Is Simplified RM Really Needed?

After reading last week’s article on “Rights Simplified Pricing” a reader asked if I could expand on why an alternative to Rights Managed pricing is needed. He said that seldom has he found that customers are unwilling to pay fotoQuote RM rates that are based on how images are used. The following is my response.

When I got into the stock photo business all stock images were licensed based on usage (Rights Managed). In the 1990s Royalty Free pricing was introduced and the models began to change. In 2015 less than 1% of stock images worldwide were licensed using some version of RM. All the rest were licensed as RF. Over the last decade of more there has been a steady decline in the percentage of RM licenses compared to RF. There are basically two reasons for this. One is price and the other is that more and more customers want a simplified license that gives them more flexibility in how images they purchase can be used.

On caveat to the above figures is that most of the information I am able to gather comes form stock agencies, not individual sellers like yourself who devote most of their marketing efforts to  selling directly to end users, not marketing their work through stock agencies.



Certainly, there a huge number of photographer who occasionally sell a picture to an end user. I have no idea how to really assess their number, but from the relatively few that I am able to talk to I get the sense that the number of sales they are making has declined in recent years and the amount they are earning per-sale is also declining.

Photographers on the assignment side of the business seem to be experiencing similar declines.
The number of photographers trying to get assignments has increased dramatically in the last decade. This makes It easier for customers to find someone who will work for what they want to pay. It is also a lot easier to find cheap stock images. More and more of the people selling photos are doing it part-time rather than as a way to earn their entire living. These shooters view photo earnings as a supplement to their primary source of income. Seldom do they carefully weigh their production costs against their earnings.



In addition, many young people are excited by the glamour of taking pictures. If someone makes an occasional use of one of their pictures, and they receive a little compensation, they are more than happy.  They continue to produce and sell at whatever price they can get until eventually the work involved for meager rewards becomes so frustrating that they give up trying to sell pictures and move on to some other way to spend their time.

I do believe that photographers like yourself are still able to get the prices you’ve always charged for your work. You have a few advantages:

1 – You have been selling images for lots of years and have a strong collection of work,


2 – You have specialized in a type of imagery that some customers need, and those customers often find it difficult to locate images of similar quality from other sources,
3 – For some customers smaller, better edited collections are of more value than huge numbers, and
4 – Over the years you have developed contacts and a reputation with the customer who need your kind of work.

However, I suspect the number of sales you are making annually, at fotoQuote rates, has been declining. Certainly, that is true of a lot of the experienced photographers I talk to. Many of them are spending less time trying to sell stock picture and moving on to other activities – some photography related and some not.

There are still some customers willing to pay traditional prices. They like to buy from specialists who supply them with extra services that the big agencies can’t or won’t offer. But, clearly their number is declining.

I recently did some analysis of 2015 sales of some of Getty’s major RM and RF contributors. Roughly 7% of the images licensed were for gross sale prices of $200 or higher. Between 60% and 70% of sales were for gross sale prices of $25 or less. It is difficult to get fotoQuote prices when your competition is making images available at prices that are so much lower.

It was also interesting to note that for the most part there was very little difference between the prices charged for RM and those charged for RF. The only major difference is that very occasionally (less than 1% of sales) the fee charged for an RM use was over $1,000. This pushes the averages up. But, if you take those sales out of the equation there is almost no difference between RM and RF prices – only a difference in the rights granted.

Back in 2006 Getty’s average gross price per RM image licensed was about $560. For RF it was $270. As best I can determine, at the end of 2015 Getty’s RM average was under $300 (including those few big sales) and the RF was about $130. While prices have steadily declined quarter-by-quarter over the last few years that hasn’t resulted in increase increased volume. The number of RM sales also seems to have been declining, although not as fast as prices.

Niche producers often have a better chance of sticking with fotoQuote prices than those who concentrate on producing the high demand business, lifestyle and food images. I thought it would be interesting to compare some of the subject matter you’re known for with what’s available from the major distributors. I went to your site (www.johnfowler.ca) and chose some of the subject matter I thought might be in short supply at the major stock photo distributors.

Here’s what I found in terms of images available on each subject.

	Shutterstock	Getty Images	Alamy
Butterflies	556,633	48,568	62,879
Moths	59,414	7,691	15,715
Beetles	90,191	15,160	19,398
Spiders	122,749	14,784	19,607
Ticks	29,428	5,111	1,873
Centipedes	3,042	430	653
Worms	56,158	5,749	28,500
Arthropods	53,082	198,985	24,990
Arethusa Orchid	15	7	35

I would think every one of your customers, or the customers of any small individual seller, is well aware of these major image distributors. Shutterstock customers can get as few as 2 images for $29. If they need more and purchase a larger credit package they can get what they need for a lot less per image. Many RM sellers like to think of the customers who won’t pay traditional rates are low budget operations that only use pictures occasionally. In fact, the companies purchasing images from Shutterstock include most of the major, volume picture users in the world.

In addition to having over 1.5 million customers, Shutterstock has over 28,000 “Enterprise” customers that each spend an average of over $1,000 per-quarter with Shutterstock. Consider how many images these customers can get, and use, at Shutterstock’s low, low prices.

One of the arguments made by customers for using specialists is that they save the customer time. For some customers, that savings is worth paying a little extra for an image. Some art directors report that today they are expected to produce 8 to 10 times the number of projects a week as they were 10 years ago. Time is an issue, but not everyone.

There is also inertia. Once a buyer has found a reliable source they tend to stick with that source as long as they can afford the fee charged. But, at some point, if there is a huge economic advantage, or a time saving advantage to switching, they will go through the process of moving to a new supplier. The old high priced supplier can try to hang onto customers by providing a better price, or better service, but neither may be enough depending on the advantages the new supplier offers.

Art directors are also being pressured by their bosses, or the customers they work for, to produce projects at lower cost. Occasionally, they will pay more for really hard to find images. But, in future they will probably spend most of their time searching for images available at lower prices.

This, doesn’t mean you should sell the images at whatever price the customer is willing to pay. While that may result in additional sales volume, there is a good chance (based on what I’m seeing from most sellers) that the additional volume at a lower price still won’t generate enough revenue to justify continued production. Often it doesn’t even justify the effort necessary to continue to make the images you have already collected available for sale.