What Do Customers Think?

Posted on 6/1/2006 by Joe Lacugna | Printable Version | Comments (0)



June 2, 2006

Analysis Of Three Recent Surveys Of Photo Buyers

    At the recent PACA Annual Meeting in Chicago, industry veteran, Joe LaCugna, PhD, was invited to present key findings from three recent surveys of creative professionals. Joe can be reached at wynphtan@pbzpnfg.arg

    With Joe's approval, I have restructured his presentation into a small number of articles that summarize these findings while also providing perspective on their implications for PACA's membership. I have used quotes sparingly even though most of the words are his. In rare cases I have inserted a few thoughts of my own in parenthesis.

      [Note: The charts included in this story are more readable if you print out the story rather than try to read it on the computer screen. Thus I highly recommend that you print this story and read it offline.]

Joe's 'meta-analysis' is based on three surveys. The first was an informal survey of attendees at the Picture House event held in New York last fall. More than 150 attendees responded, and three-quarters of these respondents were editorial customers who select images for textbooks, trade books, magazines and newspapers. A larger survey of Graphic Design USA subscriber was also completed in 2005. This was the 19th annual survey of their readership with more than 1,200 respondents. Finally, Communications Arts conducted a survey of their subscribers yielding just over 400 responses. Joe emphasized that although these surveys are far from perfect, they do represent the opinions of more than 1,800 image buyers whose highly diverse views offer useful guidance for PACA's members.

Most questions asked about image uses, but it is useful to distinguish between the numerous occasions when images are used (when money rarely changes hands) and occasions when images are licensed. Agencies benefit most from the latter and this theme will be developed in a subsequent article in this newsletter.

Type Of Images Used

When the Picture House attendees were asked the question, "Which types of images do you typically license?" 32% said Mostly RM, 15% said Mostly RF and 50% said they used a mix of RM and RF. In short, 82% use some RM and 65% use some RF. Only 1% said they use mostly subscriptions. Joe focused on the finding that half of respondents use both RM and RF, asking how meaningful are the distinctions between these licensing models if half of respondents use both? This in turn raises the question about the specific factors that prompt photo buyers to select one licensing model over the other for a particular assignment. (Editor: Keep in mind that this was an editorial customer base. It is not surprising that this market segment uses a lot of RM because much of the editorially oriented subject matter they need is not available as RF. Photographers who focus primarily on producing generic imagery for the advertising market should be careful not to read too much into this statistic.)

A roughly similar question was asked by Graphic Design USA (with more than 1,200 responses). Nine out of 10 of their respondents use RF, 6 out of 10 use RM, (meaning that 40% never use RM) and 3 in 10 use other licensing methods which includes subscription and assignment services.

A Distinction Without A Difference?

While photo agencies, artists and lawyers draw a hard-line distinction between RM and RF licensing models, in practice many and probably most photo buyers use both types of pricing models. And this hard-line is blurred further by the recent proliferation of subscription pricing models. This raises two sets of questions: (1) in what circumstances does the licensing model matter most in determining which images will be licensed, and (2) if the licensing model is not the most important consideration, what else matters when searching for and licensing images?

The Picture House survey asked, "When choosing from a set of images to complete a recent project what impact did the licensing model have on selecting the final images?" One-third of the respondents said it was 'very important' and 18% said it was 'not at all important.' This last finding is a bit disconcerting: It's a lot like the 80/20 rule: 20% of customers don't think the licensing method is important. And among the 80% there's a good deal of inter-changeability between RM and RF, suggesting a distinction that is not as important or as practically meaningful as in the past when there were more obvious differences between RM and RF offerings.

Take a look at the two middle rows in this chart. The licensing model is somewhat important either due to budget constraints, or client preferences. This suggests that frequently the importance of the licensing model is context - and project - driven meaning that the specific project and the specific client influence the image selection process above and beyond consideration of the pricing model for specific images.
But it is too simple to conclude that the licensing model doesn't matter any longer. It does, sometimes, but perhaps in ways that are surprising to PACA's membership.

The Communication Arts survey asked, "On average what percentage of stock photography you use is of the following types?"

    (Editor: The figures in the second chart don't add up because those in "use all the time" are included in "use more than half the time.")

It is worth noting that nearly 40% of the respondents say they do not use RM and another 39% use it less than half the time. Any way you slice it we've got another 80/20 rule here. Roughly 80% of the customers use RM not at all, or only occasionally and only 20% could be characterized as RM enthusiasts.

What a contrast when we look at the RF column: only 6% don't use RF, and 12% don't use it often, so here we've got 18% that don't use much RF, but three out of four customers use RF more than half the time. And when you ask them whether they use it all the time more than one-quarter of respondents say they use nothing but RF. So if you've got a rights managed collection it tells you something about whether the Communications Arts audience is a suitable target for your marketing investments. But I think this contrast and the way the 80/20 split works between these two tells us something about the increasing importance of Royalty Free and it hints at a growing disconnect between images used and images licensed.

So if the licensing model is not always decisive, and if some customers favor one licensing model over another in practice, what does matter in selecting and licensing images?

What Matters Most?

The Picture House survey asked, "Please rank the most important factors you consider when using an image for internal projects?"

The two top-ranked items are price and image which were tied in their perceived importance. This suggests again the importance of context: depending on the project and the client, sometimes price is more important and sometimes the image itself is more important. That means that photo agencies have to have the right content and the right content has to be perfectly priced. (Editor: Having the right content is particularly true for those producing editorial projects, the principle respondents to this question, because often nothing else can really be used as a replacement.)

The tie between the licensing model and the relationship with the agency is more interesting and again suggests the importance of context. Some agencies are able to distinguish themselves in ways that photo buyers find valuable, although licensing model is an important constraint for specialized or smaller agencies that do not offer both RM and RF images.

It should also be noted that 'convenience' and 'customer service' aren't particularly important in the decision process and this probably reflects the fact that these are now 'taken for granted' and seen as a competitive requirement, not a source of differentiation.
It's what economists call a 'cost of doing business': it's a competitive requirement, but not a competitive differentiator.

Picture House respondents were asked two questions to try to learn more about the difference between image use occasions and licensing occasions. Question 8 asked "How often do you re-use images when working on a marketing campaign?" and Question 9 asked "How often do you source new images when working on a marketing campaign?"

When working on new projects 80% of respondents source new images 'almost always' or 'most of the time.' That's very good news, as is the finding that two-thirds reuse images less than half the time.

But the blue boxes are a concern: 20% of respondents report that they look for new images less than 'half the time' or 'not often' and one-third reuse images 'almost always' or 'most of the time.' A large fraction of customers go to their image library first and tend not to think of new projects as an occasion to find new images: for roughly 20% to 30% of licensing occasions, customers re-use images that have already been purchased. These re-uses often do not result in revenue either because of the RF licensing model (largely unrestricted uses) or infringing uses of RM images that are not detected or enforced. (Editor: Keep in mind that this response is from editorial customers including many book publishers, and not necessarily the response one might get from GDUSA or CA buyers.)

These preliminary findings from three diverse sets of photo buyers are suggestive if not decisive. They hint that a large segment of photo buyers license both RM and RF; that the licensing model is sometimes important buy not always; that other context-dependent considerations are often influential in determining which images are selected or licensed; and that a large number of customers tend to re-use images rather than search for new images for new projects.

These findings from 1,800 customers also underscore the value to PACA members of this kind of customer-facing research. PACA is already working on a survey that will be conducted at the upcoming HOW conference in Las Vegas.

In subsequent articles, we will develop further the implications of these findings as they relate to two topics: whether demand for pre-shot imagery is growing fast, growing slowly or not growing at all; and the business implications for agencies of hyper-competition.

Copyright © 2006 Joe Lacugna. 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


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