When I first heard about a blockchain based strategy for licensing stock images it sounded like it might have some potential. What photographer wouldn’t like to be able set the price for the licensing of his/her images, have customers pay those prices, and have most of the price the customer pays immediately credited to the photographer’s account. Sounds great.
But the more I think about it, the more this seems to totally ignore the psychology of stock photo customers. I’d like to find a way to get a more even balance between what customers want (more and more for less and less) and what image creators need (enough to cover production costs and some reasonable profit), but I don’t think this is it.
Way back in the 1980s every image used to be licensed based on usage. There could be dramatic differences in price for the same image depending on how it would be used. There could also be significantly different prices for similar images from different agency sources. There was negotiation on a huge percentage of the sales. We didn’t make that many sales compared to today, but we got a lot higher average price per image licensed.
Then in the early 2000s (maybe some in the 1990s) major image users started to say, “I need more control over what I’m spending for images. I know I’m going to need approximately X images a month. Obviously, I don’t know which ones. I can afford to pay Y per month.” They told the agencies, “I’ll pay you Y every month, even if I don’t use as many images one month as the next, as long as you’ll guarantee that I can get any image I want, and as many as I want, during the month.” Some stock photo agencies said OK.
Suddenly the price of all images was equal regardless of how unique they were or how much each might have cost to produce.
The monthly fee, and the number of images allowed, varied between customers depending their general type of usage. More and more customers got used to this system.
Some customers also said, “I want to download a lot of images that I’ll only use for planning purposes as I create my designs. Much of what I download, I’ll never use on the Internet or in any finished product. I might download 300 in a month for planning purposes and only actually publish 30. I don’t want to bother to report to you which ones I actually use, but I only want to pay for the number I use.” More stock agencies said OK.
I don’t see how blockchain can deal with customers who expect this kind of service.
Shutterstock said, if you pay us $249 (or $199 per month for a year) we’ll let you download up to 750 images a month. That works out to $0.33 per image, if the customer actually downloads 750. However, in actual fact it turned out that on average customers only downloads about a quarter of the images allowed. In recent years, customers have started pressuring the agencies to offer smaller image packages at even lower prices so they can choose a cheaper package that more precisely fits their needs.
What About Rights Managed
For a while rights managed images were priced based on actual usage. That is still true today for a certain small percentage of uses. Will the blockchain system work for the RM images? How will creators set different prices for each particular license based on how the image might be used and production costs?
About a decade ago Getty Images was feeling pressure from Shutterstock and Getty’s customers were saying, “We like your images, but the prices are too high, particularly for RM. We’ll pay you a higher monthly fee, but we want to be able to use any image from your collection, not just RF.” So Getty introduced Premium Access.
With Premium Access the customer pays a fixed monthly fee for unlimited use of any image found in either the RM or RF collections. Only the people in Getty’s accounting department know how these fees are established, but I believe Getty looks at the general type of usage (all Internet, or magazine editorial, advertising, etc.), the size of the company and what Getty thinks the company can afford to pay. Presumably, the fee may be adjusted from time to time based on actual usage.
Blockchain reporting (and immediate payment to the creator) would be impossible with this kind of pricing because no one – not the customer, not Getty – knows the price of a given image until the end of the month.
Suppose Getty says, “Pay us $2,000 a month and you can download as many images as you want.” The customer pays $2,000 and over the next month downloads 580 images. Getty doesn’t know until the end of the month, when they have a total count of all images downloaded, that each image was worth $3.44. So Getty (or a blockchain) would not be able to report to a photographer, until possibly 30 days after the image was downloaded, what its actual value was.
To make matters worse it is entirely possible that a significant percent of those 580 images (maybe 500) were just downloaded for planning purposes as designers worked on their projects. The 500 may never be actually used in any product presented to the general public by the company. No one knows because no one tracks this activity.
With this system the photographers whose images were never used receive exactly the same payment as those whose images were used.
Some may think that $3.44 seems an artificially low price, but based on
analysis I’ve done of 2017 sales reported to some of Getty’s major contributors 33.14% of their total sales were for gross prices under $5.00. And a huge number of those were for prices way below $3.44.
Percentage Of Sales Falling Into These Categories
Some blockchain supporters might say, maybe a percentage of low priced sales will be lost, but isn’t there room for the blockchain strategy to get a foothold?
As I see it, the worldwide market for still stock images and illustrations (not counting editorial hard news and footage) is about $1.6 billion annually. (IPStock says the, “content market is estimated to be around $4-6 billion this year… and will be more than $10 billion by 2022.” I totally disagree with these figures.)
Getty Images, Shutterstock and AdobeStock combined control about 70% of that market. I don’t see any way for these companies to adopt a blockchain strategy. At the same time, I don’t see these agencies going away or disappearing. So they are going to be out there competing for the attention of customers. They already have strong relationships with all these customers and are providing a method of operation that the customers are comfortable with and really like.
I don’t see the customers wanting to make a shift unless there is some real economic benefit for them. I can’t see what that benefit might be.
Growing Market
Blockchain supporters will say, “Isn’t there a huge and growing market? Can’t the blockchains get a share of this new market?”
In 2017 I believe about 500,000,000 images licensed by all agency sources around the world. At best 25 to 50 million of those sales might be candidates for a higher priced, blockchain strategy where each image is paid for separately and the moment of download.
The number of people willing to pay for the stock images they want to use is flat, or slightly declining. The number of images Shutterstock licensed in 2017 is up less than 2% compared to 2016. Probably 80% of Shutterstock’s images are licensed at subscription prices and upward of 95% for less than $15. With Getty at least two-thirds of their traditionally priced images (non-microstock) are licensed for prices under $20. Prices are going down, not up.
One interesting factor that you can see from
this chart is that about 18% of the images Getty is licensing are for prices over $100. Combined these sales may represent over $230 million of Getty’s revenue.
In theory a blockchain system might be introduced that would aim at customers willing to pay these higher prices. A significant number of these sales tend to be one-offs for larger uses, not part of a subscription product. But since these same images are often licensed by Getty to other customers for much lower prices via subscriptions it is hard to see how separating them out for just higher priced sales could work. One would think each image would have to be available in one category or the other. It is hard to see how images could be available at both high and low prices depending on the need of a particular customer.
In addition, many of the image creators who have been licensing their images at higher prices have exclusive deals with Getty. They cannot easily remove their images from the Getty collection and place them with a blockchain distributor. Photographers licensing images on a non-exclusive basis could place the same images with a new blockchain distribution network and license through both channels simultaneously. Of course, the risk is that the customers will discover that they can get the same images through a cheaper, easier to work with channel.
Image creators will be required to decide whether they can earn enough selling their images at a higher price and receiving a higher royalty share by selling through a blockchain distributor, than they can earn from a potentially much higher volume of sales made by one of the existing traditional distributors. The also need to recognize that given current market trends the number of customers willing to pay higher prices for the images they need is likely to decline rather than grow. The decision will not be an easy one.
Direct Sellers
Photographer whose businesses are focused on assignments may have a better chance of success with a blockchain system. These photographers may post images on their personal websites as well as Facebook and Pinterest as a way of trying to generate assignment business. They probably don’t market their images as stock, or at least not very aggressively.
If they place their images with a blockchain and set their price at whatever they want, they might make a few sales. But, if the blockchain company also searches the Internet for unauthorized uses of images in its collection the photographer might have a chance to collect a fee when such uses occur.
Copytrack is one company that focuses more on trying to locate and collect on unauthorized uses.
The dilemma these photographer face is where to set the price for the use of their image. It seems that one price would have to apply to all usages. There is no current indication that anyone will offer a system for setting different prices for different types of usage.
Bloomberg recently published a story on
Bitcoin craze that provides some interesting insights on how frequently customers are using bitcoins to purchase products and services.