New Price Model Needed

Posted on 8/14/2008 by Jim Pickerell | Printable Version | Comments (1)

On the Alamy Pro forum Adrian Gould recently asked, "Why are we still locked into old-fashioned pricing?" He argued that because the market is "global, instant, and free for many publishers," pricing by circulation doesn't make sense. He noted the relationships between size, distribution volume, duration and value are always debatable. Then he asked readers, "How do you measure the value of your images?" Here's my response.

We are "locked into old-fashioned pricing." We need a new model built around use and value received. Corporate clients using an image on an ad or a billboard get much more value than someone using the same picture on their blog. The book publisher who sells 1 million copies of a textbook at $100 each gets much more value than the publisher who uses the same image, but only prints 40,000 copies.

There are two problems with current stock photo industry use pricing. (1) For many customers, it is too complex with too many variables. (2) There is little attempt to establish fair prices for extremely small uses. (This is where Alamy's Novel Use breaks some important ground. They may not have it exactly right yet, but they are on the right track.)

The really crazy method of establishing prices is basing it on file size. File size has almost nothing to do with value received. Maybe the smallest file sizes offered are only good enough for Web use and not print, but when you get into anything larger, the image file can be used in a host of different ways.

When RF first started charging more for larger file sizes, it was to offset the costs of online storage and the extra bandwidth needed to transmit such files. That justification no longer exists. Now, charging more for larger files is a totally inadequate attempt to earn extra fees for larger and more important uses. If RF is going to base charges on use, then why don't they establish a logical pricing system?

I have no problems with selling pictures for blogs, personal Web sites, or student projects for one or a few dollars, but it's ridiculous that book publishers or ad agencies should be able to get the pictures they need for the same price.

Nigel Atherton, editor of What Digital Camera, responded to Gould's post and said he was using iStockPhoto images whenever possible because they were satisfactory and he can't afford to pay traditional price. I can't fault him for this strategy, but the sellers are making bad decisions. It's not the responsibility of image sellers to keep What Digital Camera (or any other publication) in business.

Moreover, the printers and paper suppliers aren't reducing their charges by 50% to 75%. If the advertisers won't come up with additional money to pay more for pictures, then maybe the publication needs to fold.

In 2007, iStockPhoto grossed was $72 million and licensed rights to 17.55 million images. The vast majority were used for small projects by buyers with low picture budgets. Approximately 5% of total sales (maybe it's 3%, maybe 8%) were for commercial uses of the type Alamy typically licenses.

Suppose iStock charged their current fees for the 95% of small uses and charged the 5% of commercial users the same prices Alamy is current charging. If they had, and made the same number of sales as last year, gross revenue would have been in the neighborhood of $400 million, not $72 million. This is not gouging the customer; it's just charging a fair price for value received. What I don't understand is why micropayment sellers insist on sticking with a pricing structure that leaves so much money on the table.

For an alternative pricing plan that prices uses based on their realistic value to the customer, see Modified Rights Ready.

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 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, 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:  


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