Stock
Those selling images to big business at traditional prices must develop a different strategy for addressing the B2SB (small business) market. The strategy needs to embrace the idea of pricing based on value received, so big businesses that receive greater value from the images they purchase continue to pay reasonable fees for that value.
Traditional stock-photo sellers wonder why there does not seem to be any growth in demand for their product. The 2006 U.S. Census Bureau statistics of U.S. businesses could provide some clues.
Leaving out iStock shooters that prefer to remain anonymous, 124 of the 150 top iStock contributors licensed 431,708 combined gross units in March. This number dropped to 380,934 in April and went slightly up to 387,500 in May. These totals suggest that iStock sales may have reached a plateau, but several more months of data is needed to help determine the level and why.
The chart in this story provides details of the number of image downloads in the last three months of images belonging to 124 of iStockphoto's most productive contributors. Based on the statistics supplied by
istockcharts, I have tracked sales for the last three months of the top 150 producers. Of the 150, twenty-six have asked to remain anonymous, so it was only possible to see specific figures for 124 contributors. The combined gross units licensed in March by this group was 431,708. That dropped to 380,934 in April and was 387,500 in May.
The Long Tail describes a new way of looking at, and approaching, markets in the Web 2.0 environment. The term was first coined by Chris Anderson in a Wired magazine article in October 2004. It is illustrative of the business strategy of Internet companies like Amazon.com and Netflix which sell a large number of unique items, each in relatively small quantities, to a very large base of customers. This buying pattern creates what is called a "power law distribution curve" or long tail.
The second insight came as I was reading the business section of the
Washington Post and noticed that a photo used as part of the lead
illustration was credited to iStockphoto. This got me thinking. In the
past I’ve seen a lot of photos in the Post credited to Photodisc. Now
we may be seeing the beginning of a move from the more pricey Photodisc
images to those of iStockphoto.
Recently I was trying to explain the stock photo business to an investment
analyst and making the point that there comes a time when a
photographer can no longer afford to produce stock images because his
costs are greater than his income. The analyst was under the impression that a “stock
photo” was one that had been produced, and paid for, while the
photographer was on assignment for someone else. Thus the image was
“expense free” to the creator. And, in theory, the only “additional
costs” the photographer might have to make the image available for
secondary licensing would be the cost of packing it up for shipping it
to his stock agency.
As the stock industry changes, traditional stock agencies and distributors are losing ground because they have failed to adopt new technological efficiencies. Granted, constantly keeping up with the latest technological changes can be expensive, and most agencies have already invested huge amounts to get where they are today. But, microstock sellers have introduced a number of strategies that traditional agencies and distributors should be considering – if not rushing to adopt.
Recently, I wrote an article comparing the advantages and disadvantages of various marketing strategies. I suggested that in terms of the number of images licensed for commercial uses "rights-managed licenses account for 3% of the total number of annual licenses. Traditional royalty-free images make up 6%; 20% goes to subscription services and 71% to microstock.”
How long will it take before traditional prices drop to microstock levels? If Alamy's sales are any indication, microstock sellers might not be cannibalizing traditional sales in terms of number of units licensed, but they certainly are cannibalizing revenue as traditional sellers fight to compete.
Alamy's sales for the first quarter of 2009 were down. Yet despite the drop in revenue, the company actually licensed rights to more images in the first quarter of 2009 than during the same period of the previous year.
There are four basic strategies to consider when trying to decide how to market stock images. These are rights-managed, royalty-free, microstock and subscription. Most sellers favor one strategy and are often adamantly opposed to the others. Some, however, argue that there is merit in using several of these strategies. Starting with rights-managed licensing, this series of articles will analyze the advantages and disadvantages of each model.
Leading iStockphoto contributors saw their sales drop by almost 9% in April compared to March, according to our analysis of the numbers available through iStockcharts. To some extent, this might be explained by a loss of one business day to Easter.
The average annual earnings of photographers responding to the 2008
Selling Stock self-employed photographer income survey are $110,409, leaving out the top five producers whose earnings are uncharacteristically large. Of this, the average annual stock income was $65,475, which means that 41% of photographers' freelance revenues come from something other than the licensing of rights to stock images.
The results of Selling Stock’s 2008
self-employed photographer income survey compared to the
2007 results are disappointing on several fronts. First, we only had 136 responses this year compared with 238 in 2007. Many factors could have contributed to this, but the 2008 data must be viewed as having less validity. Nevertheless, as we parse the data there are some interesting nuggets of information.
I believe that worldwide customers pay a combined total of about $1.8 billion for still stock images and illustration annually. There has been virtually no growth in this market in the last few of years. In the fall of 2008 Corbis CEO Gary Shenk estimated that total 2007 revenue for the industry was $2.3 billion and predicted that it will decline to $2.2 billion by 2012.
The following is a list of the 131 highest producing contributors to iStockphoto and shows the number of downloads they had in March 2009 and approximate figures of the royalty revenue this represents. The data came from istockcharts (http://istockcharts.multimedia.de/). The first column is the total number of downloads for the individual as it was listed on istockcharts on March 2, 2009. The second column show downloads as of April 1st and the third column is the difference between these two numbers or total downloads for that individual for the month.
In 2006 I examined many of the factors that are impacting on stock photo market and leading to price declines. There were also a number of factors leading to declining sales volumes to traditional customers. These include the general demand for printed products, the tendency to use images multiple times but only pay once, trends in book publishing, postage costs, crowdsourcing of images and various types of guerrilla advertising. Since that time the situation has become worse.
Traditional photographers argue that it is impossible to make money by licensing their images at microstock prices. They say volumes will never make up the difference. Despite that argument, Getty Images is licensing more and more images at Premium Access prices, which are not all that far away from what microstock sellers charge. Getty's volumes are not making up the difference for traditional photographers, but that is because Getty is selling these images to volume customers who used to pay traditional prices---not reaching the new customer base that microstock addresses.
In 2008 on behalf of Selling-Stock we surveyed photographers, illustrators and graphic designers designed to provide useful data for all those who license rights to their images. This story provides detailed results of this survey.
Selling Stock recently analyzed some iStockcharts data in an effort to assess iStockphoto’s revenues during the first two months of 2009 and predict the possible effects of recession on microstock. Though the original analysis suggested a decline in iStock sales, new information about iStockcharts makes this a questionable conclusion.
Recently, several stock agencies have found it necessary to discontinue operations. When that happens, photographer royalties often go unpaid. What went wrong for these firms and their photographers?
In November 2003 I began tracking Getty Images return-per-image by dividing the total number of RM and RF images into the total revenue generated in the previous four quarters. In the last four years Getty’s gross revenue from still image licensing has grown about 50%, but as the charts below show, not nearly as fast as the number of images added to the collection. As a result image suppliers have found that they have to produce more and more images each year just to stay even.
Photographers frequently ask how royalty-free still photography got started and why creators only receive 20% of royalty free sales. Here is a little history.
Leading traditional and microstock photographers and agency owners share their views on selling the same images at different prices.