Getty Offers Flexible License Packs

Posted on 1/4/2004 by Jim Pickerell | Printable Version | Comments (0)

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GETTY OFFERS FLEXIBLE LICENSE PACKS



January 24, 2004

Pricing Strategy For RM Moves Closer To RF


The distinguishing characteristic of Rights Managed pricing has always been that users
pay based on a specific product (magazine ad, poster, etc.), the size of the use (1/4
page vs spread), circulation (1,000 copies or one million) and time (one month or 5
years). In contrast, RF pricing sets one fixed fee regardless of size of use,
circulation, time, or how many different products the image is used in.


Getty's new Campaign Pricing, or Flexible License Packs offer customers that may have many
potential uses for an image, not only a greatly simplified way to purchase the rights,
but possibly at a great reduction in costs.


In October Jonathan Klein said, "There is little doubt that customers have always
appreciated the ease of use that one gets in the RF licensing model. The first phase
of the new RM licensing model (Campaign Pricing) will come at the end of this year with
more enhancements to come in 2004. This will include the ability to license an image
for an entire campaign rather than for each individual type of usage. This has been a
common issue for creative professionals across the industry and we are certain that
the changes will be very well received."


As I noted then "the devil is in the details". I also suggested that, "the risk is
that the price will be set too low - in order to meet the needs of the masses - and
lots of dollars will be left on the table in some cases."


And finally, I pointed out that this is such a fundamental change in the way RM
imagery is licensed that everyone else in the industry will probably have to move very
quickly to the same pricing strategy. With that said, lets look at what Getty is
offering.


Flexible License Packs


Getty has eight different Flexible License Packs that give the customers
freedom to use an image for multiple types of media without having to create
individual licenses or provide precise license details. A flexible license pack
offers unlimited usage in many products, in the territory, industry and time frame.
There is no need to specify circulation, or image size. The License offers
unrestricted circulation and size, and in multiple products.


In the following charts I have outlined what is included in each of the eight Packs and
listed the prices for 3 months through 5 years for the Base Fee charged for The Image
Bank and Taxi images and the premium price (15% higher) charged for Stone images.


All Advertising Pack


Unlimited Advertising usage within the territory, industry and duration you select.
This pack included all uses within the following groups of uses as shown in the
categories of selection 1 or the price calculator: Advertising - Print/Web, Displays -
Indoor/Outdoor and Brochure or Marketing Collateral.























     

Image Bank/Taxi   

Stone   

3 months   

$13,700   

$15,755   

6 months   

$14,800   

$17,020   

1 year   

$16,030   

$18,435   

2 years   

$19,865   

$22,845   

3 years   

$23,155   

$26,630   

5 years   

$26,445   

$30,410   



Collateral and In-Store Display Pack


Unlimited Collateral and In-Store Display usage within the territory, industry and
duration you select. Uses include: Brochure or Direct Mail, Electronic Only Brochure,
Single Sheet or Postcard, In-Store Display or Poster.























     

Image Bank/Taxi   

Stone   

3 months   

$6,600   

$7,590   

6 months   

$7,130   

$8,200   

1 year   

$7,725   

$8,885   

2 years   

$9,570   

$11,010   

3 years   

$11,155   

$12,830   

5 years   

$12,740   

$14,650   



Collateral and Web Pack


Unlimited Collateral and Web usage within the territory, industry and duration you
select. Uses include: Brochure or Direct Mail, Electronic Only Brochure, Single Sheet
or Postcard, Web - Email, Web - Banner Ad, Web - Corporate or Promotional Site, Web -
Personal Wireless Device.























  

Image Bank/Taxi

Stone

3 months

$5,500

$6,325

6 months

$5,940

$6,835

1 year

$6,435

$7,405

2 years

$7,975

$9,175

3 years

$9,295

$10,690

5 years

$10,615

$12,210



Collateral Pack

Unlimited collateral usage within the territory, industry and duration you select.
Uses include: Brochure or Direct Mail, Electronic Only Brochure, Single Sheet or
Postcard.























  

Image Bank/Taxi

Stone

3 months

$4,400

$5,060

6 months

$4,755

$5,465

1 year

$5,150

$5,925

2 years

$6,380

$7,340

3 years

$7,440

$8,555

5 years

$8,495

$9,770



Collateral, Print Ad and Web Pack

Unlimited Collateral, Print Ad and Web usage within the territory, industry and
duration you select. Uses include: Brochure or Direct Mail, Electronic Only Brochure,
Single Sheet or Postcard, Print Ad - Magazine and Newspaper, Print Ad - Directory,
Print Ad - Free-standing insert, Print Ad - Event Program, Web - Email, Web - Banner
Ad, Web - Corporate or Promotional Site, Web - Personal Wireless Device.























  

Image Bank/Taxi

Stone

3 months

$9,550

$10,925

6 months

$10,260

$11,800

1 year

$11,115

$12,785

2 years

$13,775

$15,845

3 years

$16,055

$18,465

5 years

$18,335

$21,090



Print Ad and Web Pack

Unlimited Print Ad and Web usage within the territory, industry and duration you
select. Uses include: Print Ad - Magazine and Newspaper, Print Ad - Directory, Print
Ad - Free-standing insert, Print Ad - Event Program, Web - Email, Web - Banner Ad, Web
- Corporate or Promotional Site, Web - Personal Wireless Device.























  

Image Bank/Taxi

Stone

3 months

$7,800

$8,970

6 months

$8,425

$9,690

1 year

$9,130

$10,495

2 years

$11,310

$13,010

3 years

$13,185

$15,160

5 years

$15,055

$17,315



Print Ad Pack

Unlimited Print Ad usage within the territory, industry and duration you select. Uses
include: Print Ad - Magazine and Newspaper, Print Ad - Directory, Print Ad -
Free-standing insert, Print Ad - Event Program.























  

Image Bank/Taxi

Stone

3 months

$6,700

$7,705

6 months

$7,240

$8,325

1 year

$7,840

$9,015

2 years

$9,715

$11,175

3 years

$11,325

$13,025

5 years

$12,935

$14,875



Print Ad, Web and Billboard Pack

Unlimited Print Ad. Billboard and Web usage within the territory, industry and
duration you select. Uses include: Print Ad - Magazine and Newspaper, Print Ad -
Directory, Print Ad - Free-standing insert, Print Ad - Event Program, Web - Email, Web
- Banner Ad, Web - Corporate or Promotional Site, Web - Personal Wireless Device,
Billboard.























  

Image Bank/Taxi

Stone

3 months

$9,100

$10,465

6 months

$9,830

$11,305

1 year

$10,650

$12,245

2 years

$13,195

$15,175

3 years

$15,380

$17,690

5 years

$17,565

$20,200



To summarize, the Base Rate (Image Bank/Taxi) for one-year use for each Pack
is as follows: (The price for Stone is consistently 15% higher than the Image
Bank/Taxi base price.)




















  

Base Rate, 1 year

All Advertising Pack

$16,030

Collateral and In-Store Display Pack

$7,725

Collateral and Web Pack

$6,435

Collateral Pack

$5,150

Collateral, Print Ad and Web Pack

$11,115

Print Ad and Web Pack

$9,130

Print Ad Pack

$7,840

Print Ad, Web and Billboard Pack

$10,650



Using the list immediately above you can one can find the rate of other
periods of time multiply by the following factors:
















  

Multiplier Times Base Number

3 months

.854

6 months

.923

1 year

Base Number

2 years

1.239

3 years

1.444

5 years

1.649



Premium Brands

It is interesting that the prices for the various brands on the site vary
and the highest priced brand is not necessarily what one might expect. The images of
7 of the 16 RM brands on the site are priced at the Base level. These brands are: Beateworks,
Illustration Works, Lonely Planet Images, Photographer's Choice, Robert Harding World
Imagery, Taxi
and The Image Bank.

As I noted Stone images are priced at a 15% premium above the base price, but in
addition to Stone, National Geographic and The Bridgeman Art Library are also priced
at a 15% premium. The images of Allsport Concepts, Hulton Archive and Time Life
Pictures
are priced at a 5% premium to the Base price.

It is hard for me to understand the reasoning for pricing Time Life Pictures and
Allsport Concepts at a level lower than National Geographic, but obviously Getty has
some reason for this decision. Another brand where the pricing is difficult to
explain is 3D Clinic. At this time they don't appear to have many images on the site,
and most of what they have is some very excellent medical illustration. These images
are priced below the Base price at 9/10ths of that figure. To my way of thinking
someone has no confidence in these images. I would grant that there may be relatively few
buyers who need this type of imagery. But, I would think the buyers who do need this
imagery would not only be more than willing to pay the Base price, but probably a 5%
to 15% premium given the quality of the images.

While I have only checked the pricing on the 8 Packs, I believe that these premiums
and discounts are used for all licensing of images of each of these brands, not just
for the Packs. This assumes that every image selected for Stone is worth 15% more
than any image selected for the Image Bank or Taxi brands regardless of what went into
producing the image or how the image is used.

However there are two additional brands on the site - Botanica and FoodPix -- that we
haven't discussed. They are the real surprises. Images from these brands can be
licensed at a 38% premium over the base price. That means that a customer licensing an Image
Bank photo of food would pay $16,030 for All Advertising rights for 1 year,
but if the customer chose a Food Pix image instead she would pay $22,125.


Things To Consider

These prices aren't bad if the planned usage is for 1/4 page and the campaign is of moderate
size, but consider what's likely to happen if it is a major campaign.
The Pack price for unlimited Collateral use for 3 months is $4,400. But if specific usages are
priced separately the fee for using an image on
the cover in one brochure with 5 million circulation is $2,845. If the image is on the
cover and inside it is $3,315. Add on many other uses like postcards, single sheets
and electronic brochures and it quickly gets over $4,400.

The Pack price for Unlimited Collateral, Print Ad and Web for 3 months is $9,500. For usages
priced separately, the price
for a picture used full size in a print ad, one insertion with 10 million circulation
is $4,200. Add on the brochure we described above and we're up to $7,515. Now, if
the campaign envisions multiple insertions in a number of publications over the three
month period, and promotions on the web, postcards, etc. the price for a variety of
usages could easily go over $9,500.

What this strategy does is effectively putting a relatively low cap on usage. If
everyone jumps to buying Packs just to avoid the hassle of figuring out how they are
going to use the image Getty will make out. But, I don't think the art buyers are
stupid. I think they will comparison shop on the Getty site when it comes to price.
They will look more
carefully at what they plan to do with the image. If the combined uses are less than
the Pack price they will buy one use at a time. It the price of the combined individual
uses are greater than the Pack price they will buy the Pack. If a significant portion of
Getty's RM revenue starts coming from Pack purchases there is a good chance Getty will
be leaving money on the table.

Looking at the one-year price as a base, the discounts for buying only 3 months or 6
months are not too bad. But as you go up from one year to five years the additional
fees buyers must pay for these longer uses seems very low. The customer is only paying
23% more to use the image for a whole 2nd year, and 44% more to use the image for two additional
years. If the customer is really going to use the image for five years the price per year is
only about 1/3rd of the 1 year price. Or to look at it another way, if the customer is going
to use an image for 5 years in Unlimited Collateral, Unlimited Print Ads and on the Web they
can get the image for $3,667 per year. One of the big risks of this strategy is that Getty
may generate more cash in the short run, but in the long run revenue may drop as
customers make more use of the images they purchased as part of Packs.

Hopefully, Getty will begin reporting the portion of RM revenue that comes from Pack
licensing. As that number goes up the average license fee will undoubtedly go up, but
it also seems likely that the number of images licensed will start going down. Since
it is easier for customers to buy multiple uses with one license, it seems likely that
fewer uses will be recorded. The average license fee as it has been reported by Getty
in the last couple of years will no longer be an accurate measure of what is happening
to price unless Getty provides additional granularity.

Getty's site asks customers to check the territory where the image will be used, but so
far the price does not vary from one country to another. The fee is the same for Spain
as it is for the United States. Providing variations for different markets may be one
of the "additional enhancements" Getty will provide in 2004.
Pack licensing also makes it harder to determine how customers are using images
because they no longer have to supply specifics about type of usage when they license rights.

Who Should Pay

An underlying principle of the Old RM Pricing model (that's last year's model because this
model changes everything) is that larger users pay more based on the benefits they
will receive from the use. This makes it possible to keep fees lower for those customers
whose image use is relatively minor. This Old strategy made it possible for more
people to use images that they might otherwise not been able to afford.

If the top prices come down, the bottom prices for the smaller uses will eventually have to
go up to maintain the same level of revenue. It does not necessarily follow that usage
will always increase as prices are lowered. It is worth noting that most RF
brands are raising prices again, and that RM prices are
already below some RF prices for small single image uses.

This comparison between the Old and New RM pricing strategies has a similarity to
Conservative and Liberal taxing strategies in the U.S. The conservatives want to cut
the taxes to the wealthy and prosperous as much as possible. This allows the wealthy segment of
the population to keep a much higher percentage of the income they earn than those who
earn less. People on, or near, the bottom of the economic ladder are taxed the heaviest,
as a percentage of earnings. Thus, the middle and lower classes must either pay a
much greater portion of their income for the services they need from government, or
everyone does without these service. (The wealthy have enough left over after taxes that
they can purchase some of these services for their families on their own.) The Liberal
strategy is a sliding scale that taxes every person about the same percentage of their
gross income.

Cutting costs to the larger users makes it almost inevitable that the prices the smaller
users pay will eventually have to be raised. Klein indicates that customers
want lower prices and more simplicity and that "the changes (Getty is implementing) will
be very well received." Customers will always want more for less. But the only ones who
will benefit from Pack pricing are the big users because they are the only ones doing
large enough campaigns to justify paying the Pack price. And the question
remains: How long can the image suppliers at the bottom of the food chain continue to
give the big users such a break?


Copyright © 2004 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 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.  

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