Microstock: Moving Up in the Face of Recession

Posted on 2/26/2008 by Julia Dudnik Stern | Printable Version | Comments (0)

While there is still a large gap between traditional royalty-free and microstock, image pricing and contributor commissions are rising at leading microstock Web sites. Even with recessionary woes, there are no signs of a slowdown in the micro segment.

Traditional stock producers have long agreed there was room for higher pricing in the microstock niche. Now that microstock is no longer new, its leaders are testing those waters. Fotolia recently launched an upmarket offering, with prices in the range of $20 to $100. It also raised prices of its micro collection. As of 2008, prices are up as much as 50% in some categories at the Getty Images-owned iStockphoto.

The price hike means higher earnings for image producers at iStock and Fotolia. Other agencies are taking a more direct route: offering higher commissions. On Monday, subscription-only micro Shutterstock announced plans to raise contributor payment, which is currently $0.25 to $0.30 per image download.

Jupiterimages-owned StockXpert pays its shooters 50%. The 40% of the newly launched StockXpert stock footage offering is also higher than the directly competing Shutterstock footage commissions of 30% and iStock's baseline of 20%.

Several younger and smaller sites offer even higher contributor compensation. Newcomer Zymmetrical, for example, pays 70%.

While higher commissions are universally welcome, rising microstock prices have created a stir.

Higher prices, fewer customers?

There has been some speculation that iStock's price hike had an influence on its sales. On its forums, contributors are debating whether  the company's "Spring Up" promotion, which discounts larger-sized images, was launched to combat a drop in volume. One photographers writes: "The introduction of this kind of sale discount, coming so hot on the heels of the massive price hike, really does give the impression of panic measures being introduced in response sales volume falling for these larger image sizes."

Even among iStock contributors, not everyone agrees. The higher prices should compensate for a smaller number of transactions. Barring one-quarter of iStock customers exiting at once, there should be no decrease in revenues.

In addition, site-monitoring services show no signs of a slowdown in the amount of traffic to the top six micro-payment properties, which includes 123rf, Dreamstime, Fotolia, Shutterstock and StockXpert. Except for the typical holiday slump at the end of December, Alexa Internet shows that the higher-priced iStock continued to outperform all others in page views and growth rate of traffic during the past three months.

Given the micro segment's rapid growth of the past two years, it is safe to assume that low-cost images will continue to be the fastest-growing industry segment, despite increasing prices. For a professional buyer, $20 remains inexpensive for an extra-large image. The overabundance of images in the market, as well as the growing number of micro-payment Web sites, ensures that even the most cash-strapped marketer can find plenty of $1 images, albeit of a smaller size or lesser quality.

Traditionals brace themselves

The recession could further encourage cost-consciousness in image choices. If that happens, the shift of the professional market from the traditional agency to microstock will increase proportionately to the decrease of designers' budgets. Though a general dropoff in the number of transactions can be expected for the entire industry, microstock is the least likely to feel the effects of an economic downturn. Conversely, it could be a boon.

Despite pressures from lower-priced competitors, there are still large numbers of successful traditional agencies and stock producers that can anticipate and react to changing business conditions.

Some stock producers have joined the micro ranks. High-profile examples include Ron Chapple, launching the microstock brand iofoto, and Image Source, which provides content to Fotolia's Infinite Collection.

Agencies that have not diversified into microstock are looking to video, illustration and even outside the stock business. The World Picture Network is now focusing on its assignment division.

All companies are looking to cut costs. Layoffs continue across the industry, most recently at Masterfile, which cut 30 production jobs this month. The company characterized the move as pre-emptive, responding to an ad-industry slowdown that reflects financial uncertainty in the U.S. market.

The rest of the stock community should take note. Being unprepared when an industry-wide sea change coincides with an economic downturn can equal disaster.

Copyright © 2008 Julia Dudnik Stern. 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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