Will Blockchain Benefit Image Creators

Posted on 12/28/2017 by Jim Pickerell | Printable Version | Comments (0)

Can blockchains improve tracking of stock photo sales, give creators greater control, cut costs and increase royalties? Various companies are talking about instituting such systems. Announcements are expected in the near future. Such systems may reduce the need for some of the services stock agencies currently provide and remit 80% to 90% of the fee the customer pays to the photographer.

As I understand it, one of the big advantages blockchains offer is that all the data related to a particular image is trackable and easily reviewable by the image creator. The creator sets the price for the image in U.S. dollars. When a customer decides to license rights to use an image the transaction is done in a cryptocurrency and immediately reported to the creator. The customers either has cryptocurrency on hand, or purchases some with U.S. dollars (USD). The creator has the option to immediately cash out and the cryptocurrency is re-converted back to U.S. dollars.

Suppose, for example, that the price the photographer sets for use of an image in a project with a print run of less than 250,000 is $10. That $10 would be available to the photographer immediately, but it is unclear if the $10 will be automatically sent to the photographer’s bank account, or if there would have to be a certain accumulation of transactions (say totaling $50) before dollars would actually be deposited in the photographers bank account.



If there are multiple licenses of a particular image the photographer will be able to immediately see exactly who licensed the use, the date of the transaction, the terms of the agreement and the fee paid. Given current low prices, the payment delays that are occurring with many agencies and the fact that the photographer is never even aware that there has been a sale until a payment is received, the blockchain strategy is a very attractive option.

Leaving Payments In Cryptocurrency


The photographer may also decide to leave the fee paid in his/her cryptocurrency wallet and cash out later, or use the currency to purchase something else where cryptocurrency is accepted. The photographer could potentially profit from holding the cryptocurrency and cash out later at a higher USD value, if it increases in valu . But it should be recognized that as long as the payment remains in the cryptocurrency it could also decline in terms of the number of USD’s it is worth.



Subscriptions


One of the things that will certainly happen with such a system is that it will basically eliminate all Subscription or Premium Access sales. Some photographers will think that’s a good thing. Others may not.

Subscription sales currently represent a significant portion of the images licensed – maybe in excess of 80%. The percent of revenue such sales represent is certainly much lower, but it is hard to estimate what it might be as a percentage of gross revenue generated by the industry.



Basically the subscription customers wants to pay a fixed monthly fee and get access to all the images they need. The customer doesn’t know how many, or which images, it will need in any given month, but it wants to keep its costs at a stable level.

Since the customer doesn’t know which images it will need, or what price the photographer might set on any of them, it quickly becomes impossible for the customer to manage its monthly costs for images. Photographers may set low prices for some, or all, or their images, but there is no way for the customer to predict, in advance, whether they can get by with just the low priced images, or whether some of the expensive ones are really what they will need.

Much of the control will have shifted from the customer back to the producer. However, there is a real question as to whether, in the long run, that will be good for either party. The creators may get higher prices for the images they license, but end up licensing many fewer images and not necessarily make more money. The customers might pay more for the images they purchase, but be forced to find ways to get by with fewer images.

With subscription sales the customer tends to pay a fixed fee, up front, for the right to download a certain number of images in a month or over a longer period of time. With cryptocurrency this will be impossible because there will be no way to predict the value that a certain amount of cryptocurrency purchased with USD will have in the future. It could go up in value and the customer might be able to purchase a lot more images than they had anticipated, but it might also go down. I suspect most subscription customers will not want to speculate that their cryptocurrencies will increase in value.

Options For Photographers


Photographers who have non-exclusive contracts with their agencies should be able to test both markets. They can leave their images with the subscription sellers and offer the same images at higher prices through the blockchain market.

A percentage of the customers may discover that the features offered by the blockchain market may make finding and licensing images easier and that the higher prices are still reasonable. Over time the photographer will be able to determine if the volume of sales; the ability to track uses and adjust prices; the licensing of some images at higher prices and the higher royalty share outweighs making their images available through subscription sellers at all.


Copyright © 2017 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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