Masterfile Struggles

Posted on 11/9/2015 by Jim Pickerell | Printable Version | Comments (0)

For decades Masterfile has been a leading provider of stock imagery to advertising, design and corporate communications. The company represents the work of many of the worlds leading image producers. Its collection is well edited and its website offers very efficient search. Currently, more than 70% of the company’s revenue comes from sales in North America and more than 80% comes from the advertising, design and corporate communications segments of the market that presumably need the highest quality work and have the budgets to pay for it.

But in the last couple of years the company has been struggling. Examining this struggle may provide others with some insights into the future of stock photography.

So far in 2015, Masterfile’s average license fee for an RM image has been $600. That average is up 21% from 2006 and down 1% from the 2014. The average license fee for RF is $240, down 13% from 2006 and 2% from 2014.

    (By way of comparison Getty’s average price per image in 2006 was about the same as Masterfiles, but based on an analysis I did in early 2014 (See here) Getty’s prices have declined by at least 50%, if not more. In fairness Masterfile CEO, Steve Pigeon, points out that Getty’s figures are based on worldwide averages while over 70% of Masterfile sales come from the higher priced North American market. Pigeon notes that Masterfile “takes a beating from distributor sales” in the rest of the world.)
Masterfile also owns the Crestock microstock brand and offers these images on its Masterfile website in an optional “Budget Royalty Free and Subscription” collection. Amazingly, in 2015 the average single image price for micro sales from this collection (excluding subscriptions) has been $45.60. This is much higher than most other single image micro sales, but Steve Pigeon, CEO of Masterfile, says they, “sell a lot of extended licenses through and most of our transactions are for the larger file sizes or vectors.”

In 2015, just looking at RM and Premium RF, 24% of the images licensed have been RM and 76% have been RF. On the revenue side 44% percent of the revenue resulted from RM sales and 56% from Premium RF.

Volume Declines

While Masterfile has been able to maintain high prices, particularly in the U.S. market, volumes have declined significantly. Pigeon says, “over the past 10 years, the declining number of images licensed from Masterfile has been the greatest factor in our revenue decline as customers turned toward ultra-cheap licensing models.” In 2015 alone, compared to 2014, the number of RM sales is down 16% and Premium RF is down 5%.

Certainly one of the reasons for the decline could be that Masterfile has been less willing than its competitors to cut prices, but Pigeon said, “You could be right but I think it’s more about the microstock effect. We do what we can to play ball with every customer when we are competing against similar licensing models but when we find ourselves competing on price with an RM image pitched against a microstock shot – that’s no contest. And that happens a lot.”
He continued, “We haven’t lowered our posted prices much but we have had to provide a lot of discounted promotions and negotiated discounts in order to compete effectively.”  

The number of customers has remained approximately constant but:
    (a) extant customers are generally spending less (we have cannibalized some of our own premium business with microstock by trying to satisfy customer demand at all price points).
    (b) we have lost a lot of formerly big budget customers who have moved almost exclusively to the big subscription services, microstock, and contract deals with larger stock agencies who are accepting micro-prices on premium RM and RF content in exchange for volume. We don’t do that.
    (c) we have replaced many lost customers with new ones who have been attracted to our microstock products.  Unfortunately, they generally are not compensating for low prices with higher volume so we are doing the same amount of work for considerably less money.”
In a recent letter to contributors Pigeon said, “Sales have been declining for several years. Over the years Masterfile has taken a number of steps to try to adapt to the changing environment.
Since 2008 we have reduced headcount by 70%, closed branch offices, cut our Toronto office space in half, put some staff on reduced hours, cut salaries of senior managers and cut every discretionary expense we could reasonably do without. And that still wasn’t enough because sales dropped further and the company continued to lose money.”

In April of this year Masterfile sold its European subsidiaries to Mediapro Mediamarketing GmbH in Vienna in an effort to further cut staff and raise capital. Currently, Masterfile has a staff of 37.   

Due to declining sales in recent years Masterfile’s cash flow became a real challenge in 2014. In order to stop the cash drain, in November 2014 -- for the first time in the company’s history -- Masterfile began to delay royalty payments to contributors. This continued for six months through April 2015. However, it is important to note that royalties in that period were always reported on time so all contributors knew exactly what they were owed.

The funding transaction with Mediapro Mediamarketing provided Masterfile with much-needed working capital to get the company back on track financially and to invest in marketing and IT initiatives.  The funds were not used to reinstate salaries – those reductions remain in force.

Starting on May 28, Masterfile was able to once again pay royalties on a concurrent basis with the delivery of the contributor’s royalty statement. However, they still did not have enough funds to settle the royalty backlog. They are paying the oldest outstanding balances first as cash flow allows.

Pigeon told contributors, “Revenues dropped in May and remained flat right through September. The company made further cost-cuts at the start of October to keep the company cash positive and to keep royalty payments current. These included some lay-offs, salary reductions for some employees and further salary reductions for senior managers. This belt-tightening is beginning to feel like a corset but I will look good in a dress.
He continued, “At current revenue and cost levels, we can continue to pay royalties on time forever. But, unless revenues increase by 20% or better, we will need to raise additional capital if we are to get that infernal backlog paid out to all our contributors in a reasonable time frame. And we are working on that.”

Pigeon says that the declines in sales they have experienced were “smallest in North America, larger in Europe and larger still in the rest of the world where we deal through third-party distributors.” He acknowledged that this, “may not be representative of the industry at large.”

Photographer submissions

As might be expected photographer submissions of RM & premium RF has dropped continually over the past 10 years as licensing returns declined from the glory days when the average contributor earned $50,000 a year in royalties from Masterfile.  Pigeon added, “This was exacerbated in 2014/2015 when we fell behind in royalty payments. While we resumed payments on all current royalties in May 2015, I think most photographers are taking a wait-and-see attitude – and who can blame them?”

So far, this reduction in production by some photographers has not has a significant effect on the quality of the collection. Production companies like Blend, Tetro, Hero Images and Caia to name a few have been “reliable contributors of first class images – through good times and bad,” says Pigeon.

Photographers are certainly not happy with the way the stock photo industry is changing, but most of the Masterfile photographers I talk to appreciate the fact that Steve Pigeon and his team have been very upfront with them about what is happening and doing everything possible to make the best of a very difficult situation. One photographer who is still owed money said, “Steve Pigeon is a real stand-up guy and I admire him.”

Copyright © 2015 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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