Stock Image Revenue From Ad Clicks

Posted on 3/26/2008 by Jim Pickerell | Printable Version | Comments (1)

The PicApp licensing model has caused great concern among photographers in recent days, but it could well be the forerunner of the best way for photographers to earn money in the future.

The theory behind PicApp is that (1) there is massive unauthorized usage of images on blogs and forums that is virtually unstoppable; and (2) the volume of Web advertising on these blogs and forums is increasing at an astronomic rate.

It is probably impossible to convinced bloggers to pay for pictures, but if picture usage could be tracked and a percentage of revenue paid by the advertisers funneled to image creators, it has the potential to become a significant new revenue source.

Photographers are concerned on a couple of levels. First, as a result of a programming error at the time of public launch, many of Getty’s images began appearing on PicApp. Photographers had never authorized free use of their images and believed they would never see any revenue from the free usages. However, it was never Getty’s intention to offer anything other than wholly owned images through PicApp. All images not wholly owned by Getty have been removed. In future, some creative images will be offered, but only those wholly owned by Getty. (Other portals like Corbis, Jupiter and Image Source currently have wholly owned images on PicApp.)

This does not mean that photographers working on a royalty basis will never have an opportunity to benefit from this advertising revenue model, but the agencies want to prove the concept with wholly owned images before expanding to all images.

Photographers’ second concern is that the whole concept is flawed, and ad clicks will never generate enough revenue for the image creator’s share to be significant. But as the information world changes, photographers should not be too quick to discount the potential just because the fee per click is very small. Everyone in the traditional segment of the industry is focused on high prices for a relatively low volume of sales. We could be moving to a point where the reverse makes more sense.

Last year Getty licensed rights to about 500,000 RM images, but through iStock it licensed rights to 34 times that number of microstock images at an average price of $3.25. There is fantastic growth in the low-price sales, while slight, but steady decline in the number of the high priced units. The idea of a lower price per unit licensed should not be rejected without exploring the potential, particularly if a way can be found to get this additional revenue without losing any from traditional revenue sources. Looking ahead a year or so, the number of times someone views or clicks on ads delivered on blogger sites seems likely to be significantly greater than the number of microstock images downloaded.

Advantages of a New Model

One of the significant advantages to being paid by clicks is that the amount paid will be the same for each unit licensed, not some tremendous discounted price per unit as volume increases.

I recently had occasion to review the price charged to use an image in a 1999 textbook compared to that charged to use the same image in a different book in 2008. In 1999 the gross fee for a circulation of 40,000 was $250, or about 6/10th of a penny for a book that retails for over $100. In 2008 the fee charged for a book in the same price range and intended circulation of 500,000 was $364, or less than 8/100ths of a penny. If the 2008 book had 200 pictures, the publisher would pay $72,800 for all the images and gross over $50 million. It is one thing to give discounts for volume, but the breaks we’re giving publishers are ridiculous. See “Reasonable Pricing For Textbook Use” for more realistic pricing.

Considering the discounts being offered, circulation-based pricing is hurting us more than helping. Being paid by the unit -- even at a much lower base price per unit sold -- could be of tremendous advantage to image producers, and with technology developments is now practical.

Another example of extreme discounts is postcards. The average postcard deal goes for about $500 for a print run of 10,000. In addition many publishers print more than 10,000 and never tell us, but that’s another story. Postcard publisher also want exclusive rights for a couple years which adds additional costs in tracking uses. All this works out to $.05 per card.

Suppose we make all of our images available for personal postcard use through a PicApp type service. People are already sending lots of e-cards and it won’t be long until everyone has a home printer capable of printing good quality postcards or greeting cards. What if we were to charge $.25 per download, plus credit card transaction fees. That’s $2,500 for 10,000 postcards, not $500, and we’ve cut out a lot of middlemen. Actually, many buyers would probably gladly pay $1 per download.

The problem we’re facing is not that certain usage fees are too low. Rather, image producers need to understand that it isn’t a sin to sell images for certain uses for very low prices, and it’s time to explore other options.


Copyright © 2008 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

Comments

  • Tim Mcguire Posted Mar 27, 2008
    Jim,

    The problem with all this type of stuff is that none of it adds revenue to the industry. We just keep trading a $1 license for 2 50 cent licenses and giving away more rights to use photographs.

    Yes, the stock market since the mide 90's has greatly expanded in terms of volume of pictures licensed/sold, and yet, the overall revenue has remained the same for as long as I can remember, around $2 Billion worlwide. If you take into account the numbers of people entering this businesses competing for that static amount if not shrinking amount of money then every new low cost / rights generous licensing model and business model has merely diluted the revenue per image licensed, making us all worse off than we were before. I doubt revenue from ad clicks is going to change that.

    Tim McGuire

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