Marketing Strategies: Royalty Free

Posted on 5/12/2009 by Jim Pickerell | Printable Version | Comments (2)

Traditional royalty-free images currently account for perhaps 6% of the images licensed worldwide. In relative terms, the number of images licensed using this model is declining most rapidly.

Royalty-free model: advantages


1 – It is less expensive than rights-managed.
2 – About twice as many royalty-free images are licensed compared to the rights-managed model.


3 – The pricing strategy is much simpler than that used by the rights-managed model.
4 – Unlimited use of any image licensed is allowed.

Royalty-free model: disadvantages


1 – Pricing is based on the size of the file delivered, a factor that has nothing whatsoever to do with the value the customer receives. Thus, when a sale is made for a major use, the fee is nowhere near what the image would command if the price were negotiated.


2 – In the same way, prices for certain small uses are often higher than customers can afford.
3 – Because prices are fixed and not negotiable, the images are often extremely overpriced for certain uses.
4 – Sales are declining, particularly due to the pressure from microstock, which, for the most part, offers the same rights at much lower prices. (Microstock does impose some usage limits that are not part of a traditional royalty-free license.)
5 – Compared to microstock, traditional royalty-free licensing tends to be extremely over priced.
6 – While prices were originally designed to be fixed and not negotiable, in many cases they are now being negotiated substantially down as part of bulk deals (for example, Getty Images’ Premium Access) and for Web uses.


7 – Like rights-managed, traditional royalty-free sellers address only about 9% of the market. Traditional royalty-free is very expensive for at least 91% of today’s stock photography buyers.
8 – While pricing is still simpler than rights-managed and microstock, it has become much more complex than when royalty-free licensing was first introduced. Current prices are based on file size delivered, and price points vary widely among different brands. When doing a search, customers have little idea of pricing before chosing a specific image. This makes it difficult and time-consuming to make a judgment between two competing images, if price is a factor.
9 – Given the pricing strategy there is no good way to determine how customers are using the images.


Copyright © 2009 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 www.selling-stock.com, 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: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

Comments

  • Tim Mcguire Posted May 12, 2009
    I guess your disadvantages and advantages depends on your point of view.

    "4 - Unlimited use of any image licensed is allowed" may not be an advantage to some.

  • Fred Voetsch Posted May 12, 2009
    I would agree. Traditional RF is now overpriced and the typical buyer is mainly looking at price and is likely very aware of micro and subscriptions sites as an alternative. RM is holding up better for us and that's partly because buyers expect higher prices and partly because they are more likely to call and haggle if the standard price is too high.

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