The first thing we need to recognize when talking about RM's future is that in nearly all cases, RM images are used in some type of printed product. Thus, the future of print is of critical importance to the future of RM sales. The economy of the printing industry has been steadily declining since the mid-1990s.
As we move from baby boomers to GenXers, each generation becomes more comfortable with computers and less attached to paper. They get less information from magazines and newspapers and more online. Readers pay less attention to and are less dependent on print ads. Advertisers are finding that their cost per-thousand to advertise is going up and the response rate (when it can be measured) is going down. Advertisers are looking more to the Web, where it is easier to target customers and measure response rates.
In his Q3 2007 conference call to investors, Getty CEO Jonathan Klein said, "The amount of print materials being produced is definitely slowing down and ... print has always been the bread and butter of the rights-managed business." The company is "seeing pressure on volume in traditional creative stills. The pressure is specially felt at lower prices and file sizes in royalty-free and in the brochure, print advertising and print collateral usages for rights-managed."
A significant percentage of stock images are used in direct mail and catalog promotions. As customers turn to the Net for information, such methods become less desirable.
Given that the cost of producing images is going up, some photographers would like to raise the price charged for better "quality" ones. In a previous story, I've argued why that is impossible. The producer has a right to charge more for certain images, but all that is likely to accomplish is reduce the number of times the image may sell.
No matter how unique one might think his images are, in nearly all cases, there is something else available. With the Internet, alternatives are easy to find. In addition, if Gary Elsner's comments to my article on "What's A Photograph Worth?" are correct, then it is impossible to have consistent pricing from one country to another. Where the image is sold, and how it will be used has much more relevance to the price charged than the cost to produce it or the creativity involved.
There is one justifiable reason for charging a higher price. That is when the initial established price was below market rates and the new, higher price is simply bringing the cost up to what the market is willing to pay.
Pricing complexity is another reason offered for the decline in use of RM. With RM, the price is set based on use. Often, customers don't know all the potential future uses, or have the detailed information necessary to properly negotiate a license with restricted use. To the degree this is important, the simpler RF and microstock pricing structures are more appealing.
Internet Needs Images
If print use is declining, isn't Internet usage rising? Yes, but there are several reasons why this won't benefit RM
1. Internet uses tend to be smaller than print uses, and the perception is that the quality necessary for print use is not required for Web use.
2. A significant portion of those designing for the Internet have become very comfortable using microstock. GenYers grew up looking for cheap alternatives and community involvement.
3. There is no way to stop the quality of the microstock offering from improving and taking some share of the market.
4. The new technology in camera equipment and design software has made it easier for former customers to create a portion of the images they need themselves.
It appears RM use will continue to decline, and RF and principally microstock will take over a larger share of the market. The continuous growth in the number of RM images available further reduces the likelihood that any particular RM image will be licensed.
So what, if anything, can be done to improve RM's fortunes? In a future story, I'll discuss some possibilities.