate for their needs. They are voting with their dollars.
Still another photographer thinks microstock shooters are out to kill him. He said, “Just say to photographers who want to work for microstock that they kill everybody and first themselves.”
Based on my analysis there are more microstock photographers earning good money from their images than there are rights-managed photographers. And revenues for microstock are going up while revenues for rights-managed photographers are going down. Take a look at this chart for estimated earnings of some of the top microstock shooters. And the chart doesn’t include estimates for a lot of the leading shooters who are non-exclusive with iStock, but earn much more from the combined total of all the microstock agencies that represent their work than those who are exclusive earn from working with iStock alone.
Granted, there are a huge number of part-timers earning very little money from iStock and the other microstock agencies, but photographers who insist that “no one” can make money selling microstock are only deluding themselves.
“Survival! If we don’t get our rates up and differentiate ourselves from the Want To Be’s, we will all be looking for a job.”
There is a declining number of customers who want what rights-managed photographers provide, unless those photographers are willing to sell their images at much lower prices. More and more customers are perfectly satisfied with the images the “Want To Be’s” produce. Some of these images are of very high quality. The Internet has made it easy for amateurs to participate in the market. There is no way to turn that around and get rid of the amateurs.
“Convince libraries that giving away their killer images for tiny fees and not calculating usage on value received will be financial suicide.”
I think the traditional libraries may already recognize that what they are doing may be financial suicide. They see their market getting smaller and smaller. It is interesting that back at the end of 2007, Goldman Sachs predicted that Getty’s sales of rights-managed and traditional royalty-free would decline by 40% by 2012. Even before the recession hit, Getty knew this decline was coming. What they are doing is simply trying to hold onto as many customers as possible, for as long as possible, until they can figure out some other line of business to get into.
If rights-managed photographers can’t figure out how to sell enough images at microstock prices to earn a living, then maybe they should revise their income expectations. Or perhaps stock revenue should not be expected to be more than a supplement to some other primary source of income.
Creative destruction
The problems the stock photo industry faces today are not unique. Creative destruction is a natural result of innovation and progress in a free market, capitalist society. According to economist Joseph Schumpeter, “innovation by entrepreneurs is the force that sustains long-term economic growth, even as it destroys the value of established companies and laborers that enjoy some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.”
A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and reallocating resources to newer and more productive ones.
The telegraph was the perfect illustration. In the 1930s, more than 500,000 telegrams were being sent per day. Then came teletypewriters, and knowing Morse code was no longer necessary. After that came the telephone, computers, the Internet and email. Each change displaced some workers and opened new opportunities for others.
One SAA photographer said, “I think microstock is the beginning of the end for stock photography. It should be discouraged at all costs, as a photographer cannot survive doing this.”
If there was any realistic chance of returning to a pervious era, maybe life would be better. But we have to be very careful in choosing which era we want to return to and what benefits of the current era we are willing to give up.
It seems to me that the SAA leadership is trying to accept those things they cannot change and help photographers find new ways to continue their involvement in the photography business as well as earn enough money to support their families and chosen lifestyle.