Subscription licensing is in for some dramatic changes.
We know that a significant number of the images subscription customers download are used in the designer’s “creative process,” but never find their way into a deliverable end product. Traditionally, creators of all the images downloaded – whether used in a deliverable product or not – have received an equal royalty share of the revenue paid for the subscriptions.
Adobe Stock has changed all that.
Unfortunately, no one – not Shutterstock, Getty or Adobe – has any idea what percentage of the downloads are used in deliverable projects. Adobe is about to learn. We do know that about 90% of Shutterstock’s downloads are through subscriptions. At Shutterstock customers pay by the image for each image they download in less than 10% of the cases. That might mean that only one out of every ten images downloaded via a subscription is used in an actual deliverable product, but we really have no way of knowing.
Adobe has told graphic designers that now they can download at no charge all the images they want to use in their creative process. The only images they must pay for are the ones included in a deliverable product that goes out the door. This gives designers huge freedom and flexibility, and may dramatically reduce costs for many.
Image Creators
Image creators who license use of their images via subscriptions have been receiving payment for images that are downloaded, but never used. Going forward, much of the payment for never used pictures will disappear.
Many Shutterstock contributors have been complaining of declining revenue in the last few month. There could be many reasons for such declines.
1 – Increased competition reduces the odds that any particular image will be licensed. Statistically quarterly downloads in Q4 2012 represented 92% of all the images in the collection. In Q1 2015 that percentage had dropped to 62%. (Some images were downloaded many times so the actual number of unique images downloaded would have been much less in both cases.)
2 – Image-on-Demand and Enterprise sales have been increasing as a proportion of total revenue. Thus, overall revenue for the company could be increasing while growth in unit sales is slowing or declining.
3 – iStock as well as Adobe Stock could be picking up some of the subscription sales.
4 – Growth in new customers could be declining.
Revenue or Unit Sales
Most contributors tend to focus on their gross revenue trends. Is revenue going up or down year-over-year?
It is time for them to pay more attention to unit sales growth in each of the various categories of licensing – Subscription, Image-on-Demand, Enterprise or Video. The odds of their images being licensed in any of these categories is dramatically different from every other category.
As the market dynamics change it is very likely that the number of subscription downloads will decline, not only at Shutterstock, but also at Adobe Stock and across the entire market.
Globally, this isn’t necessarily all bad. The number of units licensed at much higher Image-on-Demand and Enterprise prices may rise. Adobe image creators will receive a royalty for each download that is about three times higher than Shutterstock subscription royalties. But it is entirely possible that the combined Adobe Stock and Fotolia subscription downloads will be significantly less than Fotolia subscription downloads were in the past. Now a certain percentage of past subscription downloads that were used in the creative process, but never appeared in an actual finished project, will no longer be paid downloads.
Over a year or so this could dramatically change the market for stock photography. The following are my estimates of the number of stock images licensed worldwide in 2014. The actual numbers may vary somewhat, but I think the proportional shares are pretty accurate.
| Type of License |
Downloads |
Percentage |
| Rights Managed Prices |
2,000,000 |
1.0% |
| Traditional Royalty Free Prices |
5,000,000 |
2.6% |
| Single Images, Microstock Prices |
33,000,000 |
17.3% |
| Subscription |
150,000,000 |
78.9% |
| |
|
|
| |
190,000,000 |
1 |
Obviously, if almost 79% of the downloads are subscription, and that number drops significantly, it could dramatically lower the percentage of images in collections that will be licensed in one way or another. Since we know that the number of images available for licensing will probably continue to grow dramatically the odds that any single image will be licensed is likely to significantly decline.
On average the images that are licensed might be licensed for significantly more money. Consider that, even now, the average license fee of a subscription images at Shutterstock is about $1.25 and at Adobe Stock it is $2.99. And a much higher percentage of images that are licensed will be licensed at high prices. But, overall it may not mean more money in individual contributor’s pockets.
Image creators that count on a significant share of the revenue they receive coming from subscription licensing should start tracking the number of their subscription downloads very carefully in order to determine if the revenue generated justifies continued production.