In the next year image creators who are also image buyers may determine the future of stock photography. One-third or more of the images purchased may be bought by people who are also trying to sell their images. As buyers they want the lowest possible price. With their seller hat on they want the highest possible price. They will not get the lowest price when they buy and the highest when they sell.
There is a big question as to how many creators fall into this category, but in the past Shutterstock has said that one-third of its revenue comes from illustration. It is reasonable to assume that many of those who produce stock illustrations are also at least occasional buyers of stock photography.
Based on my analysis or
iStock’s leading contributors 23% of the images downloaded were illustration. Another 17% of the images downloaded were from contributors who produce both photography and illustration. Many of these contributors probably also buy images.
Recently Shutterstock released the following revenue breakdown in terms of the size or the image buyers.
| |
Percent Total |
Revenue in |
| |
Revenue |
Millions |
| self employed |
25% |
$82 |
| 2 to 5 employees |
28% |
$92 |
| 6 to 50 employees |
28% |
$92 |
| 51 to 500 employees |
12% |
$39 |
| more than 500 employees |
7% |
$23 |
Thus, over half Shutterstock’s revenue ($174 million in 2014) comes from small firms with fewer than 5 employees. Most of these companies are probably graphic design firms purchasing images for relatively small projects for small and medium sized businesses. Another 28% of buyers are with companies that have 6 to 50 employees. Only $62 million of Shutterstock’s expected $328 million in 2014 revenue came from what are generally called large organizations. The company’s top 25 customers represent less than 3% of total revenue. Certainly small, in many cases occasional, users are responsible for the bulk of the company’s revenue. This is probably true for most of the other players in the industry.
Why Are These Buyers So Important?
As I pointed out in a
previous story where I compared the single-image-pack pricing of Fotolia, Shutterstock and iStock probably the biggest marketing advantage Adobe/Fotolia will have is that images are much cheaper at Fotolia. The chart below provides some comparative per image prices depending on the size of the image pack purchased.
| |
Fotolia |
Fotolia |
Shutterstock |
iStock |
| |
Medium |
XXL |
|
|
| 1 Image |
|
|
|
$12 |
| 2 Images |
|
|
$14.50 |
|
| 5 Images |
|
$7.20 |
$9.80 |
$10 |
| 10 Images |
$3.60 |
|
|
$9.44 |
| 25 Images |
$2.80 |
$5.60 |
|
$9.44 |
| 50 Images |
$2.80 |
|
$9.26 |
$8.67 |
| 100 Images |
$2.40 |
$4.80 |
$9.16 |
$8.33 |
| 200 Images |
$2.40 |
|
$9.16 |
$8.33 |
A significant percentage of the usages these days require medium or smaller file sizes.
Fotolia’s prices for this file size are significantly cheaper offering a perfect marketing opportunity for Adobe.
If Adobe uses this marketing strategy, will Adobe Creative Cloud users who are also image producers embrace the lower priced offering, or will they continue to pay significantly higher prices at Shutterstock and iStock for the images they need.
At this point we need to also remember that back in 2011 when iStock decided to lower contributor royalties a significant percentage of buyers abandoned iStock and started buying the images they needed and Shutterstock, Fotolia and others. This is one of the major reasons for the tremendous growth of Shutterstock and Fotolia in the last four year, and iStock’s corresponding decline.
If Adobe decides to adopt this marketing strategy it won’t result in a cut in royalty rate, but it will have the same effect. If customers start buying images at Fotolia instead of Shutterstock and iStock the royalty on a much lower price will be much less.
Will buyers continue to shop at Shutterstock and iStock. Will they pay more than necessary for the images they need, because the prices are still reasonable and the fees are billed to their customers, or will they go for the cheapest price?
If a significant percent of customers go for the cheapest price Shutterstock and iStock will probably be forced to cut their prices. In that case, contributors lose no matter where their images are purchased.
Something to watch.