It may be time to retire Rights Managed as a licensing model. RM pricing doesn’t work for most customers anymore. Moreover, it no longer really maximizes the potential earnings of photographers.
There used to be a time when all image uses were in print. In those day when an art director purchased an image for a magazine ad, a book or a brochure she knew exactly how the image would be used in the layout and how many copies would be printed. Those days are mostly gone forever.
Now there are multiple ways to deliver every message. Most communication projects that use images are subject to being infinitely repurposed, reused and reproduced in weeks, days or sometimes hours as clients comes up with new and different ways to deliver the same message. Options change constantly and in some cases almost instantaneously.
For most customers choosing am RM image that is licensed for a specific use has become too great a risk. Many of the customers who are getting caught for
unauthorized use are the few that haven’t figured this out, but they are learning fast.
Adapting To The New Reality
Most buyers are insisting on the right to use the images they purchase in any way they choose. This is particularly true if the organization has multiple art directors working on the same, or different projects. There is always the risk that someone other than the person who negotiated the first rights will see the image and use it in another project thinking the image was initially licensed as RF.
The end result is that very few images are licensed as RM.
I believe the combined total of images licensed in this segment of the market in 2013 was about 183.5 million. This brakes down as follows.
| |
2013 Downloads (est.)
|
Average Price |
| Rights Managed |
1,300,000 |
$298 (my Getty est.) |
| traditional Royalty Free |
3,000,000 |
$133 (my Getty est.) |
| Midstock |
5,000,000 |
$35.00 to $45.00 |
| Microstock |
44,000,000 |
$6.00 to $7.00 |
| Subscription |
130,000,000 |
$1.25 |
All the growth is in RF and in images available at lower prices. In 2011 over 100 million images were licensed for use at microstock prices or part of low priced subscriptions. In addition untold numbers of images were downloaded from the Internet and used without compensating the creator in any way whatsoever.
Getty is the largest player in the RM segment of the market with about $150 million in Rights Managed sales and an equal amount in Royalty Free sales in 2013. It is worth noting that in 2006 Getty’s gross Creative Stock (RM + RF) revenue was $643 million. (See analysis
here.)
Based on my analysis of sales reports from some of Getty’s leading contributors I believe average price for a RM image in 2013 was in the range of $298, down almost 50% from the 2006 average RM license fee of $536. Many photographers who haven’t had some big sales may find their individual average even lower than $298. In addition Getty has more than 5.7 times the number of images in its RM collection as it had in 2006.
A $298 average may not sound too bad when compared to microstock pricing, but the only way you get there is to have a few of those very rare multi-thousand dollar sales. At Getty 25% to 30% of the licenses are for fees of less than $25. Over 50% are for fees of less than $100. For most photographers, no matter which agency they are with, the chances are that a higher percentage of their sales will be for fees under $100.
A few small, specialist agencies still hold the line on pricing. They won’t license RM images for these low prices. But in most cases they don’t make many sales. The only way an agency can compete with Getty is to offer similar, or lower, prices.
In theory, these low fees are for small, limited uses. But most customers who are buying RM images insist on very broad, unlimited use, or they just go somewhere else for the images they need.
It used to be possible to make a case that the better quality images were RM. That’s no longer true. There are great images available at traditional RF prices, at Midstock prices and even in some cases at microstock and subscription prices.
And every art director and image buyer knows it. If you think differently you’re kidding yourself.
There still remain 3 reasons to buy RM images rather than RF:
1 – The customer needs something very specific and can’t find anything similar that will fulfill their needs in any of the RF collections,
2 – The customer needs exclusive rights, but it is very rare for anyone to purchase exclusive rights today, and
3 – The customer doesn’t have the budget to pay for an exclusive, but would like to be reasonably sure that no one else will use the same image. (Today, with the volume of images available the chances are very slim that any RM image will be licensed for many different uses.)
What’s The Alternative? - Midstock
I would define Midstock as images with a base price of between $10 and $100 depending on the file size delivered. But there are additional add-on fees for certain uses. I’ll get to them in a minute.
Midstock is RF, but the prices are higher than Microstock or Subscription. iStock is the major midstock provider with all their exclusive images priced in this range of $10 to $250. (See
here for details.) The average price seems to be in the $35 to $50 range.
Stocksy is another midstock company in this price range. Their basic prices are $10 to $100 depending on file size and I estimate the average price is also in the $40 to $50 range. For the most part they pay a higher royalty than iStock. By the end of 2014 they will have been in business less than 2 years and are on track to gross in the range of $5 million. Fotolia and some of the other microstock companies also license some of their collections in these price ranges.
The fact that your images are available as Royalty Free means that more potential customers will be looking at them. Many customers won’t look at what’s available as RM anymore.
Keep in mind that there were about 4 times more Midstock images licensed in 2013 than RM images. And there are a much smaller number of images available at Midstock prices than those being licensed as RM.
How To Get More Than $100 For A Midstock License
With most Midstock and Microstock companies if customers plan to print more than 500,000 copies of an image they must purchase and Extended License. (With Stocksy the limit is 250,000 copies.) An Extended License is also required for products for resale such as the customer’s “design on t-shirts, greeting cards, posters, calendars, etc.” or for electronic products for resale such as “screensavers, templates, wallpapers designs.” (Check out what Stocksy charges for these
Extended Licenses.)
Giving Up High Dollar Sales
The big argument for licensing images as RM always goes something like this. “If I sell images as RF I have to give up the chance of ever getting a high dollar sale.” But how many of those multi-thousands of dollar sales have you made lately?
Is it more important to you for a customer to pay a lot of money to use one of your images, or is it more important to maximize the revenue you earn from all the images you produce?
Less than 1% of the images licensed are RM and the percentage is declining every year. The chances of licensing an image in a Midstock collection are at least 4 times greater than licensing an RM images and probably much more than considering the volume of RM images available compared to those in the Midstock collections. Thus, if the average price of a Midstock license is $40 that would be equivalent to an average for RM or $160.
Given Stocksy’s very favorable royalty rate it is possible to earn more from Stocksy for use of an image in an Electronic Product, than a photographer were to earn from Getty if Getty were to charge $2,000 for such a use. How many times has Getty charged $2,000 to use an image in an Electronic Produce? My guess is never!
Another advantage of licensing images as RF is that you can offer them at a whole range of price points from traditional RF to Midstock to Microstock to Subscription. If certain images aren’t selling well at one price level you can move them to a lower priced offering to try to earn some money from them. With RM that is virtually impossible. The pricing is almost always left entirely to the agent and in many cases agens are not serving the photographer’s interest.
Finally, it is also important to recognize is that a huge percentage of the images licensed at RM or traditional RF prices are licensed through sub-agents rather than to the end using customer. As a result the photographers royalty is often a cut-of-a-cut. Sometimes there are three cuts. This is usually not true in the Microstock and Subscription arena. The royalty the photographer receives is based on the total fee the end-using customer pays.
A few things to think about!