A recent article on “Rights-Managed Marketing Strategies” estimated that “for commercial images, rights-managed licenses account for 3% of the total number of annual licenses. Traditional royalty-free images make up 6%; 20% goes to subscription services and 71% to microstock.”
One reader commented: “Just up until recently traditional RF sustained nearly 40% to 50% of the commercial market, right? Is microstock’s new claim of 70% due to the increase of new total buyers? If so, it would be interesting to see a chart breaking down the total number of traditional buyers represented in these percentages compared to new buyers. Meaning, of the 70% who is new and who is traditional and why has RF and RM decreased in commercial market share so rapidly—all due to the volume of buyers in the microstock space?”
First, it is important to once again point out that the term “commercial” refers to non-editorial images. Traditional sellers still have a very dominant hold on customers who need editorial images. “Commercial uses” include everything else, such as the type of rights-managed and royalty-free uses that Getty Images defines as “creative,” as well as microstock and subscription images used for non-editorial purposes.
It is correct that as recently as four years ago—before microstock—the revenue generated from rights-managed and royalty-free sales was about equal (see Getty’s 2006 and 2007 images used numbers). Since the average price of a royalty-free images was about half that of a rights-managed image, this means that there were about twice as many royalty-free images licensed as right-managed. This is important, because the percentages provided in the first paragraph address the number of images licensed, not revenue generated.
When microstock entered the picture, it did much more than just steal customers from traditional sellers. Microstock sellers uncovered a whole new body of customers who had not previously purchased stock images and who could never justify paying anywhere near traditional image prices. Yet there is a lot of disagreement on this point. Many traditional sellers want to believe that all microstock is doing is stealing their customers—customers who would have paid more if microstock were not so cheap. There is, however, a lot of evidence that disproves this theory.
When Getty Images purchased iStockphoto, Getty analyzed both companies customers found that only 8% of iStock’s customers were also Getty Images customers. Obviously, there was a huge percentage of iStock’s customers who had never purchased an image from Getty Images and probably never even heard of the Seattle company.
Some Getty customers that had not used microstock prior to this acquisition are probably using it now. But a bigger problem for image producers trying to sell at traditional prices is not in the number of images these traditional customers are using, but in the prices they are being charged, as Getty—and everyone else—lowers prices to try to hold onto their traditional customers.
One of the biggest indications of this are Alamy’s first quarter numbers, which show a had a 27% drop in revenue compared to the first quarter of 2008. Yet Alamy actually sold 2.5% more images than the year before. There is every reason to believe the same thing was happening at Getty and the other agencies that do not disclose their numbers. Photographers can determine whether this trend is accurate for individual image producers by looking at the number of images licensed and revenue generated by quarter.
Still, the biggest indication that there is a huge number of new image buyers that have never before been seen by traditional sellers is the dramatic growth in the number of images licensed by various microstock companies. iStockphoto is estimated to have licensed rights to less than 4 million images in 2005. In 2006, it was 10 million. In 2007, it was 17.55 million, and in 2008—an estimated 25 million. The combined total images licensed by all the other microstock and subscription companies in 2008 was greater than those licensed by iStock, according to figures provided by various photographers. Meanwhile, the number of images licensed by the traditional sellers was flat throughout this period.
So yes, the reason the percentage of images licensed for commercial use has changed so dramatically is that we are now dealing with a much larger customer base. Over 90% of these customers cannot afford to pay very much for the images they need, but they do use images and they will pay something.
The dramatic change in volumes of images sold per licensing model has not been caused by a similarly dramatic decline of traditional rights-managed and royalty-free imagery, although these numbers have declined somewhat. Rather, the change is the result of astronomical market growth. But traditional sellers continue to focus on their old customers and do nothing whatsoever to identify or address the new buyer pool.