Traditionals Move Toward Microstock

Posted on 4/14/2008 by Jim Pickerell | Printable Version | Comments (1)

Many traditional stock sellers are trying to determine how to enter the microstock market. Microstock companies have identified hundreds of thousands of customers. Traditional sellers have resisted this market, due to the low fees per use. But the number of sales is becoming hard to ignore. The quandary confronting traditional sellers is how to participate in this new market without cannibalizing their existing one.

The three majors each have their own microstock brands. However, all seem to be seeing some cannibalization of their existing RF sales. Moodboard has launched a new strategy. Alamy and Masterfile have plans on the drawing board, but specifics are not yet available. ImageClick in Korea recently entered into a partnership with Dreamstime. Image Source is making some images available through Fotolia's "Infinite" collection and is said to be exploring other strategies.

What's The Best Strategy?

At the moment, most traditionals are trying to segment their collections into "high quality" and "average" images. They offer the average ones, which generally turn out to be older images that haven't sold for a long time, if ever, as microstock, while retaining the others for their higher priced offerings. In my opinion, this strategy is doomed to failure.

In theory, since these images haven't been selling there is little to lose. However, in most cases, if they haven't sold in traditional distribution they are unlikely to sell in microstock. This doesn't mean that these average images are of poor quality, there are just others available in microstock that will do a better job of fulfilling specific customer needs. If the images don't sell well, the traditional agencies will conclude it is impossible to make money at microstock prices.

If you doubt that better images are available, go to any microstock site and organize your search returns by number of downloads. I went to iStockphoto, searched for "people" and organized the returns by number of downloads. The most downloaded image has been used 10,209 times in less than 2 years. The 200th most downloaded image has been purchased 1,650 times in the last 6 months. The average price per image downloaded at iStock in 2007 was just under $4.

 

Make Your Best Images Available

If traditionals are going to sell to microstock customers, they've got to find a way to make their best images available, not images that they recognize as being of secondary quality. Some make the argument that it is unwise to offer high quality products at low prices. They point to other industries and say producers of retail products never try to sell both high and low quality products in the same store. But there are some important distinctions between licensing stock photography and selling clothes or other retail products.

1 - Every image is unique. Differences may be slight, but they can be important for various customers. With most other retail products, there are far fewer variations.

2 - Each customer's use is unique. Every use is different. Each buyer has a different perception of the perfect image. The right image for one is not necessarily satisfactory for the next. The audience and messages are different. I suspect every use of the iStock image that sold over 10,000 times was very different from every other use. The image might have been used for ads, brochures, textbooks, editorial, personal sites, etc.

3 - The buyer's perspective is critical in determining value. The value of a stock image is not an arbitrary decision of the seller based on cost, difficulty of production, artist's talent or reputation. Value is based on the buyer's needs.

4 - Use, not image quality, determines the value. The value the customer receives dictates what the customer is willing to pay. In every instance, value is based on how the image will be used. An image used in a marketing brochure distributed internationally will have one value. The same image used in a different brochure for a local nonprofit organization has another.

5 - Price should be based on value received. Customers who receive something of great value to them will be willing to pay more than those whose use is relatively minor and whose project budget is much lower.

If the goal is to maximum units sold, and it's mandatory that the price remains the same regardless of how the image is used, then it makes sense to keep the price as low as possible. Raising the price will drive some customers out of the market. But if the goal is to make money, long-range this strategy has serious flaws. Given the differences between stock photographs and other retail products, pricing images requires a different strategy.




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 Apr 15, 2008
    Do us all a favor... those more traditional stock distributors and producers moving to the microstock business model should give an honest effort to expand the revenue of this industry rather than continuing the race to the bottom by the constant expansion in volume of images licensed / sold and the simultaneous constant dilution of revenue (relative to volume)caused by giving away more and more rights for less and less money. Not to mention the fact that there is no differentiation in price between a high school student using a microstock picture in a research paper and a multinational corporate conglomerate using a picture on it's website home page or in an advertisement.

    Jim,

    Your #4 above is a good argument for continued and evolved RM business models.

    The biggest problem with Microstock, like it was with RF, is the price points don't make sense in a market where USE, and all that entails determines value. Of course, when the price is low, it always makes sense for the buyer. Seems that free image licensing models is the "logical" next step ;-)

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