Pricing
Recently, a new stock agency asked if they should develop a pricing
strategy based on fixed prices, or prices based on how the images would
be used? Here are some things to think about.
Many photographers believe they will make more sales for the best prices
if their images are represented by the biggest distributors. They may
make more sales, but definitely not for the best prices. For years the
biggest distributors have been seriously undercutting price – at least
in the education field. There is a big question whether increased volume
at low, dramatically discounted prices results in increased revenue
overall for creators. Here’s how and why.
Many who enjoy photography and have had some success at licensing rights
to their images dream of quitting their “day job,” giving up a regular
pay check and taking pictures full time. This story offers a few things to
think about that apply both to photographers who hope to do commercial
assignments and those who want to license rights to stock images.
Recently a photographer asked how to price extended educational use of
an image that was first licensed by the publisher for textbook use two
years earlier. Initially the image was printed full page, inside. Now
the publisher wants virtually all rights for 20 years. This story explains how I would approach the problem.
Editor's Note: James West, CEO of Alamy, provided a detailed explanation of the company's Alamy Permium Account strategy on the Alamy blog. For more information about this read
our story published last week and contributor comments on the
Alamy blog.
It’s time to institute a new pricing model. In the ‘80s the only pricing
model was Rights Managed (RM), but the term itself wasn’t even invented
until the ‘90s. Back then every price was based on usage and there was
no other option. In the early ‘90s Royalty Free (RF) was introduced. In
the early 2000s microstock came into existence. Now, it is time to
introduce a fourth model which I will call Use Pricing (UP). The
following would be some of the characteristics of Use Pricing.
In certain segments of the stock photo market Alamy has been experimenting with both price points and the nature of licenses in an effort to grow sales and stem the tide of customers moving to microstock. One particular segment where they have seen a significant decline in sales is travel. Recently, one of Alamy's travel customers outlined for me the details of Alamy's new offer. This story examines the issue.
After lowering royalty rates for non-exclusive contributors in January, iStockphoto introduced a
new strategy in early May that made it possible for non-exclusive contributors to offer a portion of their images at higher prices. Non-exclusive contributors are now allowed to nominate up to 15% of their total portfolios for inclusion in the Photos+ brand.
After reading my story on
why usage fees will continue to decline Larry Minden wrote, “Is there no one among the thousands upon thousands represented by Alamy who will stand up to those idiots and tell them a 50-year license is unneeded and an absurd bastardization of an RM license?" This story explains why complaints from suppliers are unlikely to have much effect in the long term outcome.
Photographers complain that stock photo fees are way below what it costs
them to produce images. And they are right. But, the prices volume user
pay for images will continue to decline. Here’s why.
Alamy has announced that its US sales of the company’s images have
increased 30% in the past year and as a result they have contracted with
the New York Internet Company (NYI) will oversee its infrastructure
upgrade for North America, starting in New York.
On May 23rd I announced a
contest. Everyone who provided an answer to the question "Describe a situation where a fee of $10.00, or less, is justified for the COMMERCIAL use of a single image?" would be entered in a drawing to Win $100.00. In addition to announcing the contest to my newsletter subscribers I passed out cards to attendees to the CEPIC Congress in Istanbul. We have conducted a drawing and the winner is Tim Harris of Nature Picture Library and Bluegreen Pictures in the UK.
There are strong indications that iStock's introduction of higher priced brands has resulted in the company licensing fewer images. In addition many of its customers seem to be turning away from iStock and goint to other microstock sites to purchase the images they need. One non-exclusive photographer with many best selling recreation images on both iStock and Shutterstock reports that his images on Shutterstock are now outselling those on iStock by 3 to 1 while a year ago the reverse was true. Other photographers confirm this trend.
BigStock is introducing a new strategy for licensing microstock images. Their pay-as-you-go system allows customers to pay with a credit card for only those images they want to use immediately and not be forced to purchase packages of credits. There is no minimum purchase.
At the annual CEPIC Congress, this year in Istanbul, where stock photo
agents and distributors from around the world meet, I asked attendees
the following and agreed to enter the names of those who answer into a
drawing for a chance to
WIN $100.00.
Describe a situation where a fee of $10.00, or less, is justified for the COMMERCIAL use of a single image?
Selling-Stock subscribers also have a chance to win. Send your answer in now!
It’s no surprise to anyone in the stock photo business that average fees
for image use are declining. The questions are how much, what’s causing
the decline, can we make it up in volume and how can we turn it around?
Universal Images Group (UIG), and Encyclopaedia Britannica (EB) have
entered into a 10-year License Agreement that makes UIG the exclusive
provider of still pictures, video and footage for EB’s online
educational image service, Image Quest. UIG, the distribution
business of the Virtual Picture Desk (VPD), has provided 2 million
educational still images for Britannica Image Quest and will
subsequently provide motion content including video and footage clips.
The Image Quest online subscription service went live in September 2010
with content from more than 50 world-class image providers.
When customers first requested rights to use images in both print and
online it seemed reasonable to charge a supplemental fee for the online
use that was much less than the print price. Today, electronic use is at
least equal to print and tomorrow it will be the predominate use of all
imagery. If we continue to price electronic as a lesser usage we will
be offering a huge discount on the price for the majority of our future
licenses. Therefore we must come up with an entirely new strategy for licensing electronic uses.
In the microstock world, when establishing prices for online image use
distributors should consider developing ways to distinguish between
personal or social media uses and those for commercial purposes.
Customers who use images for commercial purposes, and earn revenue as a
result, should be charged more than those whose image use is for
personal, non-revenue generating purposes. On the print side of the
business microstock sellers have already solved this problem to a
degree. They charge more for larger file sizes that are commonly needed
for print uses, and even more when print uses are expected to exceed
500,000 copies.
One way to satisfy customer demands for lower prices without reducing
overall operating costs is to cut the amount paid for the product you’re
selling. Over the past decade some stock photo distributors have used
this strategy very effectively. This article examines the effect that discount prices are having on the ability of stock photographers to earn a living.
Anyone who earns significant revenue from producing or licensing stock
images for educational purposes should be looking, as soon as possible,
for another line of business. Why? It is rapidly becoming
impossible to earn enough from licensing images for educational use to
cover the costs of producing them. For decades photographers have been
willing to license rights for limited usage of their images with the
understanding that if a greater use is made the photographer will
receive additional compensation. This system was originally developed to
help publishers limit their risk in the event that some of the book
they produced did not sell well or generate as much revenue as hoped.
Educational publishers regularly set up “preferred provider” agreements
with image suppliers who represent large collections. Publishers outline
certain standard terms and uses. The image provider is then asked to
stipulate a fee that will be charged for each use. Based on the fees
providers agree to charge the publisher decides which supplier to use. McGraw
Hill School Education Group has recently requested quotes from
potential preferred providers and they have introduced a new concept for
determining circulation of the product. Instead of talking about the
number of copies printed McGraw Hill now refers to the number of “unique
users.”
Veer (
www.veer.com) has announced the introduction of an Extended Customer Protection Plan, providing customers with up to $250,000(USD) coverage for 100 Veer Credits. Veer credit prices range from $0.78 to $1.41 depending on the size of the credit package purchased.
One of the great benefits of the Microstock marketing strategy is that
distributors have always offered customers a variety of ways to organize
search returns. In particular, sort-by-downloads has been a very
popular option. A “Redeemed Credits” option would get more of the best selling images of
the higher priced brands near the top of the search return order. This
method of searching would allow customers to see all the various brands
in a single search and still see more of the expensive images in the
early pages. See explanation.
Getty’s move to sell some of its royalty-free images on both
www.gettyimages.com and www.istockphoto.com is presenting some problems
in pricing usages and is sure to drive more Getty Images customers to
iStockphoto.