Why 70% Of Images Licensed Are Microstock

Posted on 5/17/2009 by Jim Pickerell | Printable Version | Comments (0)

Recently, I wrote an article comparing the advantages and disadvantages of various marketing strategies. I suggested that in terms of the number of images licensed for commercial uses "rights-managed licenses account for 3% of the total number of annual licenses. Traditional royalty-free images make up 6%; 20% goes to subscription services and 71% to microstock.”

One reader responded, “until recently traditional RF sustained nearly 40%-50% of the commercial market, right? Is microstock’s new claim of 70% due to the increase of new total buyers? If so, it would be interesting to see a chart breaking down the total number of traditional buyers represented in these percentages compared to new buyers. Meaning, of the 70% who is new and who is traditional and why has RF and RM decreased in commercial market share so rapidly - all due to the volume of buyers in the microstock space?”

Clearly, I haven’t been adequately explaining how I arrive at my conclusion so let me try again. First, when I use the term “commercial” I’m talking about non-editorial sales. Traditional sellers still have a very dominant hold on customers who need editorial images. When I talk about “commercial uses” I’m talking about everything else including the type of rights-managed and royalty-free uses that Getty Images defines as “Creative” as well as the microstock and subscription images that are used for non-editorial purposes.

The reader is right that as recently as four years ago (before microstock) the revenue generated from sales of rights-managed and royalty-free sales was about equal (See Getty’s 2006 and 2007 numbers of images used. Since the average price of a royalty-free images was about half that of a rights-managed image this means that there were about twice as many royalty-free images licensed as right-managed. This is important because in the percentage figures above deal with images licensed, not revenue generated.

When microstock entered the picture it did much more than just steal customers from traditional sellers. Microstock sellers uncovered a whole new body of customers who had not previously purchased stock images and who could never justify paying anywhere near traditional prices for images.

There is a lot of disagreement on this point. Many traditional sellers want to believe that all microstock is doing is stealing their customers; customers who would have paid more if microstock wasn’t so cheap. I believe there is lots of evidence that disproves this theory.

When Getty Images purchased iStockphoto they did an analysis of the customers of both companies and found that only 8% of iStock’s customers were also Getty Images customers. Obviously, there was a huge percentage of iStock’s customers who had never purchased an image from Getty Images and probably never even heard of them. Some Getty customers who hadn’t used microstock images prior to acquisition of iStock are probably using them now. But a bigger problem for image producers trying to sell at traditional prices is not in the number of images these traditional customers are using, but in the prices they are being charged as Getty – and everyone else – lowers prices to try to hold onto their traditional customers.

One of the biggest indications that this might be happening was revealed last week in Alamy's quarterly report had a 27% drop in revenue in Q1 2009 compared to Q1 2008. But, they actually sold more images to their customers than they had a year earlier. The number of images sold went up 2.5%. There is every reason to believe the same thing was happening at Getty and the other agencies that don’t divulge their numbers. Photographers may be able to determine this for themselves whether this trend is accurate. They can accomplish this by looking at the number of their images licensed in the comparative quarters, as well as their growth or decline in revenue for the period.

However, the biggest indication that there is a huge number of new image buyers, never before seen by traditional sellers, is the dramatic growth in the number of images licensed by the various microstock companies. It is believed that iStockphoto licensed rights to less than 4 million images in 2005. In 2006 it was 10 million. In 2007 it was 17.55 million and in 2008 an estimated 25 million. The combined total images licensed in 2008, by all the other microstock and subscription companies was greater than those licensed by iStock, according to figures provided by various photographers. Meanwhile, the number of images licensed by the traditional sellers was flat throughout this period.

So yes, the reason the percentage of images licensed for commercial use has changed so dramatically is that we are now talking about much larger customer base. Over 90% of these customers can’t afford to pay very much for the images they need, but they do use images and they will pay something.

The dramatic change in percentages has not been caused by rights-managed and royalty-free selling fewer pictures than before, although the numbers have declined somewhat. Rather, the percentage change is a result of the market growing astronomically while traditional sellers continue to focus on their old customers, and do nothing whatsoever to identify or address the new customers.

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.  


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