October 15, 1999
In an effort to try to give photographers an online option to the current dominance of
Internet selling by the big agencies, Speedpix, led by United Kingdom photographer Mike
Morrison and international software consultant Joe Clarke, expects to launch a new
on-line site with approximately 5,000 images in February 2000.
This agency guarantees photographers 65% of gross sales if they let Speedpix handle
their images exclusively, or 55% on a non-exclusive basis. It is important to note that
these percentages are of the true gross sale because there will be no sub-agents
involved to take percentages off the top. Speedpix will be a fully digital agency. Their
vision is to sell directly all over the world so there will never be a sub-agent
discount taken off the top before the photographer's percentage is calculated.
Their initial search engine will be in English only, however, they are working on a German
version and expect to have it operational shortly after launch.
They plan to make all sales through secure on-line credit card transactions so the
payments will be immediate with no billing and collection problems.
Based on our experience we think the payment and collection strategy will present some
problems in the near term. While it is certainly easy for online users to pay for
services with a credit card, we believe most photo buyers in the U.S. still prefer to be
billed. Companies like Getty Images are claiming that 25% of their sales last
quarter were "digital sales", but that does not mean that all these sales were full e-commerce
It is clear that 25% of the Getty clients use digital search to find the image they want
to use. However, Getty does not supply statistics on the percentage of sales that are
billed rather than using automatic payment. Likewise, they don't report the number of
"digital sales" where fulfillment is by film rather than a digital file. Granted the
industry is moving in the direction of full digital and Jonathan Klein, CEO of Getty
Images, predicts the industry will be fully digital in three years. Nevertheless, we
believe Speedpix may be ahead of the curve on this payment issue.
Speedpix does plan to handle some negotiated sales for multiple insertions and exclusive
uses, but it appears that one reason they can offer a higher percentage is that they
do not intend to have a lot of billing and collection
costs. We believe in the near term this strategy will limit the number of potential
buyers willing to work with Speedpix.
Costs of Supplying Images
Speedpix will charge photographers $50 per image for the initial two years after launch
and an additional $5.00 per image per year to be deducted from sales after the initial two
year period. Of the $50 only half must be paid up front. The other $25 will be deducted from
This second $25 will be recovered by retaining 50% of the photographer's monthly
commissions until the outstanding balance is paid off. The photographer will be obligated
to eventually pay a total of $50 for every image placed on the site whether that image
sells or not.
The keywording charges are included in this fee, but the photographer must also pay
scanning charges or supply an acceptable 30MB file. Speedpix has worked out an
arrangement with a scanning service in London that offers a very reasonable fee for a 30MB
scan. That charge will be approximately $4.50 per image plus shipping and handling charges.
Speedpix intends to store only digital files. Originals will be returned to the
photographer after scanning. They feel that only rarely will customers ask for a file
larger than 30MB. In most cases their first step will be to re-size the file in Live
Picture and apply judicious sharpening in the lightness channel of Lab mode. Only as a
last resort will they attempt to obtain film to deliver to the client.
From a pure quality point of view, they are probably right that this is a perfectly
satisfactory procedure for supplying the client with a usable file. However, this doesn't
take into account the fact that many print users still want film, even when they use a
digital catalog to locate the image.
Pricing of Usage
Potentially the biggest problem with Speedpix is their pricing strategy. They emphasize
that they want a very simplified pricing structure that makes it easy for the user. They
will charge on a per usage basis and say they will have a "comprehensive and easy to use
pricing engine". The following sample price schedule can also be found on their site at
| Web Use - 700K file
| Banner or Front Page
| Other Pages
| Non Promotional Use
| Promotional Use
| Print Run
| Up to 5,000
| 5,001 to 500,000
| 500,001 to 3 Million
| over 3 Million
Speedpix arrived at their pricing structure by first analyzing sales figures from
three major libraries and one minor one. A larger percentage of the sales
analyzed were from the U.S. and Germany than from the UK. They then looked
at the low prices charged by RF and set their prices at a point between the two.
Finally, in order to keep the licensing process simple, they have established prices based on
file size rather than size of usage and provided limited circulation breakdowns.
For the non-promotional uses, which includes all editorial uses, they will be adding
a print run breakdown.
Morrison indicates that if these prices seem low, it is because
prices in the industry have been falling in the last few years due
to the pressures of RF.
In our research in the U.S. market we find that prices charged by
the major agencies have been dropping much faster than those of
many of the minor agencies. Many smaller agencies have refused to
play the "match price" game with RF or the larger agencies and have
been able to maintain reasonable prices for usages they license. They have also
discovered that even with higher prices their sales volumes don't tend to
fall off any faster than seems to be the case with many of the
Photographers need to carefully examine the pricing structure and
proposed pricing philosophy of any agency they join. One basis for
comparison of online prices is to go to PictureQuest and price a
variety of uses. Keep in mind that on this site each agency sets
its own prices for most uses. It is advisable to check the price on images
from different agencies. The PictureQuest system is much more
complex than that proposed by Speedpix, and yet it has a track
record of working very well. Consider whether total simplicity is
an absolute necessity when using the Internet to make sales.
We believe there is still value based on size of usage and and circulation rather than the
size of file delivered. On PictureQuest certain digital uses are priced based on file size
but most print usages are priced based on size of usage and print run. I can't speak
for other agencies but currently Stock Connections' average gross sale for print usages
on PNI is $699 per usage. It is hard to imagine Speedpix's averages being anywhere
close to that given the proposed schedules.
While selling by file size is common in the on-line market, it can produce some disturbing
uses. Many users have found ways to get by with small files for fairly large
reproduction. In some cases they use interpolation. If the image is graphic without a
lot of subtle detail or color changes, art directors can often get very satisfactory
results with a small file. In some cases pixelization is used as a design technique
which enables the art director to use smaller files.
On Web uses there should be a distinction between advertising and editorial uses. Banners
are advertising uses and should command a higher price than other advertising uses. Not
only are there front page uses, but the way Web sites are being designed there are a lot
of lead page uses to various sections that are analogous to "chapter openers" in books.
These should command higher prices than pictures buried deeper in a site. To
fail to ask for different prices for such variations
brings the whole pricing structure closer to RF, regardless of what the strategy is called.
It is important for photographers to recognize that the difference between Royalty Free
and Rights Protected is not so much that RF users can use the same image over and over on
"many different projects", but that they get a lot of usage on a "single project" for one
very low price. The RF producers acknowledge that many disc buyers buy a disc with 100
images -- only use one -- and never use that disc again.
Photographers need to be concerned about the price clients will pay for a full page use or
a large circulations. More money is lost by allowing large uses for too low a price than
by allowing a single user to use the same image in multiple projects.
Speedpix believes that in order for an internet site to be successful the pricing structure
must be extremely simple and the vast majority of the transactions must be fully automatic.
Mike Morrison says, "We will not have local agents anywhere else in cyber space. This is
an internet based service. The concept of needing local agents completely reverses the
advantages of dealing in this way."
At Selling Stock, we believe that the Internet can provide efficiencies and be used
effectively in ways that
are not 100% E-commerce. We believe there remains a place for local agents in such a
strategy, although the services provided by the local agent may be very different from
the services traditionally supplied. The percentages the agent receives for this new
package of services may be much less than what agents have expected in the past, but
because their cost will be less their profit margins could be as good or better.
We believe that some of the models of how the Internet can be used effectively without
being 100% E-commerce are: PictureQuest.com, Workbook.com, Thestockmarket.com, The Image
Bank's private online services, and to a great extent the services being supplied by Getty
While we have outlined a few concerns with Speedpix, it still may be the best option
photographers have to get their images seen. This may particularly be true if their
images are of a type and style that are more frequently used in Europe than the U.S.
To make a reasonable judgement we need to compare Speedpix with other available options
such as PictureQuest operated by PNI in the U.S.
Most photographers should be looking at a non-exclusive arrangement with any marketer who
is 100% into online marketing. At this stage in the development of the technology it may
not be wise to limit all your marketing to online. Other types of marketing need to be
used simultaneously to maximize sales from your images. Therefore, I will base my
comparisons on the 55% rate.
Speedpix is an agency. The photographer's images are edited and not every image submitted
is placed on the Speedpix site. Photographers interested in placing images on PNI have 65
agencies to choose from. The big question is which agency will pick the most of the
PNI has over 400,000 images on their site so the client gets a much broader selection
than going to Speedpix's site with 5,000 images. PNI has been selling pictures online for
several years and has over 50,000 registered users. Client can get film from PNI
agencies if they choose. Assuming the client knows about both PictureQuest and Speedpix,
which site are they likely to go to first?
The price photographers will pay to get their images on PNI and the percentage of the
sale they will receive, varies from agency to agency. In some cases the photographer's
will pay nothing to get their images up online, but will only get 30% of the gross sale.
With Stock Connection the photographer pays a one-time fee of $23 per image and the image
may stay up forever with no additional cost. This fee includes the cost of scanning as
well as keywording. PNI handles collection for all sales and takes 40% off the top.
Stock Connection takes 35% of the remaining money so the effective rate to the
photographer is 39% of the gross sale. That is certainly less than 55%, but the issue
is whether the sales volume generated by Speedpix will match the volume likely from PNI.
Currently PNI makes almost no sales outside North America but photographers should
keep in mind that Getty, who is aggressively trying to sell everywhere in the world, says
that 85% of their digital sales in the first six months of 1999 were in North America.
Speedpix may generate more sales in Europe than PNI, but what about their volume in the
Recently, in another story I published some figures on average return to photographer from
different online marketing operations. These figures are worth repeating.
Several Corbis photographers indicate that their share of sales should be between $3.00
and $4.00 per image on-line for 1999. This is up significantly from previous years. On
the other hand, Stock Connection photographers who have images on PNI will probably earn in
excess of $20 per image per year for each image they have on PNI for the whole of 1999.
It should also be noted that only a little more than 1% of the images on PNI are Stock
Connection images. We have no way of knowing whether our returns are better or worse than
the other agencies who obviously represent the vast majority of the images.
Stock Connection photographers also have images on Workbook.com. In the past year our
photographers have received, on average, a little over $15 per image, for that year for
each image they have on this site. Approximately 5% of the images on the site belong to
Stock Connection photographers. We do not know the average return per image for other
By way of comparison it is also worth noting what ASMP's MPCA on-line service is
producing. In March of this year Dick Weisgrau told us that MPCA has about 600 qualified
buyers who can view the site and that gross sales are in the range of $60,000 per year.
This means that MPCA photographers are receiving, on average, about $.70 per year, per
image on file.