Traditional Sellers Report Declining Share of Sales

RM and traditional RF sellers are only addressing 10% to 15% of the total market for stock images. Some readers asked how I arrived at that number.

First, this is the percent of images licensed, not revenue. That 10% to 15% of images used represents about 90% of current revenue. The other 85% of images used is responsible for only 8% to 10% of revenue. However, there are strong indications the revenue relationships are about to change dramatically - and not in favor of RM and traditional RF sellers.

Sellers need to pay more attention to the number of potential customers and the various types of new uses that didn't exist five to 10 years ago, and less on how to get higher dollars for each individual sale.

Public numbers of Getty Images are important factors in arriving at the above conclusions. Last year, Getty licensed just under 500,000 Commercial RM images and about 1 million RF. (These numbers were achieved by dividing average price-per-image-licensed into total revenue.)I believe Getty's single image sales represent about 50% of total single images licensed worldwide, not counting subscription and wire services sales, particularly since their numbers include licenses made of image partner images. Thus, sales worldwide would be about 1M commercial images and 2M traditional RF.

Editorial images licensed are harder to determine.

Many editorial images are licensed through subscriptions. An accurate number for the total subscription images downloaded or actually used doesn't exist. Thus, I determined to leave subscription revenue out of my calculations and focus on single image sales. Subscription revenue would include AP, Reuters, much of Getty's editorial revenue, Jupiter's $29 million in 2007, Shutterstock and other smaller subscription sellers. I estimate total 2007 editorial subscription sales at $300 million, most of that editorial wire service sales.

That leaves about $400 million generated from single-images editorial sales. I'm guessing that the average price for one of these licenses is $125. If that number is high, more editorial images are being licensed. In arriving at this number, I've taken into account that Alamy's average editorial license for the last four quarters was between $126 and $133, and it licensed over 100,000 editorial uses. Thus, 3.2 million editorial images were licensed not counting subscriptions.

For microstock, the publicly available numbers from iStock are useful. In 2007, the company had 17.55 million downloads and gross revenue of $72 million.

I estimate iStock had only about half the worldwide microstock sales; the total for all the other brands combined equaling iStock's. Shutterstock pays photographers based on downloads, and photographers report that Shutterstock downloads are not far from the numbers at iStock, although revenue is lower because Shutterstock pays less. Based on this logic, I conclude there were approximately 35 million microstock downloads in 2007. After totaling the industry category numbers in the chart above, I get 41.5 million total images licensed, 35 million or 84% of which were microstock.

In addition, the number of microstock images downloaded is going up significantly, while images licensed at traditional prices are declining. (Consider the Goldman Sachs projections.) That pushes microstock toward 90% of total units licensed. It probably won't be long before the percentage goes even higher.

How Low Can Traditional Sales Go?

Based on iStock's 17.55 million downloads divided into 72 million gives an average $4.10 per download. iStock introduced an approximate 30% price increase at the beginning of 2008, raising the average price to about $5.30. It is estimated to have $122 million in 2008 sales, raising its total number of sales to 23 million. Traditional sales are expected to decline.

For Getty, gross revenue for RM, RR and traditional RF (Creative Stills) is expected to be down about $100 million in 2008 and by 2012 ,Creative Stills is estimated to be 38% below 2007 levels. Thus, if Creative Stills sales were 10% to 15% of total sales in 2007, it will be much lower than that in future years.