RF In Your Future?

543

March 22, 2003

Many photographers are still adamantly opposed to producing Royalty Free stock. It's time
for them to re-think and re-examine that position. There are two principle reasons for a
photographer to get involved in stock photo production:

(1) it offers a great deal of flexibility relative to working on assignments, and


(2) it is a way to earn a good living.

Production Flexibility

From the photographer's point of view both RF and RM offer the same production flexibility.
You can shoot for either market on your schedule rather than having to wait and react to the
customers' schedule when they make an assignment. This is a big advantage provided you have a
satisfactory way to market your production. It is with relation to marketing that RF
offers significant advantages.

With the industry consolidation it is becoming harder and harder to get RM images where they
can be seen by customers. There are fewer outlets and they tend to be more selective than
they were in the past. RM images must be in some type of digital catalog or on a portal in
order to sell. The number of requests for file research has dwindled markedly and as a
consequence most agencies are only accepting images that they intend to digitize. The
opportunities to place images in RF are limited also, but some photographers may be able to
get more images into the RF market than they can get placed with RM outlets. If that is the
case the photographer ought not to reject the RF opportunity out of hand. I believe most
photographers who shoot exclusively for the RM market should be exploring the
possibility of doing some shoots for RF.

We know that sales of RF images are on the rise and sales of RM images (in terms of numbers
of images licensed) and on the decline. In the last three quarters in 2002 Getty Images
figures show that customers were buying about twice as many single RF images as RM. This
does not take into account the number of buyers purchasing RF discs and using multiple
images from those discs. Thus, the RF share of total images used may be quite a bit higher
than 66%. While these are only Getty's statistics, and we certainly must take into
consideration the fact that many smaller companies sell only RM images, it is clear that
many buyers are finding what they need among the images offered as RF. Overall, there are
clear trends in the industry toward using more RF imagery and less RM.

Klaus Tiedge, the leading photographer for the RF production company ImageSource has
produced over 40 discs for that company and says, "If I had 3000 images in the RM market I
think I would make more money, but I would never get a chance to put so many pictures into
stock agency catalogs." Tiedge supplied RM images to Zefa, The Stock Market, AGE and
Premium for several years before he started shooting RF two-and-a-half years ago. Now 80% of the new
images he shoots go into RF because they are willing to accept much more of what he produces
and get the images to market faster. (To see some of his work go to
www.klaustiedge.de . Also see the
Story 545
"Journey Into RF".)

Earn A Good Living

Some photographers are concerned about the low unit price for usages, and the lower royalty
percent of the gross fee collected. They ask, "how can you make any money when the images
are being sold for such low prices and you only receive a 20% royalty?" The answer is that
the volume of units offered for sale, and the volume of units sold may make up for some of
that low fee per unit. The critical issue is not the price or the royalty percentage, but
the total dollar return on either an annual basis, or on the basis of the time invested if
the photographer only does a few projects.

Getty's recent re-launch of its RF site has dramatically improved the pricing for single
image RF sales. Getty has divided their PhotoDisc offering into three different levels œ
Red, Green and Blue. The pricing is as follows:

This seems likely to do a number of things.

• First, it is likely to significantly improve Getty's total RF revenue and the
  royalties RF photographers receive from sales of their RF images. This will be particularly
  true if the images are "new, contemporary images" that fall into the PhotoDisc Red category.
  As far as we can tell photographers will have no say as to the category in which their
  images are placed. That will be up to the Getty editors.

  
  

• Second, it opens the door to more flexible pricing of single RF images. Getty can pick
  and choose the category in which they put new images and how long an image stays in that
  category. If there is a good selling image in the Green category they can easily move it up
  to Red and jack up the price. Green images that never sell can be moved to Blue to bulk up
  that category and maybe improve sales of those particular images.

  
  

• With three levels of pricing it becomes easier to adjust price in the future based on
  demand.

  
  

• Finally, the fact that Getty has raised prices makes it easier for all the other RF brands to
  raise their prices. Overall, everyone who licenses RF is likely to see improved revenue in
  the coming year, even if the number of uses stays relatively flat.

When RF started out the pricing was extremely low and that was a major reason for
photographer's strong resistance. As pricing improves there may be less resistance. In
February 2000 PhotoDisc prices were $24.95, $79.95 and $149.95. Now, three years later if we
compare these prices with the Green level pricing there is a 100% rise in the lowest price,
an 88% rise in the price for a 10MB file and a 67% rise in the price for the largest file
size. If we compare the 2000 prices with the "Red" level there is more than 100% increase at
every level. All this indicates that the pricing of RF imagery may finally be reaching a
more realistic level.

What can you earn from RF?

Even at the pricing levels before Getty's recent increase some photographers have been
making significant money from the licensing of RF images when they are able to get a
significant number of images into the RF marketplace.

Getty currently has 185,571 RF images on its site. In 2002 Getty's gross revenue from RF
sales was approximately $127 million. All these images were not on the site for all of 2002,
but had that been the case the average total sale would have been $684 per image. If the
photographer gets 20% of this it would be about $137 per image. Multiply that by a file of
100 or 1,000 images and it gets to be some interesting money. There are also indications
that once the images are in the archive they sustain income at this level for several years.
This is a ballpark figure, but at least it provides some perspective. Sales for any given
images will vary greatly depending on the type of subject matter and the demand for that
subject matter.

I know photographers with a significant number of images on the gettyimages.com site that
are earning in the range of $210 per image per year and others that are earning about $36
per image per year. It is likely that the return from the gettyone.com site is higher on a
per image basis than is the case with some of the other RF portals.

I know at least two photographers who are earning approximately $300,000 per year from their
RF production and there are a few that I suspect are earning quite a bit more than this
amount. These photographers are very productive and pay all their production costs so the
$300,000 is not profit, but gross revenue before expenses.

The key to success is to be able to generate a volume of images in a relatively short period
of time and to get them online where customers can find them. RF is not for the photographer
who spends a day creating the perfect image. In many cases all images for an 80-100 image
disc are shot in 2 to 3 days of shooting time. (This does not count pre-production and
post-production time). It is often possible to get many more RF images accepted than RM
images so even though the average return per image promoted might be much higher with RM
than with RF the total dollars generated by RM may be lower.

It is important to consider total earnings, not the potential earning from a single large sale. Just
because the photographer occasionally licenses rights to an RM image for a very high fee
doesn't mean that at the end of the day he will earn more from making a few sales for high
RM fees rather than lots of sales for low fees.
However, the only way to determine what you might be able to actually earn is to "test the
waters" and produce some RF images.

Marketing

Another thing to consider when deciding whether or not to produce RF is how aggressively
your images will be marketed once they have been produced. What are the distribution
channels for the images? (You can about some of the distribution channels by looking at "Subjects
In Demand", Story 544 .)

Most larger companies now offer both RF and RM, but they seem to be putting more emphasis on
promoting the RF side of their businesses. Part of this is because they are selling more RF
units than RM and RF seems to be the growth area of the industry. Part is because they seem
to be adding more new RF images to their collection than RM, particularly in the high demand
subject areas. Part is because print catalog marketing of RM images isn't working as
effectively as it had in the past and most agencies are reducing the size and frequency of
their print catalogs, or dropping them entirely.

In general the pitch seems to be, "Here's our new, cheap RF offering, and, oh by the way, if
you need RM images we have them too." Looking ahead, I believe more emphasis will be placed
on promoting RF than RM.

Also, RF images tend to be more widely distributed through multiple sales outlets than RM.
Because they are a commodity the strategy of most RF producers is to place the product with
as many outlets as possible. There seems to be no limit. With RM, on the other hand, most
companies are still trying to protect their brand by limiting the marketing outlets they
use. This means that fewer buyers are likely to see a given RM image than will see one that
is sold as RF. (Henry Scanlon discusses this multi-channel marketing strategy in Story
547 .)

Limiting Supply

While volume is the key, it may be difficult to get a lot of images accepted by either the
major RF brands or the RM agencies. Many photographers who have a lot of images in RF (and
thus are earning high dollars) were able to achieve this position during the period when the
RF companies were aggressively building their collections. Now, most companies are looking
to fill holes rather than add a lot of new content quickly.

As customers have changed their work practices and moved to searching for images online,
there has been a recognition by the seller that the volume of images that were placed in the
files in the 80's and early 90's are no longer needed. Too many images were chasing too few
customers and the simple process of managing all these images had become a tremendous
burden. Agencies had tended to accept any good image without much consideration as to what
was already in the file on a particular subject. Now, partly because of the costs of
scanning, keywording and image storage the strategy of most marketing companies is to be
very selective in what they accept. Also, better tracking and analysis of sales data has
enabled companies to make tighter judgments about what might be needed in the future.

Digital technology makes it much easier to distribute relatively few images to all the
potential markets worldwide. Sales representatives may be needed for specific areas of the
world and user groups, but it is no longer necessary to have the number of images that was
once the case. In addition, since the sellers of RF can easily make arrangement to sell
images produced by another company they don't need to produce similar images for their own
brand.

Questions

In preparing this story I asked several agencies a number of questions and received answers from
Getty Images, Comstock, ImageSource, Stockbyte, Image State, Rubberball and
Thinkstock . If you are interested in getting involved in RF production the following
responses may help you understand the differences between various RF production companies. Many
RF marketers also have guidelines for photographers on their web sites.