All Images Available To All Customers

Posted on 3/18/2010 by Jim Pickerell | Printable Version | Comments (0)

After publishing my article on a Two-Tier Pricing System I’ve had a series of discussions with several photographers. There seems to be some general misunderstanding as to why I think such a system is in the best interest of all photographers regardless of whether they currently license their work as rights-managed (RM), traditional royalty-free (RF) or Microstock.

Two-Tiers is not just another pricing model. The whole purpose is so all images can be made available to all customers at appropriate prices depending on how the customer intends to use the image.

Some photographers using the RM and RF licensing models want to continue to place limits on who can use their images. They don’t want to allow access to their images by customers who want to make small, personal uses unless these customers are willing to pay fees that are well beyond a personal user’s price range. These photographers don’t need a new price model. The one they use now is fine. However, they will continue to see their unit sales decline because fewer and fewer customers will be interested in using their pictures at the high prices they want to charge. Sales will decline as more and more customers find images that fulfill their needs on the microstock sites at much lower prices.  

Microstock sellers are willing to license their images to everyone. But, they have three problems. First, they set their price points at levels anyone can afford. As a result, those few commercial customers, who receive great value from such uses, are allowed to pay much less than the market price for the images they license. This leaves a huge amount of money on the table that could benefit both the photographer and the companies that handle the licensing.

The second problem is a little more subtle. When it comes time to increase revenue they raise their prices across the board rather than making an attempt to consider the value each individual user receives from using the image. This works for a while. Customers can usually be pushed to pay a little more than their budgets allow, but eventually the bottom end customers have to go somewhere else to find what they need, or do without.

This is exactly what happened to Getty Images in their licensing of traditional RF. Around 2000 the price for a traditional RF image wasn’t all that different from what customers pay for the large microstock file sizes now. But to increase revenue Getty (and all other RF producers) started raising prices. By the middle of 2002 the average price of an RF single image license was $99. Two years later the average price had jumped over 100% (see and by Q1 2006 the average price was $254 per image licensed. Traditional RF sellers continue to raise prices today as they try to get more out of the few customers who will stay with them while many others flee.

It is worth noting that iStock got started in 2000-2001 when some RF image buyers decided that traditional RF was too expensive considering the uses they were making of the images they purchased. They needed a cheaper alternative image supply for their projects.

The third strategy for microstock sites use in an effort not lose customers is to segment their collections and argue that some images are worth more than others. All this does is limit the number of images available to those customers whose uses are small and narrowly focused. So despite the fact that the microstock sites are willing to sell to anyone, they chase some of their customers away because the site operators are unwilling to license rights to the images those customer want for a price they can afford.

Some would say that everyone should be able to afford $3 or $6 or $10 for an image. But what if that customer is a student who wants to use an image on his blog, or on his cell phone? Should he be forced to do without or steal? Which do you think he is going to do? Is our goal to train students to steal?

In response sellers will say, “That student will never pay even $1.00 for a picture. He is going to steal no matter what and there is nothing we can co to stop him.” I don’t think the microstock companies know this to be a fact because they have no good way of knowing how their images are being used. They could get that information if they would begin to price based on use.

Whoever they were, a lot of somebodies used to pay $1.00 for images. Now they are paying $3.00, but their numbers seem to be declining. Will they pay $5.00? Gross revenue at the higher price makes up for the loss in unit sales, but what happens to those who drop out?

Why Should Traditional Sellers Care About Microstock?

The point of all this is that both traditional sellers (lets call them Macro) and Micro need a new strategy if they are going to make their images available to all customers and maximize revenue. The strategy needs to work equally well for all image sellers and in my opinion a strategy that takes usage into consideration when setting a price is the only one with a chance of long term success. The price a stock photo will sell for depends entirely on what the customer is willing to pay and that depends on the use the customer intends to make of the image.

Those who insist on only licensing their image for high prices are doing themselves a disservice. Their egos are getting in the way of making sound business decisions. Rather than sell direct to consumers, these photographers will license rights to companies that manufacture retail posters, calendars and greeting cards and let them make 10,000 or more copies of their images for a few hundred dollars. In these cases the manufacturer and the distributor of the product make all the profit while the image creator receives a pittance on a per unit basis.

Many products are priced based on what it costs to manufacturer and market the product. The manufacturing costs are also affected by the volume of units the manufacturer believes he can sell. The finished product serves a particular function which has particular value to the customer. Most photographs can be used in many widely varying ways, each with a different value depending on how the customer intends to use it.

The idea that the photographer can make an arbitrary decision as to the value of any given image prior to ever licensing the image for any use, or identifying a customer who is interested in purchasing it, is what has got the stock photo business in the mess it is in today. Consider how RM licensing got started. An agency would say, “I’ve got photos. If you find something you want to use then we’ll negotiate a price.” Someone comes in and wants to use image “A” in a magazine. After discussion they settle on a price of $200.

Another buyer pics a different image which he intends to use in a different magazine. The agent say, “I got $200 for magazine use before, therefore that’s a reasonable price to charge for this use.” The buyer says, “My magazine is much smaller than the other guys,” and the agent negotiates a lower price, but if the magazine has a larger circulation the seller holds out for more.

Today, customers want a more instantaneous solution without tiresome negotiations. To accomplish that we must give them more fixed prices, but that doesn’t have to mean that we can no longer base the price on use. We may have to narrow the number of variables and as a result take an average position in certain general categories. But we don’t have to eliminate variables entirely. The more a photographer insists on negotiating every deal the fewer opportunities he will have to license rights to his images because an ever growing segment of the customer base doesn’t want to take the time to negotiate.

Keep in mind that microstock pricing ( isn’t all that simple. And it regularly gets more complex. But the principle vweakness of the microstock pricing strategy is that it is based on file size not use and it tells us very little, if anything, about how the image will be used.


Copyright © 2010 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, 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:  


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