As Selling Stock posited in January, iStockphoto’s first quarter seems to confirm that microstock has reached a plateau.
| Box: Methodology of calculating averages |
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In December 2009, 196 of iStock's top 250 shooters licensed 464,884 images per month on average. The method of arriving at this average requires some explanation.
In May 2009, it was possible to go to iStockphoto.com and determine the exact number of images licensed in each contributor’s career. In June, iStock changed its strategy and now only supplies the nearest lower round number of downloads. The actual number of downloads can vary by as much as 10,000. For example, >100,000 could be anything from 100,001 to 110,000. If the photographer’s total downloads are less than 100,000, the range is 1,000 downloads.
Our estimates were calculated by determining the minimum and maximum number of downloads each contributor could have had for the entire period. We subtracted the May 1, 2009 number from the April 1, 2010 number. Then we divided by 11 to determine the average monthly low for the 11-month period through March 31, 2010. We did a separate calculation for the average high, working with the highest possible number based on the information supplied. We are aware of a few contributors who have recently passed the low number, but some could also be very near the top of the range and about to move to the next level. Then we totaled the results for 196 contributors and compared them with the May totals.
We used the same method to determine the average for the eight months from May 1, 2009 to December 31, 2009. That information can be found here.
The lowest possible number of average downloads for the 196 contributors for the eight-month period from May 1, 2009 to December 31, 2009 was 416,642 per month, and the highest was 513,126 per month. The average of these two numbers is 464,884, which is a 5% increase over May 2009 figure of 442,533 downloads.
The lowest possible number of total downloads for the 196 contributors for the 11-month period from May 1, 2009 through March 31, 2010 was 420,136 per month, and the highest was 499,836 per month. The average of these two numbers is 459,986, which is a 3.9% increase over May 2009 or a 1% decline from the level at the end of last year.
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In May 2009, 196 of 250 top-selling iStock contributors had licensed a total of 442,533 images. (Information on some of the top 250 was not available.) Eight months later—in December 2009—this group licensed 464,884 images per month on average, a 5% increase over previous May. At the end of the first quarter of 2010, this group’s downloads averaged 459,986 images per month, which is a 4% increase over May and a 1% decline from December. (See box for more on the methodology of calculating averages.)
In addition, in the last three months, these contributors have expanded their iStock collections by a total of 27,409 new images. This averages to about 140 images each, or a total of 5% of all the images they have at iStock. The total number of images this group had in the collection at the end of 2009 was 509,842. Their combined total now is 537,251.
Based on these numbers it appears that the most productive of iStock’s contributors are, on average, experiencing very little, if any, growth in units licensed. (For the experience of individual photographers see this chart.) Most contributors continue to see revenue growth as iStock continues to raise prices, but there is a question as to how long they can do that before the company starts losing customers. In fact, that may already be happening to a minimal degree. A number of the iStock competitors are already under-pricing it.
The next thing to consider is the degree to which the experiences of 196 individuals are representative of the more than 80,000 iStock contributors. Currently, iStock has a total of about 6,579,000, meaning that the images belonging to this group represent about 8% of the total collection.
Percentage of sales these contributors represent
Jonathan Klein, Getty Images CEO, told TechDirt: “In 2005, Getty Images licensed 1.4 million preshot commercial photos. Last year, it licensed 22 million—and ‘all of the growth was through our user-generated business’.” Based on this figure, about 20.6 million of the images licensed would have come from iStockphoto. (Selling Stock had estimated iStock’s 2009 sales at 25 million to 30 million, but there could have been fewer licenses at higher average prices than we believed.)
In any event, an average 464,884 licenses per month for 12 months would equal 5,578,608 total sales for 2009, or 27% of iStockphoto’s total licenses, if it licensed 20.6 million images.
So we have 3/100ths of 1% of the photographers contributing 8% of the images to the collection and making 27% of the sales. The same paradigm—where a very small percentage of total contributors earn the majority of total revenue—is common on the traditional side of the business as well. However, photographers should take note. Anyone who believes stock photography is an easy way to make money should think again.
Other explanations for trends
Some other explanations for the leveling of sales should be considered.
Competitors may be taking some market share. In many cases, competitors offer the same images as iStock at lower prices. Though 161 of these 196 photographers are exclusive with iStock, 35 have their images on other sites. A high percentage of other iStock photographers are represented non-exclusively.
The growth in the size of the collection and number of contributors make it less likely that images belonging to any particular photographer will be chosen. On the other hand, customer tendency to choose images that have been licensed before gives these photographers preference in the search return order and is one of the reasons that 8% of images generate 27% of downloads.