There appears to be little or no growth in the volume of uses at traditional prices. In addition, there is reason to believe volumes will decline. The dilemma for RM producers is how to expand their customer base without losing revenue from existing high-end customers.
Microstock has proved there is a large group of image buyers that have never purchased an image from a traditional source. These buyers cannot afford to pay anything approaching traditional RM prices, but a significant number can afford to pay more.
The microstock pricing strategy has two critical weaknesses that open a wide door to RM sellers. Microstock treats its customers as one large homogeneous group rather than many small groups, each with different requirements and budgets. Second, it has chosen a pricing strategy that makes it hard to determine the size of these smaller groups, or to address the specific needs of each. It is ironic that they have chosen this course at a time when most Internet activity points toward narrowly defining and specifically addressing small customer segments.
Instead of worrying about the traditional customers, microstock is likely to steal RM needs to go after microstock's customers. RM's existing pricing model is ideally suited to segment the total universe of buyers and address the specific needs of each group. As a result, those who use the RM pricing model are much better positioned than traditional RF sellers to capture a significant share of microstock customers. The key to success for the RM seller is to carefully define certain types of uses that qualify for lower prices. Here are some examples and definitions:
- Comp Use - It is believed that many of the subscription customers are using a significant portion of the images they download for comp and design purposes and the images never appear as part of a public Web offering or a printed piece. These customers prefer a small file size to save download time. For this purpose, a low fee (probably $1.00) seems appropriate, as long as it is made clear that no public use of the image is allowed.
- Personal Web Use - Any use on a personal Web site, cell phone or PDA. The site may not be used for any type of commercial or research purpose that will eventually generate revenue. Image may not be sold or given to any user other than the purchaser. (Commercial users should recognize that technology will be used to track online uses of this image. If it is discovered that the images has been used in an unauthorized way, the purchaser agrees by contract to pay a usage fee of (10) times the normal fee listed on the Web site for the type of use involved, plus any legal fees involved in collecting the usage fee.) Commercial use is defined as using an image in any manner to offer a product or service to consumers, or to recruit staff for a commercial venture or fund raising.
- Personal Greeting Card - The digital file may be used to create and online greeting card that is sent to no more than 25 friends. Cards may not be sold or used for any type of commercial purpose.
- Personal Wall Art - The digital file may be used to create one print for hanging in one's home or place of business. An additional fee should be paid for each additional print desired. (As part of the invoice with this purchase, a certificate would be provided that the purchaser could take to Kinkos or some similar print shop authorizing that one print be made. Upon delivering the print, the print shop retains the certificate.)
- Student Report - The image may be used by a registered student in any elementary, secondary, under-graduate or graduate program in any type of report, power point presentation or project.
- Educational Presentation - The image may be used by an instructor in any educational institutional instructor as part of a classroom power point presentation, classroom handout, poster or study print.
- Commercial power point presentation - The image may be used in any type of power point presentation created for commercial or business purposes.
- Religious Use - This fee is for any type of printed material prepared by a religious organization, or any power point presentation.
- Nonprofit organization - Includes nonexclusive uses by a nonprofit organizations for newsletters, magazines, Web sites, email, power point presentations or in a broadcast format as a public service. (Initially I would define nonprofit organizations as a single category, but we'll need to separate the truly low budget operations from bigger organizations, such as those with gross annual budgets of less than $1,000,000)
Commercial use is defined as using an image in any manner to offer a product or service to consumers, or to recruit staff for a commercial venture or fund raising.