Strategies Traditional Sellers Should Adopt

Posted on 5/26/2009 by Jim Pickerell | Printable Version | Comments (0)

As the stock industry changes, traditional stock agencies and distributors are losing ground because they have failed to adopt new technological efficiencies. Granted, constantly keeping up with the latest technological changes can be expensive, and most agencies have already invested huge amounts to get where they are today. But, microstock sellers have introduced a number of strategies that traditional agencies and distributors should be considering – if not rushing to adopt.

The first, and possibly the most important, is to recognize the benefits of pricing images based on credits rather than dollars.

Credits vs. Dollars



Basing prices on credits rather than dollars (1) gives the seller money before the product is delivered, (2) makes it simpler to conduct small transactions, (3) appears simple to the buyer and (4) gives the seller more flexibility in adjusting prices.

For the seller there is a major advantage in having three pricing variables – the number of credits needed to purchase an item, the price per package of credits, and the number of credits in a package – rather than just one as is the case with dollars. The seller can improve his selling position by adjusting any one of these variables. Depending on how this is handled, it can cause the buyer to believe he is getting a better price than is really the case.



Let me illustrate using iStockphoto’s current prices (http://www.selling-stock.com/2009/05/26/strategies-traditional-sellers-should-adopt-credit-based-pricing/). An extra small file for web use is priced at 1 credit. If you look on iStock’s web site it says $1 (one dollar), but that is misleading to the seller’s advantage. If the customers doesn’t need many images and wants to buy the minimum number of credits (12) he’ll be paying $1.50 per image - a 50% premium over the listed price. It can cost even more if he doesn’t need to download 12 images. The dollar figure is not really a lie. The customer can get the image for $1.00 or less, if he buys 1,500 or 2,000 credits at a time. But how many web users will make that kind of commitment.

When the seller wants to raise prices he can keep the number of credits required to buy the image the same and simply raise various credit package prices. If you go to iStock to purchase credits they tell you how many “extra credits” you get by purchasing each larger package, but don’t provide the customer with the actual price per credit. The customer can figure this himself, but how many do? My guess is that most customers estimate of the number of credits they will need, look at the price for a package with a slightly larger number and if the price seems reasonable, buy. If the price is a little higher the next time the customer probably won’t notice.

The seller can also keep the prices of the credit packages the same and reduce the number of credits provided in each package. All these strategies enable the seller to increase prices without it being readily apparent to any but the most careful buyers.



Another factor is the size of each credit package. Prices in dollars are for an exact number of dollars and cents. But with credits you may be required to buy more than you need. Chances are the customer will not immediately use the exact number of credits purchased. The seller not only gets his money before he delivers anything, he may get to hang onto - and receive interest on a significant portion of it -- for weeks or months before the customer requests delivery of a product. In cases where the customer fails to use all the credits purchased that money can generates interest indefinitely for the seller while it is effectively held in escrow.

Sizing credit packages at levels where some credits are left after any purchase tends to encourage the customer to return to the site to use the remaining credits. iStock’s 26 credit package for $38 provides an interesting example. If a customer wants small files he can purchase 8 images, but will have two credits left over and will have to purchase another package if he wants a 9th image. He can get four medium files, but also has two credits left over. None of the credits required for large, Xlarge, and XXlarge divide equally into 26. We suspect this was not an accident, but a very shrewd business strategy.

Over time sellers should be able to determine the average number of credits most customers use and adjust package sizes to insure that most customers either leave some credits in their account, or buy extra pictures they don’t really need just to use up their credits. Either way the seller wins.

For traditional agencies a credit pricing system makes it easier to license certain small uses for low prices and begin to sell to at least a portion of those customers who currently get their images from microstock companies. But, credit pricing doesn’t have to be the only system employed by an image distributor. One strategy could require that small uses, say those priced under 50 credits, be paid for using credits and that those prices are non-negotiable. Negotiation and invoicing would still be available to high volume customers and larger uses.

Customers purchasing higher priced uses could be given the option of paying with either credits or dollars, but if they use credits they get a discounts compared to the dollar price. For example the dollar price might be $250 or 220 credits. To get 220 credits the customer would have to buy at least 300 for a price of $370, but he would have 80 credits left over. On the other hand if he knows he is going to buy a lot more images sometime in the future he can buy a 2000 credit package for $1,900 and get this $250 image for $209.

Thanks to microstock the concept of “credit pricing” has become widely accepted in the industry, and in every case we can think of it works to the advantage of the seller. Thus, it is hard to understand why it is not being employed by traditional sellers.

Now that we've dealt with credit pricing let me examine four other strategies traditional sellers should consider.

Let customers organize search returns

Traditional distributors should provide customers with choices in the way search returns are delivered rather than forcing them to use the agency’s preferred system. There’s nothing wrong with defaulting to the agency’s preferred image return order, but it seems short sighted to not offer customers a variety of options as microstock sellers do. A microstock options that I find particularly useful is the ability to display images in the order of most sales. Many customers like to see the images others have used. This gives them the benefit of seeing the editing decisions real buyers, not just the agency’s editors, have made. Some sellers argue that customers only want new images and images no one else has used, but the number of times some of the best selling images on the microstock sites have been downloaded demonstrates the fallacy in this argument.

Traditional sellers may be embarrassed to reveal how few times their best sellers have sold compared to microstock’s best sellers, but they don’t have to reveal the number of times the image has sold, just that it has sold more than others in the collection. In cases where several images have sold the same number of times the newest in that group should be shown first. Such a search algorithm would seem simple to develop. It is difficult to understand why traditional distributors have not adopted this feature as a way of providing better customer service.

Aid photographer research

Being able to look at images that have sold, not only helps customers, but also helps photographers when planning new shoots. Currently, photographers selling through traditional agencies must guess at what is actually selling, or look at what’s selling on microstock sites and hope demand in the two environments is comparable. Photographers get no direct feedback from customers. In addition, most traditional agencies have cut their editing and photographer support staffs that used to provide top photographers with guidance as to what is in demand.

Those who argue against this strategy say that if everyone knows what is selling, everyone will copy those pictures rather than producing something new and different. Certainly some of this happens in both the microstock and traditional arenas, but maybe not as much among traditional shooters. But, since a lot of people who are producing pictures don’t pay attention to this data and shoot what most inspires them there is still plenty of diversity. In fact, I believe there is more diversity in microstock than in most big traditional collection.

Provide a more varied and eclectic offering

Traditional sellers should be developing technological ways accept images from a more varied group of sellers (particularly advanced amateurs), and have less stringent editing criteria, in order to produce a broader collection. [I am now ducking while everyone throws brickbats].

More and more of the images available in the traditional environment are being produced by production companies. These companies carefully analyze what is selling and concentrate on producing images that are in high demand. As a result there is a great oversupply of high demand subjects causing those trying to earn their living from stock photography to narrow their focus even more and increase that oversupply.

To broaden the collections more niche subject matter is needed. But, the niche subjects, no matter how well produced, won’t sell frequently enough to support a photographer shooting on speculation. For the most part, the people who produce niche material are amateurs or part-timers. Traditional agencies want high producers and tend not to accept niche photographers, or their imagery. As a result microstock agencies are becoming the place to find such images.

There are certainly problems with the microstock system for selecting images, but on the whole, with the exception of Alamy, photographers have a much better chance of getting their images accepted by a microstock distributor than a traditional one. Some argue that this results in a collection of images of lesser quality. But I don’t think so, and there certainly is a greater “variety of vision” in microstock than on traditional sites because images are accepted from a more diverse group of shooters.

Speed photographer payments

Traditional sites need to copy microstock in the way it lets suppliers know, at any given moment, how much they are owed. In addition, provided the supplier is owed at least $100 he should be able to request payment at any time. This works with a credit system because the money is in the account the instant the image is delivered. While more complicated for a hybrid account that receives money through both credit and invoice sales, it is not an impossible problem to manage.

For any individual supplier it should be possible to receive money from credit sales instantly. Money collected from invoiced sales in a given month should be reported and available at the end of the month, not three or four months later. And, sales by distributors should be available to the primary agency at the end or each month and reported and immediately available to the supplier at the end of the following month. In today’s digital environment there is no excuse for delaying payment as long as many traditional agencies do.


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

Be the first to comment below.

Post Comment

You must log in to post comments.

Stay Connected

Sign up to receive email notification when new stories are posted.

Follow Us

Free Stuff

Selling-Stock Now Free
Good News. Beginning today, Selling-Stock (www.selling-stock.com) is FREE to all readers. Try it out. Not only is it possible to read every new story on the site by simply clicking on the headline, b...
Read More
Stock Photo Pricing: The Future
In the last two years I have written a lot about stock photo pricing and its downward slide. If you have time over the holidays you may want to review some of these stories as you plan your strategy ...
Read More
Future Of Stock Photography
If you’re a photographer that counts on the licensing of stock images to provide a portion of your annual income the following are a few stories you should read. In the past decade stock photography ...
Read More
Blockchain Stories
The opening session at this year’s CEPIC Congress in Berlin on May 30, 2018 is entitled “Can Blockchain be applied to the Photo Industry?” For those who would like to know more about the existing blo...
Read More
2017 Stories Worth Reviewing
The following are links to some 2017 and early 2018 stories that might be worth reviewing as we move into the new year.
Read More
Stories Related To Stock Photo Pricing
The following are links to stories that deal with stock photo pricing trends. Probably the biggest problem the industry has faced in recent years has been the steady decline in prices for the use of ...
Read More
Stock Photo Prices: The Future
This story is FREE. Feel free to pass it along to anyone interested in licensing their work as stock photography. On October 23rd at the DMLA 2017 Conference in New York there will be a panel discuss...
Read More
Important Stock Photo Industry Issues
Here are links to recent stories that deal with three major issues for the stock photo industry – Revenue Growth Potential, Setting Bottom Line On Pricing and Future Production Sources.
Read More
Recent Stories – Summer 2016
If you’ve been shooting all summer and haven’t had time to keep up with your reading here are links to a few stories you might want to check out as we move into the fall. To begin, be sure to complet...
Read More
Corbis Acquisition by VCG/Getty Images
This story provides links to several stories that relate to the Visual China Group (VCG) acquisition of Corbis and the role Getty Images has been assigned in the transfer of Corbis assets to the Gett...
Read More

More from Free Stuff