Recently, I was asked my opinion of what
Shutterstock could do to grow revenue? The questioner had come to the conclusion that there will be very little growth in coming years in the number of stock photo customer or the quantity of still images or illustrations that each will use. He also feels that
iStock,
AdobeStock and even
Getty Images have priced their products very competitively with Shutterstock making it difficult for Shutterstock to simply raise prices.
I have several thoughts, but do not expect Shutterstock to adopt any of my suggestions.
I pointed out that Shutterstock could easily develop a two-tier pricing system. They could create a separate collection that includes only those images that have been licensed by customers at least once at the single-image-price. Then they could charge double or triple the current single-image price for future use of images in this premium collection.
iStock has a very successful two-tier system. They charge three times of much for images in their Signature collection as images in the Essential collection. It has been reported that 75% of iStock’s revenue comes from images in the Signature collection. iStock argues that the reason for the higher price is that the Signature images are exclusive to iStock. Shutterstock would be unable to make such a claim since virtually all of their images are non-exclusive.
However, I don’t think customers are buying Signature images because they are exclusive. They buy them because they are what they need for their project. The $30 price compared to $10 is still very reasonable for an image that really works for what they are trying to do. I believe many of Shutterstock’s image-on-demand customers would happily pay $30 for the right image that is easy to find.
Of course, it would always be easy for the Shutterstock customer to toggle to the much larger and cheaper collection of images that no one has ever used. Maybe they will find the right image there at a better price.
New images to the Shutterstock collection should be placed in the lower priced collection until they make one sale. Once they have made a single-image sale they could be automatically moved to the higher priced collection.
Such a system would have an added advantage for Shutterstock. With all the images Shutterstock has been adding to its collection in the last two years is it becoming harder for customers to find the right image. Increasingly, customers are required to spend more of their time doing image search. Many would find a smaller collection that contained only those images that had been judged usable by at least one other image buyer helpful. They would likely be willing to pay slightly more for such images. History has shown that a vast majority of customers are happy to use images that have been used by someone else, even when they know the image may have been used many times.
Shutterstock does have a two-tier system of sorts with their Offset collection. However, the images in this collection are priced much higher than most current buyers can justify. Many of the images in this collection are not enough of an improvement over those that can be found at significantly lower prices to justify the buyer’s time to search. Many customers will not even bother to look at this collection because they are scared away by the price. Consequently, I believe this collection represents a minute percentage of total downloads and even with the higher price points a small percentage of Shutterstock’s total revenue.
Initially, I would not include subscription downloads in this higher priced collection. Many of the images downloaded via subscriptions are used for reference purposes only, and never find their way to a final product. Nobody knows how frequently this happens, or which images are actually used.
If the image-on-demand collection is too small, or has big holes in popular usage categories, I might add some images downloaded via subscriptions if they had been downloaded by at least 6 or 7 different customers. The important point is not to equate one single-image download with one subscription download.
Other Advantages
A smaller collection would offer a couple additional advantages. The big advantage for most customers is that such a two-tier system would likely save them search time.
It would also enable creators to know what images have actually been selling in a particular keyword category. With this information they would be able to better plan future shoots, use their time more efficiently and hopefully produce more images that are on target with what customers are buying.
The higher prices for some uses would also provide needed encouragement to creators who have been seeing their Shutterstock royalties drop in the last year or so. Many of the best creators are giving up. Higher prices might provide an additional incentive to create.
Subscription Modifications
With over 110 million images in their collection Shutterstock has a huge percentage of images that are never seen by anyone because they fall so far down in the search return order. Some of these images may have sold in the past, but they will never sell again because no one will ever sees them
Shutterstock should have data that tells them how many pages a customer reviewed from a given search and which images actually appeared on those pages. With that information they should be able to easily determine what has and hasn’t been seen.
In Q3 2014 the number of downloads in the quarter was equivalent to 81% of the image in the collection. (Keep in mind that about 90% of those downloads were via subscriptions so not all those images were actually used.) We know that in many cases the same image was used multiple times so the actual number of unique images downloaded would have been much less than 81%. In Q3 2016 downloads in the quarter was equivalent to 40% of the images used. In Q3 2011 downloads in the quarter was equivalent to 91% of the images used.
I would identify images that have not been seen by any customer in one to two years. I would put them in a separate searchable collection and offer them at a 20% to 30% discount to the primary collection prices. If an image is licensed from this collection it is immediately moved to the primary collection.
The fear might be that if this lower priced collection is offered many existing customers might buy the images they need from it and avoid using the higher priced collection. I doubt that there will be a net loss in revenue, but certainly the theory is worth testing.