Customers Move From Traditional RF To Microstock

The second insight came as I was reading the business section of the Washington Post and noticed that a photo used as part of the lead illustration was credited to iStockphoto. This got me thinking. In the past I’ve seen a lot of photos in the Post credited to Photodisc. Now we may be seeing the beginning of a move from the more pricey Photodisc images to those of iStockphoto.

I began to contemplate all the newspapers around the world that might be doing the same thing and to consider why art directors and illustrators might use iStockphoto instead of more expensive Royalty Free images. People who work for newspapers are always in a budget crisis. They will usually go for the cheapest image.

In the same edition of the Post there were some very fine concept photo illustrations (not news pictures) produced by staff photographers. Once a concept picture of this type is used in a newspaper its dead to that paper. They’ll never use it again. But they could care less if someone else uses the same image.



In walks iStockphoto, an online community designed to connect art directors and other creatives so they can share information and resources. The Post has good wholly owned pictures and the costs are fully paid. They can post these photos on iStockphoto and maybe someone else will decide to use them. In that case the Post gets a few credits. But more important to the art directors at the Post, they can also go on the site, search for photos produced by the staffers of other newspapers or magazines, and buy rights to use any one of them for one credit or $1.

There is nothing wrong with the quality of most of the iStockphoto images and the community, sharing nature of the site has a strong attraction for many image users.



Problem For Photogaphers and Traditional Licensing Organizations

My readers who make their living producing images on speculation need to consider the implications of the above. Those making their living by licensing rights to the images produced by those described in the pervious sentence should also give some thought to the situation

Photographers have a cost of production they must recover if they are to stay in business. The price point of the iStockphoto model, while great for the image user, does not allow for recovery of costs. Because most photographers are not producing products or projects that use images, they have no desire to acquire, at the lowest possible prices, images produced by others to use in such projects which is the real benefit of the iStockphoto model.



Some photographers shooting images on speculation are posting them for marketing on iStockphoto, but at the quoted prices it seems unlikely that for the vast majority the volume of sales will ever be enough to offset the cost of production. Also so long as most of the user and image suppliers are more interested in obtaining photos at low cost than earning revenue from the images they post there is little likelihood that there will be much pressure to raise the prices charged to use the photos.

Agents, have no production costs, and may be able to match the prices charged by iStockphoto and other similar user communities. But it seems likely that if they do they will quickly lose their image suppliers. The agents could buy all rights to the images they represent, as some are doing, but in that case they have a cost to eventually recover. Agents could also hire photographers to produce wholly owned imagery, also as some are doing, but they still have a cost to recover and are in a disadvantaged position to the seller who is not worrying about recovering any cost whatsoever.

Looking Ahead

How successful is iStockphotos and others with similar business models likely to be in attracting image user? It is worth considering that Getty Images licensed rights to approximately 1.564 million images in 2005. On the other hand it is estimated that in 2005 iStockphoto generated between $4 and $8 million in revenue. If all their customers were getting images at $1 each that means that already photo users are getting significantly more images from iStockphoto than from Getty.

Some photographers believe that iStockphoto will never take a significant share of their market. Others say that now that Getty owns it, Getty could never afford to let it take a significant share and would kill the brand if necessary. I don’t think that is possible because once the idea of users sharing the images they create has been established killing one company would only lead to the establishment of many others with the same business model.

We may have reached the point – or will get there in the near future -- where creating images on speculation in the hopes of licensing rights to them is no longer an attractive business model. Photographers may need to begin exploring others ways of making a living.