643 STOCKDISC - LOW PRICED RF
June 21, 2004
At the recent CEPIC Congress in Copenhagen Stockbyte announced that it will launch a new RF brand - Stockdisc - with the first 40 titles available in September. Each disc will have significantly more images (150 average) and be priced much lower (249 euros) than most RF discs currently available.
CEO Jerry Kennelly points out that in the past few years the RF industry has been steadily raising its production values and creative standards and this has come at a cost of more and more expensive CD titles. In the process he contends, "there is a large base of middle market clients that have been abandoned by RF sellers as the industry has driven up production and creative standards."
This raising of creative standards has also tended toward the production of more complex images, but there is a segment of the market that needs simple, clean, very straight forward images with clipping paths - and at the right price. These customers can be small design companies or larger organizations where budget is sometimes more important than the optimum level of creativity.
Kennelly says, "When RF CD prices went beyond 500 euros and we all figured that single images were the wave of the future, we didn't consider those customers who want a high quality solution, but at a price they can afford." Many customers are not prepared to pay for the industry's increased quality standards.
The images on the Stockdisc products will be made available as single images, but at about the same prices that Stockbyte currently charges for single images.
The first 40 titles will have a total of 5750 images with discounts for volume purchases as low as 1.00 euro per image. By the end of the year Stockdisc plans to have 100 titles available. The file sizes available on the CD's are 1mb RGB and 35mb CMYK. However, as single image downloads the following file sizes will be available: 1mb RGB, 12mb CMYK, 35mb CMYK, 75mb CMYK and 75mb RGB.
Some of the Stockbyte competitors expressed concern that this is taking RF in the wrong direction. They argue that RF should continue to push the quality and the price higher as has been the case in the last few years. Nobody indicated that they would lower their own prices to match Kennelly's offering, but some were concerned that others will lower price in order to compete.
Some feel that Stockbyte's sales growth at the high end of the market may be slowing forcing them to go after the low end buyers that others have abandoned in an effort to get back on a satisfactory growth curve. Many argue that going after the bottom of the market won't generate enough revenue to offset the rising production and marketing costs that will be involved. It certainly appears that Kennelly intends to provide a Stockdisc product that is equal in quality to the Stockbyte brand, and at a higher level of quality than many of the Subscription images and other RF images that are being aimed toward, and sold to, these low end users.
In the past year Stockbyte has fine-tuned their production systems to the point that in 2004 they expect to produce 27,600 new images. This is up from 3,500 in 2003 and is more than the total produced in the past 5 years. Their goal seems to be to maintain the same creative and technical standards that Stockbyte has offered in the past, and by producing much higher volumes justify making the product available at lower prices. Kennelly believes that by keeping the images simpler and streamlining his production operations he can produce enough increased volume to offset the lower price.
Given the quality of the offering, some competitors worry that customers who would have paid more for single images from other producers will turn to these bargain discs.
Kennelly believes, and other RF producers concur, that there is a very clear separation between the customers that buy discs and those that buy single images. Those who buy discs want to build a library that they can use over and over again. But, they have limited budgets and can not justify spending the kind of money most RF discs are currently commanding. While Stockdisc may take market share from other disc producers that offer fewer images at a higher price, Kennelly doesn't believe customers who buy single images will turn back to buying discs simply because of the lower prices. Given the quality of the product it could certainly lead to a decline in sales of traditional higher priced discs.
Subscription Sales Rising
The Stockdisc product will play well to those who are currently buying Subscription RF and that segment of the market seems to be growing, although it is hard to get much in the way of accurate figures.
Some sellers are trying to satisfy the needs of the low end buyers by offering RF images at several different price points for both single images and CD's. Getty, for example, has single images as low as $49.99 in Photodisc Blue and they go up to $399.99 for a 48mb file in Photodisc Red. The CD's range from a low of $199 to $799. The difference is that Stockdisc will be offering images that are closer to Photodisc Red quality at Photodisc Blue prices.
Kennelly says, "As the market defines itself more clearly, clients at all levels justifiably expect new quality images at a fair price. As image life shortens, this is the only sustainable model for publishers. Creating content from 'retired' material will not be a valid option". Getty's strategy seems to be to move the images that don't sell well in Red to Green and those that don't sell well at the Green price levels to Blue thus "retiring" older, lesser demand images to the lower price levels. Kennelly argues that in the long run that won't work. "We've been listening carefully to these clients for some time and it is their legitimate complaints that prompted us to launch Stockdisc."