It’s no surprise to anyone in the stock photo business that average fees for image use are declining. The questions are how much, what’s causing the decline, can we make it up in volume and how can we turn it around?
There is a tendency among photographers to focus on occasional big sales for multi-thousands of dollars and believe that “things aren’t so bad,” and “customers will still pay for quality imagery.”
I’ve talked to some agents who’ve been in the business for decades. One said, “All I can say for sure is that fees for images have gone down progressively each year and we get less now for reproduction fees that we did in 1980. And that is without taking into account inflation which would make it much worse. The only time we were able to raise fees was in a period of extreme inflation. If we were to have a new period of inflation now, I don’t believe we would be able to raise the fees in the same way as the dynamics are so different.”
Another agent pointed out that not only are average fees down, but the “lawyers” representing many corporations are insisting on more rights for the same or less money. He points out that in many cases actual usages aren’t really any greater than they have been in the past, but the lawyers want the widest possible rights “just in case” they might one day want to make extra use of the image. Of course, when they do make those extra uses the image creators don’t get any more money.
Over the last six years I’ve been able to track several thousand unique RM sales from a general (not niche) collection of images. These sales were made by a number of distributors around the world, but none were made by Getty or Corbis. Some sales were for multi-thousands of dollars, but a significant number were for small uses and small amounts of money. Below are the average gross fees charged customers in each year.
| 2005 |
$340 |
| 2006 |
$293 |
| 2007 |
$300 |
| 2008 |
$274 |
| 2009 |
$200 |
| 2010 |
$190 |
These numbers represent a 44% decline in the average licensing fee over the six year period. It should be noted that the average license fee for an RM image licensed by Getty Images in 2005 was $565 compared to the $340 for this collection of images. However, from the information Getty reported publicly, and from anecdotal information from a number of Getty photographers their average price-per-image-licensed also declined during the same period.
Another important thing to recognize is that these numbers are not what the photographer receives. The selling distributor retains a healthy share of these fees and often a second agent is in the chain between the selling distributor and the image producer. Thus, it is not uncommon for the image producer to receive 25% or less of the above numbers.
Photographers have a tendency to look at average return-per-image-in-file (RPI). But there are two problems with this approach. Just adding more images to a collection doesn’t necessarily result in increased sales or revenue; it may only result in increased production expense for the photographer. Secondly, if the average price charged for the product is steadily declining then it is necessary to sell more just to stay even.
It is worth reviewing Getty’s average price-per-image-licensed when they were releasing quarterly figures between 2003 and 2007.
| Rights Managed |
|
|
|
|
| |
Q1 |
Q2 |
Q3 |
Q4 |
| 2002 |
$483 |
$467 |
$509 |
$479 |
| 2003 |
$550 |
$570 |
$576 |
$552 |
| 2004 |
$605 |
$581 |
$591 |
$560 |
| 2005 |
$596 |
$564 |
$562 |
$539 |
| 2006 |
$546 |
$547 |
$546 |
$506 |
| 2007 |
|
|
$480 |
|
| |
|
|
|
|
| Royalty Free |
|
|
|
|
| 2002 |
$89 |
$93 |
$107 |
$128 |
| 2003 |
$131 |
$142 |
$157 |
$165 |
| 2004 |
$193 |
$194 |
$202 |
$208 |
| 2005 |
$231 |
$239 |
$234 |
$239 |
| 2006 |
$256 |
$243 |
$231 |
$240 |
| 2007 |
|
|
$252 |
|
At the end of 2006 Getty stopped supplying investors with average license fee statistics as they had in the five previous years, but at the end of the third quarter in 2007 they did supply some numbers that enabled me to make a rough calculation of the average license fee for that quarter. As readers can see from these numbers, RM sales were relatively stable throughout the period peaking in 2004 and beginning a decline after that.
The average license fee for RF images grew dramatically from 2002 through the early part of 2005 and then leveled out.
What’s causing the decline?
I believe Getty stopped supplying average sale numbers in 2007 because they were beginning to see average prices trending down. Three major developments were responsible for this shift.
1 - By 2007, and thereafter, microstock – both single image sales and subscriptions -- were having a major impact on price. Agencies were forced to lower prices and offer deals to compete.
2 – Image supply was growing at a dramatic clip giving customers a lot more choice. This includes quality images being offered at traditional prices as well as all the microstock images.
3 - Getty began offering subscription deals to a wide range of customers with their Premium Access product.
One agent has argued that we shouldn’t include low priced Premium Access sales in any calculation of average price-per-image-licensed because they skew the averages downward. In my opinion any image licensed at Premium Access or other subscription prices is one less image the customer needs to purchase at a higher price. If Premium Access sales are generating a lot more unit sales than were made in previous years then there might be some justification for treating them separately. But I don’t believe this is the case.
Traditional print customers are not using more images. The only growth in image use we’re seeing is for small-business and personal web sites and these customers are unlikely to every pay traditional prices for the images they use.
Another development that had some effect on prices was the recession. But general economic recovery will not turn around the price picture for photographers. The recession taught clients to negotiate more and harder -- lessons they will not forget when the economy improves. Clients know they have choices, and that prices are negotiable. They will keep pushing.
Can we make it up in volume?
Lower prices might not be a problem if the number of units licensed was increasing dramatically, but for most sellers that is not the case. Companies that have acquired other companies, or expanded their distributor arrangement might have significant increases, but such cases are rare. Again, Getty’s historic sales are instructive.
| Rights Managed |
|
|
|
|
Total Images |
| |
Q1 |
Q2 |
Q3 |
Q4 |
Licensed for year |
| 2002 |
|
129,160 |
118,200 |
117,922 |
|
| 2003 |
132,418 |
116,491 |
113,542 |
124,094 |
486,545 |
| 2004 |
131,900 |
126,764 |
119,458 |
127,350 |
505,472 |
| 2005 |
134,178 |
139,628 |
138,861 |
146,493 |
559,160 |
| 2006 |
157,839 |
153,126 |
142,948 |
154,032 |
607,945 |
| 2007 |
|
143,938 |
149,708 |
|
|
| |
|
|
|
|
|
| Royalty Free |
|
|
|
|
- |
| |
Q1 |
Q2 |
Q3 |
Q4 |
- |
| 2002 |
|
238,060 |
257,058 |
235,400 |
|
| 2003 |
220,381 |
223,028 |
222,256 |
213,128 |
878,793 |
| 2004 |
212,072 |
208,247 |
219,306 |
223,285 |
862,910 |
| 2005 |
235,887 |
263,515 |
264,316 |
248,703 |
1,012,421 |
| 2006 |
241,836 |
269,794 |
276,580 |
265,541 |
1,053,751 |
| 2007 |
|
240,117 |
218,611 |
|
|
In 2003 Getty had 535,614 images in their Creative collection, not counting Editorial images. In 2006 the number jumped to 1,767,213 and today it is 3,458,650 images. During the period between 2003 and 2006 the number of units licensed increased about 22% while the number of images available for licensing increased 230%.This was a period when Getty was acquiring major brands and adding their images to its collection. Clearly, adding more top quality images doesn’t necessarily mean more sales.
Another interesting data point that clearly demonstrates that the volume of images in the collection doesn’t necessarily relate to the number of sales can be found on iStockcharts.
Take a look at http://istockcharts.multimedia.de. Sort by total downloads and then look at the number of files (images) that some of the top sellers have. Go in a few pages and you’ll get the sense that some people do very well with just a few images and some with lots of images don’t have many sales at all comparatively. Having more images in a collection doesn’t automatically translate into more sales.
Can these trends be turned around?
The short answer is No.
Some customers will continue to pay higher prices, but it seems unlikely that there will be enough of them to significantly increase the averages, of to sustain a business by just dealing with those who are willing to pay top rates.
As microstock prices increase there may be less pressure on traditional sellers to make further price cuts, but it seems unlikely that prices will actually increase. And because of the volume of choice available to customers, it seems unlikely that many individual sellers will see growth in the number of images licensed.
Therefore, individual photographers must determine if they can sustain their businesses at the level of revenue the stock part of their business is currently generating, or what other activity they need to engage in.
The important thing to keep clearly in mind is not that we make occasional sales high prices, but the average price of all sales.