Will Traditional Prices Drop To Microstock Levels?

Posted on 5/15/2009 by Jim Pickerell | Printable Version | Comments (0)

How long will it take before traditional prices drop to microstock levels? If Alamy’s sales are any indication, microstock sellers might not be cannibalizing traditional sales in terms of number of units licensed, but they certainly are cannibalizing revenue as traditional sellers fight to compete.

In the first quarters of 2008 and 2009, Alamy licensed rights to a respective 47,632 and 48,820 images, a 2.5% year-over-year growth in number of units licensed. However, the company’s revenue went down by 27% during this period. The average price for a rights-managed license dropped from $149 to $105, and royalty-free pricing went from $219 to $172 per image. The average price for an editorial image is now $94, down from $126 last year.

A major U.S. book publisher is now asking for a price of $80 per image for any rights-managed image used in a book or magazine. For this fee, the publisher wants unlimited re-use rights for five years and no additional fee for the right to use the image in unrelated print products, such as additional book or magazine titles, posters or other printed materials, as well as all Web uses. If the image is only to be used online, the publisher wants to pay $40 for five years unlimited use in any project, as well as the right to keep the image on the Web site for five years after any use, which effectively makes it a ten-year license).

There is no indication yet that any supplier has accepted this deal, but if the current average price for an editorial use of a rights-managed image is $94, then $80 is not that far out of line. And when unlimited Web use of a rights-managed image is being licensed for $49, why would $40 not be acceptable?

Those who have been around for a while will remember that less than 10 years ago, they made $140 to $160 for a textbook use for a 40,000-copy print run and additional fees for larger print runs and image uses in ancillary products.

How much further can or will prices drop—and how fast? More to the point, is it even worth trying to license images based on use anymore? Right now, the average price for a microstock image is believed to be about $6.50 and rising, but that is still a long way from $105.

But consider this. In 2006, Getty licensed rights to a little over 600,000 rights-managed images. It is believed that number has been declining on an annual basis ever since. Meanwhile, iStockphoto licensed rights to about 25 million images in 2008. That’s almost 42 sales for every one made by Getty. Yes, many rights-managed sellers are averaging more than $105 per image licensed, but with the increasing number of sales for low prices compared to very few for anything approaching traditional prices, the averages are certainly going down rapidly.

Based on these averages, rather than worrying about how much farther prices are going to drop, it might be more productive to accept the fact that eventually, they are going to get a lot closer to microstock prices and start worrying about how to reach out to all those customers currently using microstock who would not think of going to a traditional site.

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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