RM Sellers Win With MRR

Posted on 10/3/2007 by Jim Pickerell | Printable Version | Comments (1)

RM sellers are also winners under the MRR strategy. Many photographers will note that size of usage is being ignored; a few customers will get really big uses for less than they might have paid in the past.

Granted, RM may lose a few high-end sales, but the increased volume of sales resulting from the ability to compete in all market segments should make up the difference. There may be some loss in exclusive uses because customers will now be able to purchase exclusive rights to RF images. The loss won't be dramatic if the RM images are truly the best.

I urge RM sellers to consider how much revenue those very occasional big sales actually generate and compare that figure with the additional revenue they may recognize from being able to compete in the market segment now controlled by RF and microstock.

Current RM sellers have chosen to address only about 3% of the total market for stock images, a market segment that is declining rapidly. I estimate that in 2007, there will be about 48 million images licensed at microstock prices and another 5 million at traditional prices. About 1/3 of the traditional priced images, or 1.6 million of the 5 million, will be RM and more than 50% of these will be licensed for prices under $150. Thus, probably less than 1.5% of the total images licensed will be RM images licensed for prices greater than $150.

RM sellers insist that their images should never be made available for low prices, but they often receive royalties of $5, $10 and $20 on their sales statements. If RM sellers were to find a way to participate in the whole market, the vast majority should end up earning more, even accounting for the potential loss of a few top end sales.

MRR will make it possible for RM images to compete on equal ground with RF. RM sellers will no longer lose sales simply because their images are priced too high. This doesn't mean that RM must lower all prices to RF levels. By carefully categorizing types of use, all images can be made available at prices all customers can afford.

Seller must take a realistic view of the value a customer receives from the use of an image and price accordingly. Sellers must also scale back the current complex pricing structure to one that is simpler and easy to understand.

With the MRR pricing model, RM will be able to sell into the biggest growth segment of the market. Granted, $2 per image licensed may not be all that attractive, but if there are enough sales at this price, or higher prices for non-profit or Web use, the additional revenue could be a nice supplement to current sales generated by the existing market. The important point is that use categories must be structured so existing RM customers continue to pay about the same to use images as they have been paying in the past - and do not qualify to pay the lower prices designed specifically for customers with minimal budgets.

In reviewing my description of MRR prices, don't pay too much attention to specific numbers. These can be adjusted. More important is to recognize that RM customers have been complaining for some time that the process of determining a price is much too complicated.

Some of my MRR uses may be priced a little low. But this is easily adjusted once actual demand is determined. If in using this pricing strategy a high demand for a certain use category is discovered and the price is too low, it can be adjusted. On the other hand, if the seller discovers that everyone is buying usage at the 3,000 piece price for brochures and no one is purchasing at higher volumes, it could be an indication that the higher volume prices are too high and customers are under estimating their usage in order to be able to afford the image. Individual prices can be adjusted without changing everything. It may also turn out that there needs to be a few more breakdowns for some categories of use.

Rather than being against RF and microstock, RM sellers should do what they can to encourage adoption of a strategy that levels the playing field and enables everyone to earn more money.

Copyright © 2007 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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