What Does RF Mean?

Posted on 8/21/2008 by Jim Pickerell | Printable Version | Comments (0)

The rationale for royalty-free licensing used to be to provide the customer with three benefits: a simple, straightforward price that didn’t require negotiation, unlimited use of the purchased image and a low cost. As this marketing concept has matured, all of these ideas have been lost.

Simple price
Go to gettyimages.com and search for any RF image. In most cases, five prices will be listed for various file sizes. In addition, depending on the brand, the price may be any one of 32 different numbers, which range from $49 to $549. Each brand sets its own prices, and an image from one brand will appear side-by-side with differently priced images.

In theory, the higher priced images are supposed to be of better quality. However, any objective viewer can find many instances where cheaper images are of “better quality” and are more likely to fulfill certain customers’ needs than those that are more expensive.

In some cases, the price of a 55MB file from one brand is lower than that of a 10MB file by other brands. Similarly, some 28MB files cost less than 10MB files from other brands. Once a customer has chosen an image, he or she can easily find the price of the needed file size, but other images in the offering may be cheaper. What really drives the price is the brand owner’s confidence that customers will pay the asking price without checking if there is something cheaper.

Given the degree of price variation, the notion that royalty-free prices are fixed and non-negotiable is no longer accurate. Bulk deals for larger-volume users are routinely negotiated across all licensing models. I have seen royalty-free files with list prices of $49 sell for prices as varied as $45.18, $39.99, $38 and $20.96. Getty’s rights-ready model, while not the same as RF, is also supposed to have fixed prices. The RR price for inside use in a magazine or newspaper is $175, but I have seen sales for $77.58. Customers know that prices are negotiable and will seek to spend less, unless the asking price is already so ridiculously low as to make an attempt at negotiation embarrassing.

There are also certain volume customers, who get unlimited access to any image in the collection for a fixed price. I have seen prices for two such deals average at $15.17 and $9.33 per image. The RR fee for a tradeshow panel lists at $850, but I know of one sale for $111.34.

Unlimited use
With regard to “unlimited use,” we need to look at microstock, which claims to be an RF product. Most microstock brands limit the number of copies that can be printed with a standard license. Depending on the agency, this varies from 250,000 to 2,500,000. If the planned use is greater than the authorized standard use, the customer must purchase an extended license, which is often negotiable. Top microstock shooters claim that as much as 20% of their revenue comes from extended licenses.

To add to the complexity, every brand defines extended licenses differently. Although fees remain way below traditional-market rates, the existence of extended licenses is good for photographers, who have the chance to get higher royalties for certain uses. For the customer, however, the use is not unlimited, and the pricing structure is not simple.

Low cost
When it comes to low cost, we need to take another look at the traditional side of the market. RF is no longer inexpensive, with images often offered at prices higher than RM, particularly for editorial, small-brochure or Web uses. In the third quarter of 2002, Getty’s average RF price was $107. That rose to over $200 within two years, peaking at $256 per image licensed in the first quarter of 2006.

Microstock prices are also going up. Images in Fotolia’s Infinite Collection cost 20 times as much as the agency’s standard prices. In addition, the collection has 40 price variations, plus all of Fotolia’s extended-license options, depending on the image chosen and the use. Some are low-cost and some are not.

RF sellers are rapidly moving toward use-based pricing, but they don’t want to admit it to their customers. The result is a hodgepodge that, in many ways, is more complex for customers than RM.

Copyright © 2008 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.  


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