Premium Access Pricing

Posted on 9/11/2020 by Jim Pickerell | Printable Version | Comments (1)

A Getty Images photographer asked if I could explain how Getty calculates its Premium Access (PA) deals where prices for image use vary widely? He pointed out that on his most recent statement he had a number of PA sales for $0.11 and one for $286.00. The vast majority of PA sales (roughly 60% of all sales) are near the low end, but there are also occasional extreme outliers.

I can only guess because Getty won’t explain how any particular deal has been negotiated, but here’s how I think it works.

Getty salespeople identify customers who are regular image users. The month-to-month needs of some of these customers may vary greatly, but Getty would like to have a regular flow of revenue that it can plan on.



The salesperson tells the customer, “You purchased X number of images in the last year and paid us Y dollars.” (For the sake of argument let’s say the total spent was $3,800.) The sales person says, “If you will make a regular monthly payment we’ll give you a 10% discount on your total cost for the year. The monthly payment will be $286.00. In addition, you can have as many images as you need, whenever you need them.

These figures can vary greatly depending on Getty’s estimate of future use and how good a negotiator the customer happens to be. The important thing for Getty is to lock the customer into a fixed monthly payment for a year. It’s a great deal for the customer who can now download as many pictures as he thinks he might be able to use, whenever he wishes, and not worry about the cost.



In the first month, the customers downloads 30 images and the average price per image is $9.53 per image. The next month the customer decides he can use a lot more images on his website and downloads 300. The average price per image is $0.95. The customer also realizes that it doesn’t cost him any more to download images he may never use, so he is much less careful in choosing what he downloads when he does his initial research. He likes to have a lot of different choices to play with as he later works through his design process.

Then a month comes along when the Getty customer goes on vacation or get’s sick and can’t work. Covid-19 may have changed the demand for his services and there may have been a dramatic cutback in the number of projects he is working on. Nevertheless, the customer must still pay Getty the $286 per month.

In this month when there is not much work the customer ends up only downloading 1 image. The gross sale for that lucky photographer is $286. Getty pays the photographer a $57.20 royalty and keeps the rest. If a month goes by when the customer doesn’t use any images Getty still gets its $286 and keeps it all.



At the end of the year the customer may try to negotiate a better deal. Depending on the customer’s actual recent usage figures, Getty may agree to a lower price. The worst case for Getty is to lose a customer and have that customer go to Shutterstock or AdobeStock, so Getty may be willing to agree to almost anything to keep the customer away from its competitors.

Thus, suppose the customer is in really bad shape financially, but want to use 400 images a month. This customer can only afford $528 a year or $44 a month for the images he needs. Thus, the average price per image downloaded is $0.11 and Getty pays each photographer whose images are downloaded a royalty of $0.02.

Getty doesn’t care if its customer goes on vacation, or if most to this clients customers disappear because Getty’s customer will still need to pay Getty $44 a month until the year-long contract ends.

Over time (and Getty has had PA deals for more than 12 years) customer psychology begins to change. They set the price once a year for the total they will need to pay for photos. They no longer need to worry about carefully choosing before downloading  the photos they will use. Thus, when they start researching for a project, they download an, and every,  photo they think might work. Later, they make the decision as to which photo or photos to actually use. This is particularly true as image collections get larger and there are more photos to review.

The price-per-photo used makes no difference to Getty because the photos themselves cost Getty nothing. What’s important to Getty is that they get an upfront guarantee for all the money the customer is willing to pay, no matter how miniscule the price. Their only worry is losing the customer to a competitor.   

It is interesting to consider how big the spread is between $0.11 and $286. The $286 payment is 2,600 times the $0.11 fee for possibly the use of the same image. Back in 2006 Getty’s average sale of a Rights Managed image was $536. If a single image had been licensed for 2,600 times that much, then it would have brought in $1,393,600. If anyone remembers getting anything near that much for the use of a single image please contact me. And $0.11 isn’t the lowest price that Getty has sold an image. Some have sold for at low at $0.02.

Is it time for Getty to put some limit on the number of images that can be downloads as part of a Premium Access deal?


Copyright © 2020 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

Comments

  • Laurie Rubin Posted Sep 12, 2020
    Hi Jim,
    let me preface this comment with the statement that I have followed you for a long time, and have the utmost respect for your writing and comments, but i really wish this article was based on more than "I can only guess because Getty won’t explain how any particular deal has been negotiated, but here’s how I think it works.
    The information is not really of any value if it is solely a wild guess ?

    Thanks for trying !


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