In the very near future, RM photographers and traditional RF photographers will need to take a hard look at the whole issue of volume relative to price.
Traditionally, photographers brought up in the old school (before 2000) focused on getting the maximum possible fee for every image licensed. Volume was secondary.
Quality and value of an image tended to be measured by the selling price. Licensing an image for a low price depreciated its value. The emphasis was on producing images that might be used exclusively in advertising.
In theory, photographers needed to make occasional high priced sales otherwise they could never earn enough selling at mid-to-low prices to offset costs of production and make a decent return on investment.
Along came traditional RF, which demonstrated that it was possible to significantly increase volume by lowering the price and selling images nonexclusively. But with a few rare exceptions, that volume still wasn't enough to generate revenue equivalent to what was being generated by RM sales. RF sellers raised prices overall to increase revenue, but in the process, priced themselves out of the lowest segment of the market. Today, a significant number of RM sales are for prices below what traditional RF charges. In general, the revenue generated by RF has never matched that of RM, although it is coming close in certain segments of the market.
A Different Approach
Microstock takes a different approach. Volume is everything. Go after the maximum number of customers. Price the product where anyone can afford it. Make the transaction so simple that anyone can do it. The volume microstock has been able to generates has surprised everyone. And it is still able to raise prices and increase volume. The segment has a ways to go to generate revenue similar to that of RM and traditional RF, but getting there is looking more possible than it used to.
Consider the following:
| RM
| RF | Micro | Micro 2 |
| Average Price | $500 | $250 | $10 | $20 |
| Units Licensed | 1,000,000 | 2,000,000 | 50,000,000 | 25,000,000 |
Given that the average price at iStock was $3.81 last quarter before their recent price increase and that they licensed 17.55 million units in 2007, it looks like it will reach an average price of $10 and 25 million units in the near future. Going to $20 without beginning to lose customers may be more difficult, but not beyond the realm of possibility.
The Winner
The real winner will be someone who figures out how to sell at high prices to those prepared to pay significantly more and still make the same images available to the masses at low prices.
Back in the mid-'90s. I had occasion to do an in-depth analysis of the worldwide sales of a leading Image Bank photographer. Some of this man's RM images were licensed for tens of thousands. However, about 20% of the units licensed were for fees less than $100 and in a few cases, less than $10 for the same high-quality images that other customers were paying a lot more to use. The rationale at the time was that the low fees were being paid by third-world buyers who couldn't afford to pay more. In fact, a significant percentage of those low fees were paid by UK customers. That would not be the case today.
The words of David Liddle of U.S. Venture Partners, are worth considering. He was asked recently what separated successful entrepreneurs from the unsuccessful: "It is the ability to let something go and move on to the next big thing."