Advertising Shift

If this is the "most potent (technological) change facing the imagery industry," it would seem that sellers would want to know how rapidly this change is occurring. And yet, it appears that little effort is being expended to find such answers.

Klein believes that advertisers will start using images larger on the Internet, and presumably paying more money for the larger files, but is there any real evidence that will happen? And even if they use the images full screen, the smallest file size being licensed by the RF producers is more than adequate for full screen use on the Internet. Why would customers buy larger files and pay more? And for most sellers the size that an image appears on a web site is not a factor that is taken into consideration anyway - all sizes are priced the same.

Liz Huebner, CFO of Getty Images, has pointed out that a high percentage of the images used on the Internet are RF, and because RF buyers are not required to specify how they intend to use an image there is no way of knowing what is being used on the web.

Visual Search

In fact, there is a new technology solution that is very capable of providing precise answers as to exactly which images are being used online, what size and how frequently.

The technology is PicScout(See Story 630 ). Some of the other visual search technologies probably also have this capability, but don't seem to be as precisely designed to serve this function as PicScout. This software searches the Internet for exact matches to images stored in its database. Currently, it is being used by Zefa, Index Stock and Masterfile with the aim of locating unlicensed RM uses on the Internet. There are indications that in the near future there will be announcements that several other agencies will also be using the service.

However, so far, everyone is focusing on getting reports that provide them with evidence they can use to collect for unauthorized use. It is possible for PicScout (or other visual search companies) to offer reports that make it easy for decision makers to easily compare actual usage to sales, and make decisions based on real numbers, not guesses.

This technology could also easily locate all the RF uses of particular images. So far, as best we can tell, no one is planning to use the software for this purpose. While the cost of such searches could not be recovered by billing for unlicensed uses, as is the case of RM, it would appear that the knowledge gained about customer usage habits would be invaluable, if a major shift in the industry is likely.

Unauthorized RF Usages

If they track RF usages, one of the dilemmas for the RF sellers would be whether or not to pursue image users who appear to have never purchased a license to use the image. The initial statistics from Zefa's use of PicScout were very revealing. They discovered that 90% of the uses of their images on the Internet were unauthorized, and of the unauthorized uses half were by organizations that had never purchased anything from the company. In the RF environment everyone is well aware that design firms purchase discs on behalf of one client and then use the images on those discs on projects for many different clients in the future.

While this is a technical violation of the licensing agreement, many sellers tend to look the other way for fear of angering a good customer. The main question is how much revenue is being lost in this manner and whether it is worth upsetting customers to try to collect it. On the other hand, if the sellers track these usages, at the very least they would have an idea of the degree of unauthorized use that is taking place. Indications are that at least some RF sellers are thinking about using PicScout for this purpose.

Here are some of the things that could be learned if RF uses were tracked.

• - Sellers would know exactly which images are being used online and how frequently.
  

  
  

• - Sellers could monitor the growth trends in this type of usage on a quarterly, or more frequent basis.
  

  
  

• - Sellers could determine if there is a trend toward using images larger than one-quarter screen. This is something Klein thinks will happen, but to me it seems unlikely.
  

  
  

• - As more sellers move to track on-line use of their rights managed images the ratio of RM to RF use online can begin to be determined.
  

  
  

• - If the searches were done worldwide, which is certainly what Getty would want, it would be possible to understand the relative online use of various RF brands in various countries.
  

  
  

• - By comparing images used with sales figures, it might be possible to determine the portion of the low-end credit-card purchasing that is for images used on the Internet, compared with those that will be used in print.
  

  
  

• - How often do the images used online come from discs that were purchased years ago.
  

  
  

• - If a good portion of the low end credit card users are using the images they buy on the Internet, or somewhere else.

Since the web address and the name of the end user are part of information recorded in these searches this could also help the major brands identify customers when the sales are made by distributors. On the other hand if such data is shared with distributors it could benefit them in their future marketing.

Since such knowledge is so critical to Getty's future growth it is surprising that they have not moved more aggressively to collect this data. But maybe we'll hear an announcement in the near future.

Unfortunately for the photographers, if the large sellers do start collecting this data they probably won't make a lot of it available to the photographers as they will consider it proprietary, despite the fact that such data could help the photographers make wiser creative decisions. However, PicScout is about to deploy a service for professional photographers (based on a cheap fixed fee model) that will allow them to monitor the end users of their images and cross check the data they are getting from their agencies.

Risks

As the market changes the risks are significant. Suppose advertisers start moving very aggressively toward spending a much larger portion of their advertising budgets on the Internet, video games and in ways that don't involve print. Suppose they don't use more still images in these new venues, but find other ways to communicate their message. Suppose in this new environment they can get by with more RF and less RM. Suppose that whatever they use they don't need large file sizes and find the smallest file sizes perfectly satisfactory.

If advertisers settle for RF and small file sizes for online use, the sellers can't just raise the price of these small files because that kills print uses and chases away all those low-end print customers that the major sellers are currently trying to figure how to bring back into the fold. Unfortunately, when RF was started it set up a pricing structure that discounts electronic media use. That was OK as long as the vast majority of uses were for print. But, as that ratio starts moving in the other direction toward electronic use the RF pricing strategy becomes a major encumbrance and one that is very difficult to change.

We may not be able to alter the market trend - whatever it turns out to be. But tracking it in order to have the earliest possible warning of the next trend and how fast it is moving would seem to be critical.