Recently John Fowler wrote on the Stockphoto Group blog on Yahoo “My promotional efforts are failing me,” and asked other photographers for advice on the promotional strategies that are working for them.
John shoots mostly natural history imagery with an emphasis on insects especially those of agricultural, health and economic significance. He tries to make his images a little better than most of those available from competitors. Given the nature of his work many of his customers have probably been in educational publishing so we’ll look at that market first. He licenses his work as RM and has made minimal use of agencies preferring to deal directly with the customers.
His problem is not unique.
Educational Market
There are many factors that have resulted in declining demand in the educational market for RM images. It is important to recognize that this market is undergoing a huge migration from print to digital and that changes dramatically what they will need in the future and what they will be willing to pay. At the PACA International conference last fall Ken Carson, EVP and General Counsel of Cengage Learning said that 37.5% of their fiscal 2012 revenue, or about $750 million, resulted from the sale of digital products.
At the same conference Christie Silver of McGraw Hill School Education Group said that more than 50% of the images and illustrations used in a new 2013 reading program were for digital products.
More and more time and money is being focused on developing digital products and much less on new print products. With digital there is a need for more images, and often sequences that hang together to tell a story. Often, the single illustrations that worked well in the past are not sufficient for today’s digital multi-media presentations. Increasingly, the editors find they must organize new shoots in order to get what they need. But the amount per image that publishers are willing to pay for their digital needs is much lower than it was for print.
Reusing Existing Material
In many cases we have already given the publishers the images they need for their new digital products. In the last few years it has been common practice to license “electronic use” for a small additional fee as an add-on to the print product use. Often the definition of electronic use has been very open-ended -- sometimes unlimited -- giving the publisher carte-blanche to use the image in any electronic program that seems marginally related to the original print use.
The only limiting factor may be the time period specified in the overall license. But these days that is commonly ten years and often longer. Thus, there will be no additional fees for future digital uses for quite some time. And if the seller doesn’t maintain a good database that tells him when a license has expired he can be reasonably sure that the publisher will continue to use the image and not notify him.
There was a time when it made sense to license images for educational uses for prices that were lower than other editorial uses because an image in a successful book used to generate many re-use fees. With the long and very comprehensive licensing terms used today re-uses are dead.
Preferred Provider Discounts
To get the lower prices they need publishers have negotiated “Preferred Provider” discounts with most of the larger image suppliers. That means that the only time they will go to an individual supplier, no matter how good his work, is when there is absolutely no other source for similar imagery.
That doesn’t necessarily mean that the answer is to have one’s images with a major agency that has preferred provider agreements with the publishers. The discounts offered are often dramatic. Recently I had the opportunity to examine the sales reports of some of Getty’s major contributors. In 2012 between 25% and 40% of all licenses were for gross fees of less than $25 – sometimes significantly less. This was true for RM as well as RF although overall RM prices tended to be a little higher.
In 2006 Getty’s average price for an RM image was $540 and RF was $240. Based on the numbers I have been able to examine recently the average price in 2008 was about $480 for RM and $215 for RF. By 2012 the average price for all uses had dropped to about $300 for RM and $120 for RF. Despite the lowering of prices, and the almost tripling in size of their Creative collection between 2008 and 2012 there was a decline in the number of image licensed.
While we don’t have comparative figures for Corbis or Alamy we know that they go after the same customers and find it necessary to match prices in order to hang onto their customers. Getty, Corbis and Alamy also represent a significant percentage of the images belonging to the second tier agencies. Given the collections these three represent there is not a lot of need for publishers to go to specialist collection. Many specialist collections have found it necessary to agree to preferred provider agreements in order to get any requests at all for their images. They may not discount quite as much as the big three, but picture researchers are told to go to the cheapest sources first. Finally, when all else fails the researchers may go to individual contributors, if they have time.
Research Staff Reductions
Another factor to consider is that there has been has been a major downsizing of publishing staffs and an outsourcing of picture research. Thus, many of the editors we used to do business with are no longer doing research. Those remaining are under heavy time pressure. They need to get as many images as possible from a single source where negotiation is unnecessary because they know up-front exactly what they will have to pay.
Royalty Free and Microstock
Given how low prices are for RM uses and how few such uses there are, some photographers are beginning to wonder if they are shooting themselves in the foot by refusing to sell RF. Others insist that it is important for photographers to stick with their business model (RM) and trust that the market will eventually swing back to paying higher prices.
Let’s look at a few numbers. I estimate that in 2012 Getty licensed about 350,000 RM uses. Remember many of them were for very low prices. All the RM licenses worldwide probably totaled less than 1.5 million. In the early 2000s through 2007 Getty was consistently licensing about twice as many RF uses as RM uses on an annual basis. Thus, I estimate that about 3 million images were licensed in 2012 at traditional RF prices by all sources around the world.
Given the higher number of RF uses compared to RM, the fact that photographers are often able to get more RF images accepted for marketing than is the case with RM, and the declining royalty share for RM many photographers have been able to earn about the same licensing their images at traditional RF prices as others earn licensing RM.
But then we get to microstock. I estimate that in 2012 there were 50 to 60 million single image microstock licenses. The leader in this area was probably iStockphoto with around 10 million licenses. This was down from about 25 million a few years ago due in large part to the price increases iStock has imposed in the last couple of years. Many customers have found that iStock images are now often more expensive than RM or traditional RF.
In discussing the McGraw Hill reading program that use 23,806 images Christie Silver said they tend not to buy microstock because it is more expensive than RM. However, researchers tell me that 30% of the images they are acquiring for educational use come from microstock.
Ms Silver also pointed out that 48% of the images used in the reading program came from McGraw Hill’s wholly owned digital asset library made up to a great extent of RF images the company had acquired in previous years for previous products.
Subscription
The other source of imagery that is sometimes lumped with microstock is subscription. Shutterstock is the industry leader and licensed rights to over 75 million images in 2012. Some of these were licensed as single image for between $10 and $20 each. The average royalty per image licensed ranges from $0.30 to $0.65, but when you consider the odds of one of your images being used this fee is not as bad as it sounds.
I examined two similar collections of several thousand images with Getty RF and Shutterstock. In a 9 month period there were 17 times more sales through Shutterstock than Getty was able to make. If we consider volume 17 time $0.65 = $11.05 and this compares to an average royalty of $24 from Getty. But, images with Shutterstock are non-exclusive. Most people with images on Shutterstock put the same images on multiple microstock sites. The combined total revenue from the other sites is generally greater than what they receive from Shutterstock. Thus, the photographer’s total revenue from Shutterstock and microstock sites might equal what the photographer could earn through Getty.
Given the decline in RM and traditional RF prices it may be time to consider the alternatives.
Selling Direct
Anyone trying to sell direct must ask himself whether there is a worldwide market for his product and how much of that market he can address through direct marketing and promotion. If sales are limited to North America then the photographer may be missing about 60% of the world market.
The major agencies – both microstock and traditional -- are marketing worldwide. Shutterstock spent $32 million on marketing in 2012.
We know there is worldwide demand for people and lifestyle pictures, but is there a worldwide demand for insects. On iStockphoto the top selling insect photo has been downloaded more than 3,700 times. The one-hundredth on the most downloaded list has been used more than 400 times. Who are these customers? They can’t all be in the traditional publishing field. There must be other users for brochures, product marketing or websites. Most of these people are getting their images from microstock, not from traditional image sellers. How does the individual selling direct reach them?
iStockphoto has over 80,000 images keyworded insect. Shutterstock has 156,802 images. There is no way to tell how frequently any of the Shutterstock images have been downloaded, but it is reasonable to assume that the best selling ones have been downloaded many more times than the iStock ones.
Unfortunately, producing better quality images is not enough. It’s not about the quality of the work. It’s the easy availability of alternative images and declining demand from traditional users. There are very few customers – and their numbers are dwindling. Most are not willing to pay what we once considered a “respectable amounts to acquire images.” This is not going to turn around. Mobile devices are coming and will provide more competition and probably lower prices. New technology options such as
“focus stacking” or the
Lytro camera that makes it possible to adjust focus after capture are going to make it easier for amateurs with solid digital skills to create incredible macro images.
Sticking with a dying segment of the market will probably not work. Customers willing to pay higher rates are not coming back. Is it worth it to build a database and spend time marketing to customers that used to purchase RM, but in the current environment are probably not prepared to purchase much of what you have to offer? Or should you spend your energies going after a much larger customer base and getting your images where customers go to find the images they need, even if those customers are not paying as much as you would like? And, if it isn’t is it time to look for something else to do rather than plowing more money into a losing proposition?
For more background you might want to take a look at these articles:
Future Demand In Education,
Is There A Future In Creating Images For Educational Use?, and
Procedures To Improve Chances Of Licensing Images.