“RM, RF or Micro” received some interesting comments. Indeed, usage-based pricing is not going away; there will always be some demand for exclusive uses, for which customers will be willing to pay significant amounts of money. The question is how much and whether or not it is wise for most photographers to chase these customers.
Stock photography is like a lottery. In the lottery, there are different games with different levels of risk. In games where you can earn the most for your investment, the odds against winning are huge. When the chances of earning something are better, the potential for big winnings is usually not that great. No matter which game you play, there is no guarantee you will earn more than you invest. A few players will hit the jackpot. Many of today’s photographers would have a better chance of profiting if they were to invest in lottery tickets rather than producing images for licensing as stock.
Less than 1% of total images licensed today are licensed based on use under the rights-managed model. All the rest are licensed based on a one-time fee that allows unlimited and multiple uses—the royalty-free model. If customers are looking for the freedom to make future use of an image in some still unknown way, they are not likely to consider any rights-managed images. If customers have budget considerations, they are not likely to think of rights-managed images.
One way to level the playing field a little is to offer rights-managed imagery alongside royalty-free and microstock. If the customer finds a rights-managed image she likes, and knows it is unlikely the image will ever be needed for another purpose, she may be able to negotiate a price she can afford. This is particularly true if the use is small. Alamy and Getty Images offer some prices at near-microstock levels for small electronic uses.
But the reason photographers offer their images for rights-managed licensing is not because they hope to make $5 to $49 sales, but because they hope to hit the jackpot with a multi-thousand-dollar sale. It is this hope of hitting the jackpot that is so unrealistic; the odds of it happening are infinitesimal. Since 99% of the images licensed today are royalty-free, rights-managed sellers are chasing 1% of the market. Moreover, a huge portion of these buyers are not interested in exclusive rights, but rather are perfectly satisfied with non-exclusives, with price being the primary motivating factor.
As to pricing itself, high-dollar rights-managed sales are the exception rather than the rule. In many cases, a rights-managed image is sold for less than royalty-free. According to Alamy’s figures for the third quarter of 2009, the average royalty-free price was $177, while the average rights-managed price was only $118.
Consider a group of 100,000 images licensed for various uses under all the different licensing models. 97,000 of them were licensed as microstock or via subscription, 2,000 were priced at traditional royalty-free levels and 1,000 were licensed as rights-managed content. Of that 1,000, most were licensed for non-exclusive uses—and for the most part, at low prices. Alamy’s third-quarter 2009 average price for a commercially used image was $289, and $103 for an editorial image. It stands to reason that no more than 10, and probably less than 5, of a 100,000-image pool were licensed for exclusive or limited exclusive uses with fees exceeding $2,000.
Between 75 million and 100 million images are licensed worldwide each year. Those who choose rights-managed licensing are only going after 1,000 out of every 100,000 sales. A few of the top photographers with lots of experience shooting the right kind of subject matter and solid reputations in the buyer community can get a much higher percentage of the big sales than the majority of sellers. Some agencies will sell a lot more than others. Before quality microstock was available, there were probably about the same number of exclusive sales, but their percentage of the total was much higher, because the total number of sales was much, much lower.
Photographers need to realize that stock photography is a game of percentages. It is not about having great images. It is about having the right image, in the right place, at the right time. There is no predicting what the right image or the right place will be. Todd Klassy’s Flickr-hosted image of seats in a football stadium sold it for $10,000 for an ad. Was there any way of predicting that demand? Will such a photo ever be needed again by anyone? What are the odds of earning some money from the photos you produce?
Despite several readers’ assertions, I want to emphasize that I am not at all convinced that placing one’s images in microstock is the answer. There are a few exceptions, just as there are a few exceptions on the rights-managed side of the business. A few lottery winners also hit the jackpot each week. But in all cases, the winners are all a very small percentage of the players.
In my opinion, the best system for licensing rights to stock images would be to make all stock images available at all price points (with the exception of offering exclusive rights). Image prices should be based on certain broad categories of use. Some of the smaller uses could also be limited by the file size delivered. But until such a plan can be implemented, photographers must face the reality that most images are purchased using the royalty-free pricing model.