Jon Oringer, CEO of Shutterstock, has written a very
interesting piece about why being exclusive with one distributor doesn’t work for microstock photographers.
I agree with his conclusion, but disagree with one of his major arguments. Oringer says, “As a marketplace, in order to guarantee that the buyer gets the right photo every time they search,
no photo can be more special than another. Every single image at Shutterstock will cost the same once you have bought a subscription or image pack.”
I strongly disagree that this is a desirable strategy. In the long run this strategy may become a weakness, rather than a strength, for Shutterstock.
There needs to be some system for charging more for certain images that are either very costly to produce, or of subjects for which there is very little demand. Without such a system production of some types of imagery will dry up when it becomes uneconomic to produce them.
I agree that exclusivity is not the best way to determine which images should be more expensive than others. As Oringer points out no one goes to a microstock site because they want exclusive photos. The most important issue for a customer is getting, at the very least, a “relevant photo”, and ideally the best photo, for their current need, and getting it as quickly as possible.
All images are not equal. Some images are much more costly and difficult to produce than others. It is unwise to charge the same for every image. If the image is being produced solely for the purpose of licensing as stock (and not created as part of an assignment where someone else is paying part of the production costs) there needs to be some way for the creator to be adequately compensated for the extra costs he has incurred. For example pictures taken with an electron microscope are very costly to produce and may be of interest to a very small segment of the market. Of if the image creator has had to spend days to set up and arrange a shot, or build a complex set, that is an additional expense.
Currently, the industry does not have a good solution for how to determine which images should be priced at a higher level, but that does not mean we shouldn’t keep looking. I agree that a photographer’s exclusive participation with a distributor should not be the criteria for charging more, or paying a higher royalty. But, when a photographer consistently produces images that generate a high volume of sales that should be justification for, at least, a higher royalty.
It also makes sense to charge more for images when they reach certain sales levels indicating that they are in high demand.
The Rights Managed strategy is not the answer as RM sellers tend to insist on high prices for all their images, even when some are not particularly unique, costly to produce or aimed at a very select group of customers. What tends to happen in such cases is that a high percentage of the images licensed as RM never generate any revenue. If these images were available at a lower price point it is entirely possible that many customers would use them and they would generate more revenue than sitting in a file gathering dust.
Producers also tend to think that everything they produce is worth a certain price when in most cases high prices may be justified for a few select images, but the vast majority of their production is only marketable at much lower prices.
Ideal Strategy For Creators
A system that allows creators to have some say with regard to what should be charged to use their images is desirable. The danger here is that producers will tend to establish unreasonably high prices and as a consequence make no sales. Those who want to make a business of stock photography will soon recognize that they need to lower their prices to generate sales. The question of how much lower will depend on each particular image.
An ideal strategy for creators would be to initially offer their images at low prices and as sales volume increases have the option to raise the price on each specific image. Some creators might decide to leave their good sellers at a low price for a longer period in order to maximize volume. Others might push the prices up more quickly. But, the decision should be left to the creator who understands what was involved in producing the image.
Creators should also have the option to lower a price if they discover that an image is not selling at a new higher price. Such a system would require more monitoring on the part of the creator, but it would likely generate more revenue for him, and give him a idea of the demand for certain types of images at certain price points.
Customer Reaction
Customers would not like this system because they would not know what they would have to pay for images until they have actually chosen the ones they want to use. They would prefer to know that for $249 a month they can get everything they will ever need. With a flexible pricing system sometimes they might have to go with their second or third choice because they can’t afford the image they desire most. In most areas of commerce customers regularly make such choices, but for some reason, when it comes to purchasing stock photography, customers believe they should be able to get everything
they want for what
they decide they are willing to pay.
Eventually, that may mean that everything they want simply won’t be available. In the meantime a lot of image creators will go out of business, and a lot of people will work very hard for not much money.