Is RM Still A Viable Business Model?

Is Rights Managed(RM) licensing still a viable business model if your goal is to earn the maximum from your image collection? For most image creators the answer is clearly NO, particularly if part of the deal is to place your images exclusively with a single RM distributor.

If licensing rights to your images is a sideline and mostly unimportant source of income then the ego boost of maybe, occasionally getting a large fee for the use of one of your images may provide sufficient satisfaction. But such large fees are increasingly rare, and much smaller than they used to be. No matter how beautiful and creative the image, for most photographers the odds of one of their images being chosen for a high paid use are infinitesimal.

Originally, the RM licensing strategy was based on the idea that the amount a customer should pay to use a stock image should be based on the value the customer would receive from such a use.  The fee should be negotiated in each case based on the intended use. If the use is to be for a major print advertising campaign that would be published in many different publications over many months or years, and the image would become identified with the brand, a very high fee was justified. If the same image were to be published in a local brochure with a one-time distribution of a few thousand copies a very low fee is more appropriate.

Here are some of the reasons why RM licensing has outlived its usefulness.

1 - In today’s marketplace there are fewer and fewer big uses. Most uses have a narrow, focused distribution and a very short useful life.

2 - Increasingly, a larger and larger percent of RM images are being licensed for prices that are as low, or lower, that RF prices.



3 – Images are being used in a greater variety of ways. When a customer first chooses an image for a project they often have no idea how that project may morph into other uses, of if their project will simply be a one-time event.

4 – Twenty-five years ago the only way to license rights to a stock images was to negotiate the rights. Today, customers have plenty of other options.



5 – Customers no longer want to take the time (or have the time) to negotiate each use.

6 -  Customers don’t have the systems to track usages, or want to invest in such systems.

7 – Customers don’t want to accept the legal risk that they might accidently make an unauthorized use of an image they have acquired for a project. Consequently, they want unlimited rights to make future uses even if they never make such uses.

As a result of all this, two things are happening.

1 – A smaller and smaller percent of customers are even considering RM when there are good RF options available.

2 – If the customer requests it, most RM distributors will provide at least some of their customers with an “unlimited use” license for little or nothing more than they would charge for the first use. Thus, the RM images are often being distributed with what is, in effect, an RF license.

Consequently, fewer RM images are being used and often the prices are lower than RM.

Photographer Experiences

Some photographers who license some of their images as RM through an exclusive contract with a single distributor and other images as RF non-exclusively through multiple distributors tell me that they earn three times as much from their RM images as their RF despite the huge percentage of low priced RM sales.

But, those RM images are exclusive. If, instead, the photographer were to distribute his RM images through multiple RF distributors on a non-exclusive basis in all likelihood he would earn the same amount of money he is currently earning from RM sales, and maybe more.

Shutterstock is currently the largest RF distributor. Photographers who are represented by Shutterstock and multiple other RF distributors tell me that revenue from Shutterstock represents about one-third of their total stock income. Thus, total revenue is three times what they can earn from a single agency. The advantages are that they have more flexibility and have spread their risk

In addition, it is clear that the average prices charged for RM are likely to continue to decline and that average number of RM images licensed compared to the number of RF images will also decline.

Exclusivity Argument

Many photographers point out that their exclusive distributor also markets their images through a number of other distributors around the world. Consequently, they are, in effect, represented by many distributors and not limited to only the sales their prime distributor can make.

The problem with this argument is that the photographer is giving up a huge additional percentage of the gross price the other distributor charges to use the image. If the photographer were dealing directly with these other distributors then there is a possibility that the amounf earned from licensing RM compared to RF might be greater, but that is usually not the case.

In the microstock environment the image creator usually deals directly with each distributor. These distributors tend to sell directly to the customer and seldom, if ever, is there a second cut of the amount paid by the customer. The royalty percentage is based on the total fee actually paid by the customer.

Many RM photographers have been opposed to RF for years, but if they want to continue to operate in the stock photography business it may be time to carefully examine their sales trends.

Check out the number of sales and percentage of revenue generated for gross sales under $50, under $25 and under $10, and the percentage of total revenue each category represents. Then the photographer may also want to test the waters in the RF arena to see what kind of returns that might generate.