Buyers often ask, “Why do stock images cost so much?”
Photographers and agents tend to respond, “Because some images cost more than others to produce.” But the buyer will invariably point out that some very simple images shot on a white background are often priced higher than other more complicated and complex images that obviously cost more to produce.
A better answer to the original question may be:
“That is the value the photographer has placed on the image.”
In the broadest sense, that is the first step in why some images cost more than others. Some Rights Managed (RM) photographers aim for the high end of the market. They are willing to accept relatively few sales, but it is important to them that the customer be willing to pay based on how much value they get from using the image and that often will be a high price. Often they choose this model because it is the way they have always worked, and they don’t understand how other models might benefit them.
This business started out by basing the price on the value the customer receives from using an image. The larger and more important the use -- and the more revenue the customer might expect to receive from using the image -- the more the customer was asked to pay to use the usage. There is no particular magic to this formula, but all the licensing models have flowed out of this thinking.
Photographers that license their images through subscriptions and at microstock prices focus on selling volume. They believe that in the long run they will earn more by making their product available at a low price and selling volume. They tend to think of their images more as products designed to fill a customer’s need rather than works of art.
It is important to recognize that both systems work well for a few photographers.
Other photographers take the middle positions of Midstock and Traditional RF. The Traditional RF photographer still wants a relatively high price for most uses, but is willing to give up the rare, really high priced sales in exchange for greater volume in the middle level of the market. They offer a simpler licensing model based on file size delivered rather than actual use. License fees tend to range between $26 and $618 depending on the file size delivered. The average price is probably in the range of $125.
Midstock producers started out shooting microstock and use the basic microstock licensing model. However, they have pushed their prices up to between $15 to $240 in an effort to grow revenue. The number of uses licensed are dramatically lower than microstock. The average price is probably around $30.
It should also be acknowledged that the vast majority of photographers producing stock images on speculation are not doing very well in terms of revenue generated – regardless of the licensing model they choose.
I believe that worldwide about 175 million images are licensed annually. The breakdown by licensing model is roughly as follows:
| Model |
Price Range |
Average Price |
Total Licenses |
| Subscription |
Under $2.00 |
|
110,000,000 |
| Microstock |
$1 to $20 |
$ 8 |
50,000,000 |
| Midstock |
$15 to $240 |
$ 30 |
10,000,000 |
| Traditional RF |
$26 to $618 |
$125 |
2,500,000 |
| RM |
$1.00 to $10,000+ |
$250 |
1,200,000 |
These numbers do not include editorial images of hard news, sports or entertainment.
These are ballpark figures, and may vary with specific agencies or distributors, but I think they provide a good understanding of the relationships of the various licensing models. Another thing for sellers to consider is the number of competing images available in a particular licensing category. There number of images available for RM licensing is probably much greater than the number available for Subscription licensing. That means the odds are much higher that an image in a Subscription collection will be licensed than is the case with an RM image.
Where The Models Breakdown
While stock photographers and illustrators can determine what it costs them to operate their businesses and make a reasonable profit, it is impossible for them to determine a reasonable price for their work because they have no idea how many uses they are likely to be able to license in a given year. The number is different for every image creator and has very little relation to the volume or cost of the work produced.
With some experience a specific creator might be able to make a rough estimate of his/her future trends. But there is no guarantee that increasing production, or costs, will automatically increase the revenue the images generate.
The following are some of the factors that make it impossible to determine a fair price for a given image.
1 – Every image has different costs associated with it. With volume selling there is no way to accurately price each image based on what it cost to produce. (On assignments the photographer establishes a price based on what he believes it will cost him to produce the images required. Given the high volume and need for speed there is no way to apply the assignment shoot principles to the licensing of stock photography.)
2 – In order to reach the mass market the photographer is usually required to deal through distributors. Images are supplied to the distributor on consignment and a royalty is paid when the image is licensed.
3 – By contract distributors are allowed great flexibility in setting the price for the product.
4 – The agent or distributor has no idea what it costs to produce the images he is licensing. The distributor sets the price based on expected revenue divided by the number of expected sales and minus the royalty share of that revenue that will be paid out. If the revenue generated is not sufficient, the distributor must increase the quality of his offering, cut operating costs, increase marketing or cut the royalty share paid out.
5 – There is no way to accurately judge what competitive images will be available for the same use. Even if a photographer were to look at all the images available on a particular subject and produce something better, there is no way to insure that another competitor will not produce something even better the next day.
6 – Images that fulfill a particular need compete with those produced by other photographers that market their work at a different price point.
7 – Quality is subjective. Every buyer has a different definition. So no matter how sure the image creator is that he has produced the best image, the buyer may choose something else.
8 – There is no way to be sure how many times a particular image, or a group of images may be licensed in a given year. It is not unusual for a photographer to place 100 or more images in the market for everyone that sells. Thus, the fee for each sale has to cover the cost of producing all those non-saleable images.
9- Since there is no way to predict how frequently a given image will be licensed it is impossible to establish a lesser for an image that is licensed frequently than for one that cost the same to produce but is licensed only once. There is no way to determine what such a price might be at the time of any sale.
10 - Increased supply does not necessarily result in a proportional increase in sales. In fact if we look at Shutterstock’s growth we see that in spite of their continued growth in revenue their growth in supply is increasing faster. That means that individual creators earn less per image created than they were earning before. (The same is happening at most agencies.)
In the final analysis a
fair price is one that is acceptable to the customer and enables the creator to continue to produce. Unfortunately, there are fewer and fewer fair prices today.