Shutterstock has provided investors with some very interesting information about their Enterprise pricing strategy and how it differs from their normal E-commerce pricing. You can find the “E-commerce vs. Enterprise Case Study” by going go to this link (
http://investor.shutterstock.com/phoenix.zhtml?c=251362&p=irol-presentations). Then open the pdf under “Investor Presentation” that was uploaded on 11/18/15. The chart explaining the Case Study is on page 25 of this 37 page pdf.
| |
3 Subscribers |
Enterprise |
| Seats |
3 |
Unlimited |
| Total downloads |
600 |
600 |
| Paid downloads |
600 |
50 |
| Comped downloads |
0 |
550 |
| Revenue generated |
$597 |
$5,000 |
| |
|
|
| Rev. per download |
$1.00 |
$100 |
| |
|
|
| Indemnification |
$10K per customer |
Unlimited |
| Image Uses |
500,000 Impressions |
Unlimited Impressions |
| Payment |
Upfront |
Billed Monthly |
| Customer Service |
Basic |
Dedicated Rep |
This chart raises a number of questions for contributors. It seems to indicate that only 1 in every 12 Enterprise downloads are Paid while 11 out of every 12 are Free for comp use (presentation purposes to convince clients to license an image).
This could partially explain why many Shutterstock contributors are seeing a significant decline in sales? Shutterstock has over 20,000 enterprise customers and is working hard to add more. Between 22% and 25% of the company’s gross revenue comes from Enterprise sales. Many of these customers used to get the comp images they needed via subscriptions. In those cases, creators would get some compensation for every image downloaded. Now creators get an occasional nice sale and 11 out of 12 images downloaded get nothing. For most the revenue for the few nice sales doesn’t make up for the sales lost.
The chart also seems to indicate that the average price of a paid Enterprise download is $100. Previously, the average enterprise sale price I had heard was $50 which is a big difference from $100. If $100 is correct that means Shutterstock will license a little over one million images in 2015 through the enterprise segment of its business. It would also mean that a significant percent of the paid images must come from the Offset and Premier collections for the average price to be so high. (Premier is a collection of images that can only be seen by customers that have negotiated an Enterprise deal. The images included in this collection are believed to come primarily from traditional RF stock suppliers.)
Other Questions:
1 – How are the prices calculated for each paid image from the regular Shutterstock collection? Is a customer’s total number of paid downloads each month divided into that customer’s gross negotiated fee for the month and that price assigned to every image downloaded regardless of whether the image came from the main collection, Premier or Offset?
(One would think this would be unfair to the Offset and Premier contributors whose images are supposed to be licensed at higher prices. From what I hear from Offset contributors, most of their sales are at the listed $500 for a 300 dpi image and $250 for a 72 dpi image. These prices are seldom discounted.)
2 – Is an Enterprise customer simply billed at the end of each month for the number of images actually used from each collection, at a stipulated price for each collection?
(If this is the case then the customer’s monthly charges might vary widely month to month.)
3 – If 2 is the case, what is the price charged for a download from Shutterstock’s standard collection? Is it the IOD prices of $10 to $15, or what?
(If there is a base collection price, an Offset price and a Premier price then a huge percentage of the Paid Downloads must be from the higher priced collections in order for the average “Revenue per Download” to be $100.)
4 – Since the customer gets “unlimited impressions” from every image downloaded, is every image from the main collection licensed at an “Enhanced License” price (between $68 and $100)?
(If that is the case it might explain the $100 average download for all Enterprise sales, but I would think many Enterprise customers might need lots of images at lesser prices than that. Do the royalties contributors receive for Enterprise sales consistently reflect prices this high?)
5 – Is a customer’s monthly subscription fee based on a fixed number of images downloaded regardless of collection?
(This seems unlikely because Shutterstock’s profit per image could vary widely depending on how many images the customer happened to choose from each collection. If all the images downloaded by a given customer were from the Offset and Premier collections, and Shutterstock paid the regular royalties for each of these uses, Shutterstock might have a significant profit loss for this customer. If, on the other hand, the customer only uses images from the base collection, and Shutterstock had negotiated a high enough overall price, the company’s profits could be huge. But, to give the customer unlimited choice at widely varying price points would seem to be risky.)
AdobeStock Comparison
If $100 per download is really Shutterstock’s price, it doesn’t compare very favorably with AdobeStock’s $2.99 per image used. Adobe offers customers all the same free comp use and makes it easier for customers to integrate the images they want to use into their projects. Adobe is also moving aggressively to provide an Enterprise service. I’m sure they are offering unlimited impressions, monthly billing and probably indemnification. I have no idea what their price is for these additional services, but I suspect it is a lot less than $100 per image.