Yesterday, I wrote about the problem of the
growing size of image databases and how this is making it difficult for customers to easily find the right image for their projects. Many good images are never seen by anyone because they get buried in the search returns delivered.
In addition, the industry has a problem of declining usage fees. Market demand should be a pricing driver. But, in our industry every image is priced based on usage or file size regardless of whether hundreds of people have purchased it, or it has sat in the file for years with no one showing any interest whatsoever. Ideally, photographers would like to get more money for their best selling image and some money for the 99% of images that sit in the files and are never licensed. With the growing demand for very cheap, or free, images it should be possible to earn some revenue from the 99% if we don’t continue to insist on giving away the top 1% for extremely low fees.
The following search and pricing system is unlikely to increase the overall number of uses. There will still be a huge over supply relative to demand. But, it will give all images a better chance of being seen by at least some buyers, make good images available at prices every buyer can afford and price usages based on market demand
Solution
Collections of 20, 30 or 40 million images often deliver tens of thousands of returns for a given search. It seems to me that customers would be better served if large collections were segmented into several smaller collections that deliver search returns based on proven demand. The following are descriptions of how I would initially divide the larger collections into four smaller collections.
Collection A – Any image that has been download more than once or has been in the database less than three months. This collection might contain images that had been downloaded only once 4 or 5 years earlier, but at least someone, at some time, had liked the image enough to use it.
The default search-return should provide a mix of images that had been licensed with those that had been in the collection for a short period of time, but never sold.
Customers should be given the option to sort the returns by (1) the number of times the image had been downloaded, or (2) the newest images.
This search eliminates all the non-sellers that have been sitting around for months or years and gives the customer a tight selection of images that have been popular with other customers.
Collection B – Any image that had been in the collection between 3 months and 2 years, but has never been licensed.
Images in this collection will be offered at a slightly lower price point. There will be some great images in this collection. It just happened that the right customer didn’t come along to look at it in the first three months after it was made available for viewing.
At the point that any image in this collection is licensed it is automatically moved to collection A.
Collection C – Any image that had been in the collection for between 2 and 10 years, but never licensed.
This collection will have many good images, particularly of subjects that are timeless, but after 2 years most of them will have been buried so deeply in today’s major collections that no one ever sees them. Consequently, there is little or no chance they will ever be licensed.
The images in this collection will be cheaper than those in A or B. When one of these images is licensed it will be automatically moved to collection A. Another option might be to move it to collection B, place it near the top of the search returns, and if it sells again than move it on to collection A.
There may be some very good images in this collection, in some cases similar to those in collection A. Often several images from a shoot, or specific situation, are accepted into some of today’s large collections. Some of these may be purchased and placed in Collection A, but slight variations may have never been selected and after 2 years they end up in Collection C. This dose not mean that they are not worthy of being used, particularly if they can be purchased at a lower price point. For customers with budget issues collection C may be the first place to check.
Collection D – Any image that has been on the site for more than 10 years and never sold, or was created more than 10 years earlier.
This is the collection where customers looking for historical images that are not already in collection A will go. If one of these images is licensed it would be moved automatically to collection A.
The prices for this collection will be the lowest and the place to go for those looking for the cheapest images.
Depending on the number of images in collections C and D it may be advisable to shorten the time frame for collection C to 6 or 7 years and put any images older than that in D to make D the place to go for customers looking for the cheapest images.
Pricing
One of the industry’s main problems today is that in an effort to make images available to customers with limited budgets we have made EVERY IMAGE available at whatever the customer offers to pay. We need to find a way to make usable images available to customers with limited budgets without depreciating the value of the images in highest demand.
The key is to have a
fixed minimum price for each category. For example with category A images could be licensed at either RM or RF prices, but no image would be licensed for less that $75 with the one exception that if it were to be used one-time online, and for no other purpose, the minimum price might be $50. The prices for particular images or usages could be much higher depending on usage (RM) or file size (RF) but could not be discounted lower.
The problem with the current licensing strategy is not so much the list prices for various uses or file sizes, but in how much the prices are discounted for volume customers. While the list prices for microstock are not as high as many would like, the discount strategy (based on the number of credits purchased) is much more reasonable than some of the discounts being offered by RM and traditional RF sellers.
I have just completed an analysis of 2013 sales of one of Getty Images leading contributors who is a full-time stock producer (at least for now). The gross fee Getty accepted was less than $10 for 20% of the images they licensed for this contributor. The fee was less that $25 for 32% of the images they licensed; less than $50 for 46% of the images licensed and less than $100 for 66% of the images licensed.
Some of the images were licensed for good fees, but I can’t believe that such a high percentage of customers cannot afford to pay somewhat higher fees for the images they need. This photographer’s experience is not unusual. I believe that if most photographers were to examine their records closely they would find a similar percentage of small uses.
Getty sets the standard and other large distributors must follow suit in order to compete. The industry needs a way to turn this around.
The tendency is to accept whatever the customer says he is willing to pay. With the multi-tier system I am proposing, when the customer says she can’t afford to pay what is being asked for a certain image the seller can always say, “Fine, we have this other collection over here with great images at your price point.”
The prices for Category B might in general be 25% lower, although that could vary with different uses. The important thing would be that no use could be less than $50 with the exception that a one-time online use that might be sold for as low as $35 (still better than what Getty is charging for about 40% of its images). And as soon as an image makes one sale at this lower price it moves up to Category A and Category A pricing.
For Category C the prices might be half of the prices for Category A. Customers with real budget problems should probably begin their search with Category C. The minimum price for a small print use might be $35 and for a one-time online only use $20. In many cases the photographer will have uploaded several versions of a situation. One or two may have gotten used right away and are in Category A, but the rest moved to Category B. And after two years they were moved to C if they had never been purchased. But the Category C customer might be able to get something very similar to what is in Category A for half the price. Of course, after the first sale that image moves to Category A and Category A pricing. This will also get customers looking at images they have been totally ignoring up to now.
Category D pricing might be a flat $10 for any use. After the first use the image might move to Category A. It is important to note that after a while Category A may get pretty large. Maybe it will be necessary to require that images receive more than one download in Category C or D before moving up, or move to B before finally moving to A. Also, if it is possible to search based on the number of downloads the most used images will always come to the top of the search-return-order.
The minimum prices quoted here can certainly be adjusted depending on the particular collection. The important thing is to have some minimum standards for each collection.
Exclusive
The concept of Exclusive contributors to a particular distributor should be eliminated. It makes no sense for an image from an exclusive contributor that may have only sold a few times to cost 4 to 18 times more than an image from a non-exclusive contributor that may have sold a hundred or more times. This is the way the iStock pricing is currently set up. The price should be based on the interest customers have shown in purchasing the particular image.
Also, at iStock some of the images that are placed in the Vetta of Signature+ collections never get looked at and never sell because many customers are looking for cheaper images. If the images were offered at a lower price first, and move up to a higher price when there is evidence of demand for a particular image at least the system would make some sense – and probably generate more revenue in the long run.
Subscription
One of the biggest stumbling blocks to my strategy will be the subscription philosophy that
all images are of equal value and that they should all be priced equally, no matter their uniqueness, what they cost to produce or the degree of interest customers have shown in using any one of them. And that base value is about $1.50.
With this philosophy prices are set at what the smallest customer can afford to pay for the most insignificant use. Then everyone gets any image they want, no matter how much use they can make of it, for the same price.
Even with the volume of subscription sales some of the top image producers are already finding that they can no longer afford to produce because the volume doesn’t make up for the low price. Some of these photographers are discovering that now their best customers, who could afford to pay more, are getting all the images they need for $1.50 each, and they are pulling out of Shutterstock or cutting back on their production. New, inexperienced photographers will replace them for a while, but eventually those who are serious about trying to earn a portion of their living from photography will have to find something else to do.
Subscription sites like Shutterstock could easily set up a two-tier system with let’s call them Red and Blue subscriptions. Each image in their collection would be marked as a Red or Blue image. The Red collection would consist of images that have been downloaded, or have been on the site for less than three months. The rest would be in Blue. Given the tendency of customers to download a lot of images they never use it might be advisable to only put images that had been downloaded 5 or 10 times into the Red collection and the rest in Blue.
All customers would be able to look at all images, but they could also sort for just Red or just Blue limiting the number and quality of returns they would get. Customers that purchase the higher priced Red subscription would be able to download any image on the site as part of their subscription.
Customers that purchase the cheaper Blue subscription would only be able to download Blue images as part of their subscription. However, if they occasionally find a Red image they want to use they could purchase it at the “Images On Demand” pricing rates.
Editorial
Editorial collections may have different problems than those focused on the commercial side of the business. Editorial collections tend to upload lots of similars. As a result similars of nearly every situation are likely to end up in all the collections at all the different price points. This could be good. But, depending on how similar the images are it might drive many customers to the lower price point.
Many customers may also be looking for new images that are no more than a week old. Thus, instead of leaving unsold images in the A category for 3 months, it may be advisable to move them to the B pricing category after a week in order to keep the A category current.
The key in all of this is:
(1) to take full advantage of the valuable information customers supply when they choose the images they want to use,
(2) to structure the search in a way that makes it easier for customers to quickly find the images they need, at a price they can afford,
(3) to increase revenue overall for stock agencies and image creators.