RM vs RF: Which Strategy Generates The Most Money?

Posted on 11/16/2015 by Jim Pickerell | Printable Version | Comments (1)

Photographers with a goal of maximizing earnings from the images they produce, and who continue to insist that in order to realize that goal their work must be licensed as Rights Managed (RM), may need to consider the new realities of the stock photo business.

Generally most RM photographers believe:
    1 – They will earn more if their images are licensed based on usage.
    2 – Their images are worth more than traditional Royalty Free (RF) license fees, and certainly more than Microstock fees.

    3 – Their images cost a lot to produce and they certainly can’t cover their costs licensing images at RF rates.
    4 – If they license their images as RF they can never get a big multi-thousand-dollar fee when someone wants to use one of their images in a major ad campaign.

Who Uses RF?

The first thing to consider is that most Customers Have Stopped Looking At RM. Here’s my estimates of the worldwide breakdown of the number of images licensed in 2015.

  Number Percentage
Subscription 185,000,000 77.0%
Microstock Single Image 50,000,000 21.0%
Traditional RF 4,000,000 1.5%
Rights Managed 1,500,000 0.5%

It should be noted that a large percentage of the images downloaded via subscription are only used for planning purpose and never appear in a deliverable product. No one has any idea how many of the subscription downloads are used in this manner. However, given Adobe’s subscription pricing strategy in a year or so Adobe may have a good sense of the percentage actually used.

Even if we remove subscription downloads altogether from our calculations RM represents less than 3% of all single image downloads.

More and more customers only look at images that are licensed as RF. There are four major reasons for this.

    1 – Companies that offer RF licenses have a huge supply of top quality images, sufficient to supply virtually every need. The fact that these sites also have a lot of not-so-good images is irrelevant as long as the customer can easily find the good ones.

    2 – They are looking for a simple licensing model. They don’t have time to negotiate every use and they particularly hate having to come back and re-negotiate when their bosses decide they want to make a different, or additional, use of the images.

    3 – More and more customers need flexibility in how they can use the images they purchase. There is an ever growing variety of ways that any particular design or promotion might be used. Often the customer is unaware of all the potential future uses when they initially license the image. To cover themselves legally, they prefer a license that allows unlimited future use.

    4 - Lower prices are an added bonus, but often not the critical deciding factor.

Volume Counts

To determine likely gross revenue from a collection of images it is important to consider the number of times an image is likely to be licensed.

Masterfile recently reported that the average license fee in 2015 for RM images has been $600 and $240 for RF images. Only 24% of the images licensed in 2015 have been RM and while 76% have been RF. Thus, only 44% percent of their revenue resulted from RM sales, even though the average price was much higher, and 56% from Premium RF. If you have your images in an RF collection and license three times as many at an average price of $240 you would earn more that licensing a single image at an RM price. And remember, if they are in an RF collection there is a much better chance of them being seen.
If we look at my chart above, I have estimated that there will be 2.7 times as many RF images licensed in 2015 as RM images.

Based on an analysis I did in early 2014 (See here) Getty’s average license fees in 2013 were probably in the range of $298 for RM and $133 for RF. For a number of years there seems to have been between two and three times the number RF images licensed as RM. If the average of RF is roughly half the price of RM then the odds are that you’ll earn as much money licensing your images at the lower RF prices as you would if you keep pursuing RM sales.

Microstock Pricing

But looking at Masterfile’s average price of $45.60 for images from its Crestock collection is even more interesting. If I’m right that 4 million traditional RF images and 50 million microstock will be licensed in 2015 then the odds are that an image offered in the microstock price range is 12.5 times more likely to be licensed than one offered at traditional RF prices. (The total number of microstock images available for licensing relative to the traditional RF images available would also factor into this equation, but I don’t have any way of determining that number.) This could push the revenue earned from microstock licensing to about the average for RM.

What’s The Customer Get With Standard RF Rights?

In the microstock arena the basic listed price is often not the fee charged because customers often need additional rights. The standard license on virtually all microstock sites limits the total print run of all future uses of the image to 500,000 copies. Many users need more than that and pay for an Extended License that basically gives them unlimited use reproduction rights. Extended licenses can run from $30 for certain images on some sites to $250 or more on top of the basic license fee. Thus, in some cases the fee for the use of a microstock image can be higher than the average fees charged today for traditional RF images. Such fees can often be higher than the fees RM agencies frequently charge for RM usage.

There are a number of other cases where an Extended License is needed. They include:
  • On merchandise for Sale, (not including books, magazines and newspapers),
  • Web or print templates,
  • TV, online Video and film use above a certain limited amount,
  • Multi-seat license (multiple people using the same account), and
  • Legal indemnification.
Thus, higher fees are being charged in many cases. Masterfile whose prices for Crestock images range from $10 for web use to $45 for the largest file size recently reported that their average price for a Crestock image licensed through the Masterfile site is $45.60. It is higher than the highest “Standard” price because they license a lot of extended licenses.

Stocksy, whose basic prices range from $10 for the smallest file size to $100 for X-Large, has extended licenses that range from $100 to $500. Recently, they also started offering Market Freeze pricing that offers exclusivity for a set period of time from the date of image purchase. Depending on the length of time required the prices range from $1,250 to $9,000. Stocksy’s entire library is exclusive which makes it easier for them to offer such licenses.

At a recent conference a Shutterstock representative mentioned that they have regular requests from customers to license imagery exclusively. In such cases they work with the contributors to satisfy the customer’s needs.

Back in 2007 Dreamstime reported that they had licensed an image to a chocolate producer for $5,100. Sales of microstock image at fees that are much higher than “Standard Rates” occur on a regular basis.

Often customers looking for an exclusive for a period of time don’t care if the image has been used previously as long as they have reasonable assurance that no competitor will be able to use the image for a specified period of time, going forward.

The important thing to recognize that making an image available for RF licensing doesn’t mean that it can never be licensed for a fee that is much higher than normal RF prices. In the same way using the RM strategy doesn’t mean that the image won’t be licensed in many cases for much less than RF prices.
While there are no guarantees, many microstock sellers, and certainly those who price their work at traditional RF levels, are already earning more than most RM sellers. The trend going forward will be more in the direction of RF and away from RM licensing.

As prices of RM fall relative to RF, and the number customers choosing RF rises dramatically compared to those choosing RM, the advantages RM once had as a licensing strategy may no longer exist. If not yet, when? Something to consider.

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 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.  


  • Bill Bachmann Posted Nov 21, 2015
    I stopped subscribing to your newsletter last year because you push so many cheap ways to sell images and you always seem to be "gloom & doom" about the industry. But I bought a few points to read selectively. This one I read and you are still there fighting at the bottom, Jim. Why not have successful RM Producers (like myself and many others) tell people the facts about THEIR success?? It is not doom & gloom. Are totals less -- yes, for sure. But I still make plenty. PLUS, I know I am not selling my images for $1 for Microstock or higher for RF. I feel that the images are worth more than you do. And I know a lot of people feel the same way --- www.billbachmann.com

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