114 SELLING INDIVIDUAL RF IMAGES
January 6, 1998
Photographers supplying images to Royalty Free companies, and receiving a
percentage of sales rather than a flat buyout of their images, should examine
their contracts to determine what they will be paid when rights to individual
images are licensed.
This is important because the RF companies are moving very rapidly toward
licensing rights on-line rather than selling CD-ROM's. It may be a few years
before more images are individually licensed than discs sold, but this trend can
drastically change the economics for the photographer.
The current trend is to pay the photographer 20% of the gross sale of the
product irrespective of whether it is a disc, or an individual image. (In fact,
some photographers who have been with some of these companies for several years
will get less than 10%.)
The RF producers claim that at the $70 per image price for unlimited use that
they have to charge, they can only afford to pay 20%. I would argue that they
might be able to charge $100, or more for that on-line use since the competition
- traditional stock - is still priced much higher. They don't seem to think so.
If they charged $100 and paid the creator 30% they would still be making more
per unit sale than when they get 20% of $70. Their argument would be that their
unit sales will go down if they raise the price. I can't quite see why that is
going to happen because the clients still need the images and there is no
cheaper alternative, but that is what their financial projections show.
The interesting thing is that if they do figure out how to raise the price it is
highly unlikely that they will voluntarily rasie the percentage they pay the
On the other hand, if they begin cutting the price below $70 to try to increase
market share they are going to want to cut the photographer's royalty even lower
so they can maintain their profit margins at the lower price.