Alamy Publishes Operational Numbers

Alamy recently provided its contributors with some figures for its operations during the first six months of 2005. They intend to provide the same type of information on a quarterly basis going forward. The figures provide some interesting insights into where their business is heading.

Alamy officially launched its search engine in the fall of 2001 and has been growing ever since. Currently they have over 3 million images from 300 stock agencies and over 4750 photographers. They are adding new images at a rate of 200,000 per month.

RF or RM

In the first six months of 2005 47.2% of their revenue came from RF images and 52.8% from RM. At the end of June there were 2,159,370 RM images on the site and 985,143 RF. Thus, RM represents 69% of the total images, but only 52.8% of the revenue. RF on the other hand has 31% of the images, but 47.2% of the revenue. It is also interesting to note that suppliers are consistently adding more RM than RF images. In 2005, 762,577 RM images have been added compared to 328,406 RF which means that 70% of all images added were RM.

Photographers should give these numbers some careful consideration. With 69% of the images generating 53% of the revenue and 31% generating 47% of the revenue. The odds of making a sale are 2.33 times better if the image is offered as RF than if its is offered as RM.

Some photographers say, "Yes, I know my chances of selling the image are better with RF, but I'll make more money selling RM because I have a chance to get a high fee for big uses." Well, not necessarily. In 2005 the average price in U.S. dollars for an RF image paid for with a credit card was $240 and that was an 80% increase over 2004. Compare that with an average price of $201 for an RM image paid for with a credit card and this was Down 23% from 2004. CEO James West said, "The 23% fall in the average price of licensed images to credit card customers is largely insignificant as the overwhelming majority of credit card customers prefer to purchase RF images only."

Alamy, like most of the other big portals, has a number of "account customers" who don't pay at the time of sale, but are billed monthly. In many cases given the volume of images used by these account customers, they are able to negotiate better fees. Thus, the average price paid by account customer in 2005 for an RF image was $212 but that was up 44% from 2004. The average 2005 price for an RM image was only $161 and this was Down 11% from 2004.

To summarize prices for RF are going up significantly while prices for RM are going down and the overall prices for RM are lower than prices for RF.

Many ask, "How can this be when it is possible to license an RM image for $5,000 or
$10,000 for certain users." Yes, it is possible to get these prices, but not very often. And the fact that the price for RM is negotiable means that it can also be priced lower than RF. The simple fact is that while there are a few sales made for prices that are greater than the RF fixed rate, the vast majority of RM sales are made for prices below the RF fixed rate -- and that's what brings the average price down. If you happen to be a photographer that makes a few of those big sales that's great, but it pays to look at your average return and if you seldom get the big sales you might do better by offering the images as RF rather then RM.

Editorial vs. Commercial

One of the reasons for the low prices is that 69% of the sales revenue is for editorial usage and only 31% for commercial usage. The average price for an editorial license was $135.58 while the average price for a commercial usage was $453.86. It is important to note that while the editorial price was virtually flat compared to 2004 the commercial price was up 11% over what it was in 2004. When compared to Getty's average price for a commercial usage of about $600 ($616 in Q1 2005 and down to $582 in Q2 2005) this figure is not all that bad.

For comparative purposes I have no way of determining what Getty's average price per image used in editorial would be. Getty does not provide any figures that would enable me to calculate such a price. I assume that it is no higher than Alamy's and probably lower because so much of Getty's revenue on the editorial side of the business results from subscriptions where the buyer pays a flat monthly fee for unlimited access to images in the file. Getty can easily track downloads, but it is unclear whether they make any attempt to track actual usage since the vast majority of editorial images on their site are wholly owned.

Suppliers have complained for some time about the low prices for Alamy sales and Alamy has slowly moved to improve its pricing. However, these figures show that the problem is not so much in the pricing as the extremely high percentage of images licensed for editorial uses as compared with those licensed for commercial uses. The average price for a commercial use is 3.35 times the price for an editorial one. The average price for all licensed images in 2005 was $172.92 meaning that about 89% of all images licensed were for editorial uses.

There is some good news and bad news here. If the work a photographer produces is editorial in nature and most likely to be used by editorial customers then Alamy is a very good place to be. I estimate that worldwide the market for editorial photography is about $700 million with commercial commanding about $900 million on an annual basis. I also believe that sales for editorial content are much stronger in Europe than in the U.S. Getty has a strong control of the commercial market, but sales on the editorial side of the business are much more distributed among a lot of providers. The editorial market needs a lot of variety and depth on every conceivable subject and Alamy's strategy of accepting imagery from a broad base of suppliers with little editing makes their site very attractive for many editorial buyers. The fact that Getty doesn't offer this variety except in a few specialized areas - sports, entertainment and major breaking news events - is one of the reasons customers go to Alamy

The bad news is the very low percentage of commercial use and the trend downward. Based on the 2004 figures provided about 17% of the uses were commercial and that is now down to 11% in 2005. We were not given any dollar figures for revenue so it is possible that in terms of total dollars revenue actually rose for licenses of commercial images, it just rose a lot more for editorial licenses.

James West, CEO of Alamy, says, "A key part of our commercial strategy for 2004/2005 have been to increase share of the editorial market in the US and UK." It seems they have been successful. Now, many would hope that they work on increasing their share on the commercial side of the business.

Agencies vs. Photographers

In 2004 48% of the new images were submitted by agencies, and 52% by photographers. However, in the first 6 months of 2005 61% of the revenue was generated from agency images and only 39% from photographers. This probably means that agencies have done a better job of editing than the photographers. On the other hand the photographer's share of revenue is improving up from 33% in 2004 and the agency share is declining.

One of the reasons that such a large percentage of images licensed are for editorial use could be that the editorial customers tend to look for images that meet very specific requirements and are less interested in concept images. In addition photographers may do a better job of captioning and keywording with specific details than the agencies tend to do. If that is the case then a site that allows photographers to select and keyword their own images may always do better in selling to the editorial market than a site where the images are keyworded by third parties who may not understand or include all significant details relevant to the image in their keywords.

Images Submitted

In 2005 4,046 photographers submitted some RM images and this was up 41% from 2004. What I find somewhat surprising is that 2,295 photographers submitted RF images, a 50% increase over 2004. So in spite of the anti-RF fuss still coming from many photographers it seems that a significant number are recognizing RF as the place to be with many of their images. On the agency side, 254 have submitted RM images so far in 2005 and 130 have submitted RF.

Raw Numbers

The following are the detailed figures the company provided and on which the above report is based. The numbers are for a comparative six months from January through June in 2004 and 2005. In their table Alamy uses the word "licensed" to refer to image sales that I typically call rights managed (RM). In my explanation above I have used the short cut RM to refer to these licensed images since my readers are familiar with this term.