I recently received information that a small, specialized travel company in Canada had been offered a new pricing package called Alamy Premium Account. This company has under 20 employees and produces one travel brochure per year. It is not a volume user.
Alamy’s offered use of any RM or RF image in its collection for $49 (US) per image with the following usage rights:
No print run/impression limitations.
Unlimited repeat below-the-line use over 10 years, worldwide
Un-watermarked "try before you buy" downloads.
Unrestricted file size (typically 50MB).
No credits, subscriptions or volume commitments.
Unlimited shared access to your library of purchases.
No differentiation between Royalty-free and Rights Managed images.
The salesperson also made the point that 22 million images were available at
www.alamy.com/bespoke and the number is constantly growing. (This was before Alamy’s collection reached 24 million, but basically all images on the site are available under these license terms.)
The client asked,. “What exactly is a ‘Premium Account’ ... what is the cost to join, and how do I set up?” The sales person replied, “What is it? Well it's just a title for a new way of pricing images (for us, we're used to traditional Rights Managed/Royalty-free!). There is no cost to join, no obligation, you just pay for images ‘as you go’, on credit card or if you like, you can open an account and be invoiced instead.”
All this information was confirmed with follow-up emails.
Next Step
After receiving this information I went to the Alamy web site and discovered there is no mention whatsoever of the availability of Alamy Premium Accounts. When customers go to price the use of an image they still must go through the complex pricing template. The only $49 prices that are available are for very limited uses.
I then contacted James West, CEO of Alamy and asked for an explanation of how they determined who would be offered “Alamy Premium Accounts”. He responded:
Hi Jim
We are experimenting with a pile of stuff - you have to keep moving and turning over new ideas in this market (to put this in perspective - we throw away way more ideas than we keep). Firstly and principally we are busy launching a new site in Germany, we are working on new and better search experience for creative picture buyers, we are launching a new student offer in the autumn and yes we are experimenting both with price points but also with the nature of licenses to see how much it affects volume in some of the market segments we target like travel.
The offer which was forwarded to you is just one such example. This particular market segment has been decimated by microstock offerings and we're experimenting with price points that bring rights managed imagery back into consideration without giving away high value advertising rights and without dragging prices into microstock territory. As of today this is only a sales and marketing experiment - with a targeted offer made to a handful of customers in a narrow bands of the market. Less than 1% of revenue comes from such offers.
Best wishes
James
Experimenting
This raises a number of issues worth exploring. Certainly, when sales are declining in certain market segments we want our agents to explore other ways to get those customers back. If it is possible to do that by saying, “we have better images than anyone else,” or “we have more images than anyone else,” that’s great. But for a long time that hasn’t been enough. Price, rights and convenience have become key issues for most customers. Alamy and all other agencies and image sellers have been forced to negotiate on price and rights if they expect to retain the business. It is no longer possible to say, “this is my price, and the rights I will give you for that price, take it or leave it.”
Travel Market
It is not surprising that the travel market has been decimated. Many of the companies that offer travel service have been seriously hurt in the last few years as more and more of the travel business has migrated to the Internet. Most companies are printing fewer brochures than they did 5 or 10 years ago. Much of their advertising is now on the Internet. When promoting on the Internet they may need and use more pictures than they used in print, but their total picture budgets are less. Thus, they want more images for less money and microstock images are available. Travel customers are not looking for the most unique or artistic image they can find. They are looking for good generic images, shot in the best light, that show what their customers will see when they visit a particular location. Microstock offers that so why pay more?
Historically there was good money in repeat sales of successful travel shots, but in these times with the supply available those who want to make sales are forced to take the best price they can get.
Less Than 1%
For Alamy this is an experimental product and currently represents less than 1% of their revenue – maybe a lot less than 1%. Based on the last public figures we had from Alamy in 2009 I currently estimate that 1% of their gross revenue is around $250,000. The $49 fee could represent the licensing of over 5,000 images, or something in the range of 2.5% of all images licensed by Alamy annually.
In checking with a few of Alamy’s suppliers I discovered that between 25% and 36% of the sales made for these suppliers in the last few months were for fees of $49 or less. However, not a single one of these was for a $49 travel usage. This leads me to believe two things: (1) Alamy may not be making many sales as a result of this offer to travel customers, and (2) a significant percentage of the units they license are to customers in other segments of the market that can only be encouraged to use Alamy if they are offered lower prices.
RM Pricing
RM pricing is not a way to protect the value of images. All RM means is that the
price is negotiable. It doesn’t necessarily mean that the seller will receive a high price for his work. When you have a negotiable price it can be set at any level on which
a willing seller and a willing buyer agree. The buyer sets the price if there is no price so low that the seller will walk away. However, if the seller takes a stand, walks away, and the majority of buyers are unwilling to pay the seller’s price the seller may be quickly driven out of business.
In theory images licensed at traditional RF prices do have a fixed price for a particular file size. In Q4 2007 the average price at Alamy for an RM image was $156 and the average price for an RF one was $221. In 2009 those prices were no longer sustainable and Alamy had to dramatically cut prices in order to maintain volume. In Q4 2009 the average price for an RM images was $116 and an RF was $168. However, since then Alamy -- and all the other major licensors of images -- have been making RF images available in all the low priced package deals they offer. Consequently,
RF licenses are no longer fixed price licenses. They are fixed on the high end, but they can be negotiated to almost any point on the low end.
Microstock licenses are fixed price. A certain number of credits are required to purchase each file size. Discounts are available when customers purchase larger packages of credits, but the number of credits required to purchase a particular file size of a specific image does not change.
Pricing To Stay In The Game
Some will say that if you lower prices it will be extremely difficult to ever raise them when the economy improves. Their answer is to hold to your “principles,” stick to prices that will allow image creators to realize a profit and wait it out until the economy returns. There are at least three problems with this strategy.
(1) Most image producers don’t have the financial resources to hang on and continue to produce until that turn around comes.
(2) No one knows when the turnaround will come. With each passing day it looks farther and farther away.
(3) If, when the turnaround comes, there is still a lower priced product (microstock) of sufficient quality to satisfy the needs of the majority of customers the buyers will have no incentive to go to a higher priced product.