Stock Photography: Future Growth Potential

Posted on 7/30/2012 by Jim Pickerell | Printable Version | Comments (1)

In the future, will it be possible for more photographers to earn a better living than they are currently earning producing stock images? More and more photographers are jumping into the stock photo business every day and many hope to make it a career. Here’s a dozen reasons why future revenue growth for this industry seems unlikely. I’ve discussed all these issues before, but it seems useful to briefly itemize them all in one place.

1 - Over Supply

There is a huge oversupply of imagery relative to demand in virtually every subject category. There is no way to slow the supply of new imagery. In a competitive market, when there are not enough buyers and prices drop producers usually cut back on production. That doesn’t happen in stock photography.

Some of the more experienced producers are adjusting their personal production and looking for other ways to earn a living. However, for every producer that drops out there is always a flood of new producers with hope in their eyes that take their place.

2 - Flat Demand

There has been very little growth in demand for RM or traditional RF images (macrostock) in the last few years. From 2005 through 2009 there was a significant increase in demand for images priced at microstock levels, but since then that demand seems to have reached a plateau. Currently, there are an estimated 100 to 125 millions image uses licensed worldwide annually. Two to three percent of those are for images priced at macro levels. The rest are microstock or images licensed as part of subscriptions.

3 - Useful Life

Another factor related to supply is useful life. Since stock images are licensed rather than sold once supplied an image is never used up and continues to compete with newly produced images – potentially forever. Many photographers would like to believe that customers should want to purchase newly produced images that have never been used. In fact, a significant number of customers tend to reuse older images --the same ones everyone else has already used.

4 - Declining Prices

The average price paid to use macro priced images (RM and traditional RF) have been steadily dropping since the introduction of microstock. Prices for microstock images have steadily increased since the inception of the model. Over the last few years higher priced brands have been integrated into some of the microstock collections and this has resulted in significant price increases for select images within some of these collections.

However, from a industry point of view the microstock price increases have not been enough to offset the falling prices in the macrostock environment. Microstock prices have also reached a point where any additional increase is likely to result in a decline in the units licensed as customers switch to some of the brands that haven’t pushed price up as much. This is already happening at iStockphoto.

In 2007 the average price to license a Getty Images RM image was $550 and an RF one was $240. Assuming Getty is still licensing rights to about the same number of images average prices have dropped about 60%. If they are licensing rights to more imaged due to the introduction of Premium Access pricing the average price decline will have been even greater.

5 - Price vs. Production Cost

The price charged for the use of a stock image has no relation whatsoever to the cost to produce it. As a result, the vast majority of producers spend more on production than the images will ever earn, (particularly if their time is valued at anything above $0.00). They will continue to do this until they can no longer sustain the costs, or until they get bored with the hobby.

Since most stock images are licensed for much less than it costs to produce them and many are never licensed, the lower the price per license the more times the image must be licensed to cover production costs and earn a profit.

At the moment of creation it is impossible to know how many times a stock image might be licensed any more than when betting on a horse race it is possible to know which horse will win. The only way to profit from stock photography is to license some of the images produced many times. With careful study and analysis it is possible to improve the odds of winning, but unlike working on assignment where there is a guaranteed payment for work produced, stock photography is always a gamble.

6 - Royalty Percentage

Royalty percentages are a very complex issue because it is often difficult to compare apples to apples. In the 1990s the standard photographer royalty rate was 50%. However, the vast majority of images that were licensed could be found in expensive to produce print catalogs. Photographers were often charged several hundred dollars per image for placement in the print catalogs. Thus, while the photographer received 50% of the fee paid by the customer they also had to deduct their marketing cost in order to determine the profit their images generated.

Since the early 2000s there has been a steady decline in royalty rates. Now they typically range between 15% and 60% depending on the particular distributor. Catalog costs have disappeared, but now there are other costs such as keywording and image preparation that the photographer incurs in order to prepare the images for marketing. While it is nice to earn a large part of the gross fee collected from each sale, a high royalty rate is of little value if there are very few sales and the sales are at low prices.

While stock photographers no longer incur film and processing expenses their overall costs of operating their business has probably not declined. Thus, with lower prices for use, lower royalty rate and no dramatic increase in the number of images licensed most stock photographers are earning much less than they were 5 or 10 years ago.

When deciding which companies to work with the photographer needs to not only consider royalty rate, but (1) other costs involved in submitting the images, (2) the number of images that will likely be accepted for marketing, (3) the number of licenses the company will generate and (4) the average price customers normally pay for a license.

Unfortunately, much of this information is impossible to determine until the photographer has begun to contribute images to the distributor’s collection. Thus, it is important to have an agreement that allows an easy exit if the compensation is not satisfactory.

Another thing to keep in mind in the macro image environment is that the images supplied to a distributor are often marketed through other distributors who have joint agreements with each other. In some cases the photographer’s prime distributor may make few direct sales, but will have agreements with 150 or more sub-distributors who make most of the sales. Assuming your royalty share with the prime distributor is 20%, when a $100 sale is made by a sub-distributor he keeps 50% or 60% and returns the rest to the prime distributor. The photographer’s share is calculated on what the prime distributor receives, not the gross paid by the customer, so if the prime distributor receives $40 your 20% share is $8.00 on a $100 gross sale.

7 - Search Return Order

One of the big keys to what gets uses and what doesn’t is Search Return Order. Very few customers will review more than 400 or 500 thumbnails before they give up of adjust their search parameters. Many searches will return thousands of results. Thus, if a photographer’s image doesn’t come up near the beginning of a search there is very little chance the image will ever be seen, let alone purchased.

Unfortunately, the image creator has absolutely no control over the order in which his images will appear in the search returns. Careful and extensive keywording can help but it all depends on what keywords the customer decides to use when imputing her search parameters.

Some distributors try to argue that they have developed algorithms that will bring the best images for any customer to the top of the search returns. However every customers needs are different. And search return order is based on data – keywords, number of view, downloads, newness – not a subjective visual impression of the image.

In this regard customers often have a better chance or seeing the best image for their purposes if they are searching a microstock collection rather than in macro collection. Microstock distributors allow each customer to organize search returns in several different ways while most macro sites have one fixed order.

This becomes very apparent on microstock sites where customers can organize search returns based on downloads (number of times the image has been licensed). Customers seem to like to use this feature because they can quickly see what other customers have liked in the general category. In effect they get the benefit of editing decision of hundreds of other customers who were looking for the same subject. Images that have been downloaded the greatest number of times come up first and they tend to get used over and over again. This also makes it harder for the new images that have never been used, or used only a few times to be licensed.

Another complaint that customers have is that they see the same images over and over again. This is particularly true on micro sites if customers search by download and on macro sites. It often happens when the distributor tries to show an image or two from every contributor before showing more from the contributor with the most images or the newest work.

Building an effective search algorithm is very complex when you’re trying to show the best work from 100 or more agencies and hundreds of individual photographers. On any given subject one photographer might have had a great shoot several years ago and several images deserve to be seen. You don’t want to just show the newest images. All the other agencies and many individual photographers may have something on the same subject, but much of it may be ordinary or prosaic. Thus, it may not be in the customer’s best interest to see one or two shots from everyone who has something to offer. On the other hand you don’t want to organize the returns based on the most costly first – or the cheapest.

Be skeptical when someone tells you they have developed a technological way to sort through tens of thousands of images with the same keywords and show each customer the best images for her particular purpose.

It is worth considering how it used to be. Back in the dark ages (25 years ago) a customer would call an agency, talk to a researcher and explain what she was looking for. The researcher had an intimate knowledge of her files. The researcher pulled an appropriate selection and shipped then to the customer for consideration. The researcher might send the same images to everyone who requested a particular subject because she knew which images from her collection customers tended to like. The researcher was always award of  new images were added to the collection and when, in the researcher judgment, something new was really better than the older work, or more closely fit the customer’s request it would be added to future submissions. Technology still hasn’t figured out how to clone the intelligence that was in a experienced researcher’s brain.

8 - Decline In The Use Of Print

Traditionally, most of the demand for still photos was for uses in some type of printed product—newspaper, magazine, book, brochure or poster. Most newspapers and magazines are getting smaller. The demand for newsprint in the U.S. reached its peak in 2001. Since then there has been a 50% decline in demand. Newspapers are also reducing staff positions. The revenue from newspaper publishing declined 35.9% from 2000 to 2010 and is projected to decline another 18.8% by 2016. Fewer pages mean less space for pictures.

General interest print magazine sales are declining as well. There is some hope for special interest and local magazines, but from a photographer’s point of view these publications tend to pay lower rates than national publications. More and more consumers are getting the information they need electronically, usually for free. The migration from free Internet to paid phone and iPad apps is giving publishers some hope for subscription revenue. But the amount customers pay at newsstands and for subscriptions has never covered more than a fraction of the cost of producing and delivering content. Most publications are supported by advertising. Online advertisers have been unwilling to pay anything near print ad rates to reach the same number of consumers online.
Textbooks used to be a major market for stock photography. Indications are that in the future more and more educational material will be supplied electronically, rather than in printed books. It used to be that the fee for use of an image in a textbook was based on the number of copies printed, but that has largely fallen by the wayside.
The major publishers play the largest distributors off against each other threatening to only use pictures from the lowest priced supplier. Consequently, the distributors constantly lower their prices and grant more rights in an effort to hang onto a piece of the textbook business. There appears to be no way to reverse this trend so usage fees will continue to drop lower and lower.

Secondly, we’re discovered in the last few years that most major publishers have been ignoring their license agreements for more than a decade. They systematically licensed rights to use images for a minimum number of copies of a book on condition that they would pay additional fees when more copies of the book were printed.  When it came time to print more than the number licensed they failed to advise the creator and often printed many times the number authorized. When a few suppliers discovered the copyright infringements the publishers did everything legally possible to delay payment for the additional copies printed. In addition, they do nothing to inform others whose photos were used in the same books that they are also owed additional compensation.

Looking ahead educators will use interactive whiteboards and Internet to access educational material rather than textbooks. Thus, we are sure to see a decline in the number of images licensed for use in textbooks. Students and school systems will be given unlimited access to image collections and allowed to use the images in any way they choose.

One of the first ventures in this new direction is Encyclopaedia Britannica’s Image Quest product. An initial license made over 2 million images available to 25,000 students and educators in the Dallas school system for unlimited use for a year for $16,250 (see story The creator’s compensation will work out to 3/10th of a penny of less each time an image is used.

Overall, at the very least, we can expect to see a decline in the number of images used in all types of printed materials.

9 - Growth in Internet Use

Digital use is dramatically changing the market for stock photography. As recently as 2005, almost all (an estimated 98%) of all stock-photo revenue came from print uses. By 2010 it was estimated that 20% of industry revenue came from Internet use, and the proportion continues to grow.
In June of 2009 at the Cannes Lions International Advertising Festival Microsoft CEO Steve Ballmer predicted the continued decline of print as an advertising medium and told attendees: “[In the future,] all content consumed will be digital, We can only debate if that may be in one, two, five or 10 years… In 10 years, it will all be online.”

Customers who purchase photos for use on the Internet need smaller file sizes than are needed for print. In the RF environment these small files are much less expensive than what might have been charged for a print use.

Digital marketers tend to uses simpler images that can be “read” quickly because the customer is not expected to dwell on the images for as long as might be the case in print.

Given improved image capture and manipulation technology customers tend to create more of the images they need themselves rather than looking for a stock photo. Increasingly, designers use elements of the photographic image to create their own unique vision rather than showcasing the photographer’s vision of the subject. Some think that grabbing an element without paying for it is OK as long as they don’t use the entire image.
In the Internet environment those who want to use images tend to be much more willing to look for free images or grab an image from another site and use it without any thought of compensating the image creator. There is a general belief that everything on the Internet should be free

Those who are willing to pay to use an image expect to pay much less for an Internet use than if it were to be used in a printed product designed to reach a comparable audience. Also, on the Internet the target audience is often much more narrowly defined than is usually the case with print and thus there is some justification for a lower fee for the use .

When customers first stated wanting to post the same images on the Internet that they used in print most sellers charged very little, if anything, for that additional use believing such uses had very little value. Thus, customers began to expect to pay very little for Internet use.

In the rights managed environment the value of a usage has always been based on the number of people who would have an opportunity to view the images. This was expressed in print run. On the Internet there is no way to base the fee on potential viewers or print run. When the Royalty Free pricing model is used the number of viewers is mostly irrelevant. (When customers want to print more than 500,000 copies they are asked to pay an addition fee, but there is no way to make a comparable judgment with online uses.) The file size needed by the customer is the only pricing variable and when the image is being used on the Internet the file size needed is very small.

10 - Copyright

As we pointed out in our earlier discussion of textbook publishers, copyright has become very difficult and costly to enforce. And those who are making unauthorized uses are not just small businesses and personal users, but some of the country’s largest businesses.
The Internet has made it very easy for image users to steal what they need. This is particularly true for consumers, and to some extent small businesses that have budgetary constraints. Many of these users have little understanding or appreciation of copyright law.

PicScout has determined that 85% of commercial uses on the Internet of images offered through major stock agency sites are not properly licensed. They were either never licensed or used beyond the rights granted in the license. PicScout does not even look at non-commercial sites or sites created by individuals where the unauthorized us is probably greater.

Some of the larger distributors go to extensive lengths to collect for unauthorized uses. However, given the costs involved in the process, the amounts recovered usually result in very little additional revenue for creators. Those caught in an unauthorized use usually become more careful in the future and look for images on free sites or go to the microstock sites where they can license images for a minimal fee. Seldom will they return to an RM site to license images. In addition there are over 200 million images on Flickr that offer a free Creative Commons license provided credit is given and with certain limitations on the use.

11 - Rise Of The Part Timer

The Internet, and microstock sites in particular, have made it possible for amateurs and part time photographers to participate in the market. Many of these people produce very fine images, but their goal is not to make a living from their photography. Thus, they are often happy with a much lower level of compensation than a professional might need. Seeing their images used is often much more important than making a profit on the time and money invested to produce the images.

Another thing has happened which is particularly important to American photographers and those working in high cost of living areas. It used to be that virtually all the top producing photographers lived in the U.S., UK, Germany and France. Now, many of the most successful photographers live in Eastern Europe and third world countries where the cost of living is much lower. The Internet and microstock have enabled these photographers to participate in the stock photo market on an equal footing with Western photographers. Because their overhead is much lower they can live comfortably on much less gross income than a Western photographer requires.

In the microstock arena, photographers can easily identify the best selling images in any subject category. Many photographers in the developing world then focus on producing similar images at a much lower cost. This enables them to quickly develop viable, competitive businesses, but it reduces the useful life of many of the images produced by the first photographer. Many in the U.S. cry that this is unfair and it should not be allowed to happen. Those in the developing world see it as an opportunity and a way to compete.

While the data concerning views and downloads that microstock sites provide make it
easier for competitors to discover the best selling subjects, even without such data many producers would be able to identify the subjects that generate the most revenue. Nothing will stop the trend to over produce the subjects that are in greatest demand because it benefits the distributors to have a growing supply of the most in demand subjects. U.S. photographers must figure out how to live with this market dynamic.

12 - Video

There is general agreement that the future of information distribution will be online rather than in print. Unlike print, the Internet can effectively use video as well as still images. However, people have been predicting an explosion in the use of stock video since 2000. While there has been dramatic growth in the number and quality of videos available on YouTube and Vimeo in the last decade, there has been a very slow growth in the demand for stock clips.

Video will not necessarily replace the use of still images on the Internet. If the reader simply wants to know what an author looks like, a still image of the author may be more appropriate than a video of the author reading his article. On the other hand, some information can be communicated much more succinctly, effectively and powerfully with video than with stills.

Many customers will also have a bias toward video because it is “new,” even when it does a poor job of communicating information. The challenge for future communicators will be to determine when video is the more effective option, when to use stills and when to use text alone.

Producing good video requires a different skill set and tools that are often more costly than those required to produce still images. As a result, there will probably be less competition, at least for a while. There is also the question of whether Internet demand will be for short clips of the type used in television ads, or whether the majority of Internet uses will be for short stories that need to be shot at one location by one creator/producer. Indications are that the story and sound will be more important than snips of moving images.

So What’s It Take To Succeed?

Successful stock photographers tend to do extensive research to determine the subjects that are in greatest demand. Then they produce excellent, high quality images of those subjects. They pay a lot of attention to production values (experienced models, clothes, simple uncluttered sets, etc.) They pay a lot of attention to post production and keywording. They constantly manage their distribution channels and often have many of them. They are very cognizant of their overall costs of operation.

Even Yuri Arcurs, currently the world’s most successful stock photographer, says that it takes him an average of 30 months after production of an image to recover his costs. And despite generating over $4 million in gross sales annually he lives very frugally and plows all the profits from the licensing of his images back into new production.

Copyright © 2012 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:  


  • robert Chamorro Posted Aug 1, 2012

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