RM photographer working with the major stock production companies may have some very difficult decisions to make in the near future.
With the rise of
Offset,
Stocksy,
AdobeStock Premium and
iStock Signature it seems that RM photographers that are not also owners or shareholders of production companies, like
Blend Images,
Image Source and
Tetra Images, may find that they can earn more by moving their collections to RF.
First off, RM revenue has been dropping dramatically and in the past year particularly. With Getty’s move to make RF the default search fewer customers are even looking at RM images, let alone buying them. And Getty tends to dramatically under price most of the RM images it licenses. In most cases the images might as well be RF. In at least one case of a major RM supplier over 70% of his images licensed by Getty in 2015 were made available to customers for under $25 each. I believe many other Getty photographers have had roughly the same experience.
While Getty isn’t the only distributor offering low prices for RM, they are certainly a major one. Other distributors are often forced to lower their prices if they want to make any sales at all.
Many RM suppliers are being encouraged to move a significant portion, if not all or their images to RF in order to give the images a chance of being seen. Less than 1% of the images licensed annually are RM. If we remove all downloads via subscriptions and only count single image licenses the percentage of RM licenses may rise to 3% leaving at lease 97% of sales RF.
RF licensing can make economic sense, but it is often a very hard sell to photographers who have spent years believing that their images should be worth more given their “quality” and “production values.” In addition, ego, arrogance and pride often drive photographers to place their work with RM suppliers, even if they make few, or no sales.
One of the arguments that convinces many photographers to stick with RM is that the royalty share of the sale is higher. This is fine if the royalty is calculated on the amount paid by the end using customer. But, it is my understanding that a very high percentage of sales made by Blend, Image Source and Tetra are made through distributors, not direct to customers. Thus, a 50% royalty share from the production company often ends up being 25% of the low fee the customer actually paid.
I believe Blend, Image Source and Tetra are all pushing hard to make more direct sales, but it is my impression that direct sales still represent a very small percent of their overall revenue.
Microstock Alternative
Once a photographer accepts that RF licensing makes more sense than RM then it may be time to consider various other RF licensing options.
The prices some Microstock sellers charge are higher than Getty’s real prices - In some cases, significantly higher. (Forget about Getty’s list prices on its website because seldom does Getty charge those prices.)
If sales through Getty represent a significant percent of total images licensed, and if many of the other traditional RM distributors are matching Getty’s prices, then switching to Microstock may not make that much difference in terms of revenue per-image-licensed.
Increasingly customers are going to the Microstock sites because the customers perceive that prices are lower (even if they are not), the transaction process is easier, and these sites have a flood of new imagery, some of it very good. As a result, the Microstock sites are making significantly more unit sales than traditional distributors.
Another advantage to Microstock as compared with the traditional distributor system is that virtually all the sales, no matter where in the world, are direct to the end using customer. There is no double cut in royalty where the sale is actually made by a distributor of the photographer’s prime agent. In such cases both the prime agent and the distributor take healthy cuts of the gross sale price.
With RF, exclusivity is not that big of an issue, although for the time being most of the higher priced RF collections are either demanding co-exclusive rights, or giving preference to those who give them exclusive rights.
Of course, one of the problems of dealing with multiple sites on a non-exclusive basis – and a problem Blend, Image Source and Tetra solve for their photographers – is the hassle of dealing directly with multiple distributors. This can require a huge amount of administrative time on the part of photographer.
Looking at the options many RM photographers may simply decide to stop producing. But, in the long run that doesn’t really benefit anyone.
Blend Comments
I asked Blend CEO, Rick Leckrone for comments. The following are his thoughts.
On the whole, I agree with your observations. Speaking from
Blend’s perspective, 2015 was our largest sales year for Rights Managed content since inception. We were producing very high quality work based on strong creative research. And for all intents and purposes we became a ‘big fish in a small pond’ By providing our resellers fresh RM work every month, they in turn were presenting this content with quite favorable search placement to an audience who seemed perfectly comfortable purchasing the material (at prices not much higher than average RF prices in most cases.)
The “canary in the coal mine” for RM in particular for Blend was Corbis throwing in the towel. It has become obvious that other changes in the commercial RM space were likely follow. Of course, we have many other resellers who handle RM, but in the end, and with extensive sales analysis, it became apparent that the slightly higher overall RPL (return per license) in RM was not enough to counter % of collection licensed over time. While in RF, yes, RPL was a bit lower, but throughput was so much higher. It became evident that forward opportunity was likely in the RF space for most material.
Add to this analysis, MOST of our large ‘exclusive’ sales for the past few years were RF conversions. We licensed an image a few weeks ago for $49,000. It was an RF image now being taken off the market for some amount of time. Contemporary art-buyers (I use the term generically to mean the larger image licensing client community) really don’t seem to mind, in most cases, that the image was an RF shot. Bottom line is that about 38,000 of our 42,000 RM shots have been converted to RF. There is some material quite unique to Blend we are not converting at this time. And of course, there is some material that has existing restrictions.
As for tracking exclusives and special licenses in RF, our RM systems handle those exceptions with efficacy. And, indeed, we will still accept in certain instances RM material.
You mentioned direct sales in your piece. It is true that Blend has operated primarily as a content generation and aggregation company relying on channel sales for almost all of or our revenue. But clearly market conditions have changed, and our research has strongly concluded art buyers are absolutely looking for more flexible licensing options, fresh content, and different visual perspectives. We are very confident that our collection as it continues to grow in quality and into wider variety of content can offer a compelling search and licensing experience. Since launching our new website, and employing integrated CRM, SEO and the whole panoply social marketing, our direct sales are growing exponentially.
Working directly with clients provides two benefits, of course if done in a way that is profitable, this provides a farm-to-table opportunity for our artists. But equally important is just how much we’re learning about todays modern art buyer - talking to millennial clients gives us ground level insight on how images are being used, the kind of content that is needed and where the visual market is heading. This in turn allows Blend to make better imagery for all of our sales partners.
At Blend, our passion is creating purposeful and compelling visual content. And while we don’t believe that RM should be completely disregarded as an opportunity, the future as we see it will be in removing barriers to complexities in licensing, creating content that is resonant with today’s buyers who grew up in an environment dominated by visual storytelling, and in leveraging technology to bring the artist and the client closer together. I think the strongest agencies over the next 10 years will be those which can create environments, through technology and otherwise, were the talent of the designer (client) and the talent of the image-maker can truly work in seamless collaboration.