Where Does Riser Fit?

Posted on 8/11/2006 by Jim Pickerell | Printable Version | Comments (0)

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WHERE DOES RISER FIT?


August 11, 2006

Many in the industry are intrigued by the Getty Images announcement of it's new "Rights-Ready" (RR) licensing model and are anxious for more information so they can determine exactly where it fits and what impact it will have on the industry. The new collection of images available for this type of licensing will be called Riser.

Rights-Ready is intended to complement existing RM, RF and Subscription models by offering eight broad usage categories and allowing license holders to reuse images as much as they want for purposes similar to the original usage. While the model does not grant image exclusivity, a total image buyout can be negotiated. The categories will cover the commercial, internal company and editorial areas of use.

The key bit of information, so far undisclosed, is how the images will be priced. Customers may choose from one of the eight broad use categories with simple, flat-rate pricing that is comparable to the average rights-managed single use license for the category. Sounds simple, and very customer friendly, until we get to the specifics.
With only 8 categories, each is likely to be very comprehensive and it is not clear whether there will be any subdivisions within the categories.

Let's assume that one of the categories is for "Brochure or Marketing Collateral.". What should the price be for this category? Currently on the Getty site you can get a Stone image for a 1/8th page use, Inside, up to 1,000 copies for one month for $490. If you want this use for five years the price would be $1,000. Remember, Rights-Ready licenses have no expiration time, so there's a big choice here based on only one factor, the average length of use.

But let's look at the other end. If you want to use the same image at normal RM pricing levels and intend to use it for a full page cover, for 5 years, with more than 5 million circulation the price would be $7,565. So where do we pick the price for Riser between $490 and $7,565.

Let's suppose this use is priced at $1,500. Here's what I think will happen in a normal search. If Riser is included with all the other brands and it is simply integrated into the general RM, RF search then the customer may decide that the Riser image is really the image they want and when they go to price it they will discover that it is available at one fixed price of $1,500. If the customer intends to make a big use of the image he will be very happy because he has saved money. If the customer's use is small and the price quoted is more than he wants to pay, he will probably go back, and search through other brands for something else that can be priced based on usage.

It seems to me, no matter at what point Getty sets the price, that it is very unlikely they will find many existing customers who are willing to pay more for the flexibility offered by a RR license than would be necessary if they paid based on usage. On the other hand, if the RR image is cheaper than what the customer would have to pay on a negotiated sale he is certainly going to be happy since the RR image was what he wanted anyway. Customers who anticipate big usages will certainly look at the Rights-Ready offering first.

Given that RR is likely to cannibalize some RM revenue, it is hard to see how Getty can actually grow revenue among its existing customers from its RR offering. To the degree that it can steal sales from the other two majors they may grow revenue, but, one would expect that if RR begins to show any traction both Corbis and Jupiterimages will institute a similar pricing strategy quickly.

Photographer Considerations

Photographers with Stone and The Image Bank are being asked to commit some of their images, currently in those collections, to the Riser collection. In most cases they are images that have never been licensed, so it would seem this is a chance to generate some revenue from images that have generated none so far.

According to Getty sources, "The debut collection, Riser, includes imagery from contributing photographers that was carefully edited from a variety of existing imagery with no exclusive outstanding licenses, and also from new imagery. The images were selected on the basis that they were high quality, relevant, and covered the range of key subjects. In addition, to ensure that the collection remains relevant for our customer needs, Getty Images will continue to grow the Riser collection, adding hundreds of new images each month."

"As we evaluate the performance of the rights-ready model, we will also explore the opportunity to add new collections in the future, containing both house and image partner content."

The Riser collection and Rights-Ready will probably be promoted heavily. Assuming customers just search that collection, the photographers whose images are part of that collection will be competing against many fewer images (80,000 to start) than if there images are in the general collection. They will also probably find that their images get a much more favorable position in the search order.

Thus, it would seem likely to benefit, in the short term, those photographers who are asked to participate. Long term, I can't help but believe that RR will lead to a decline of the overall industry revenue generated from the licensing of still photography and illustration, but it certainly seems to be a marketing concept that customers want and cannot be stopped.

Issues To Contemplate

As we think about this new model there are a couple of other things that are interesting to contemplate. First if we look at Getty's revenue for the previous 12 months that ended on June 30, 2003 65% came from the licensing of RM images. If we then move forward three years to June 30, 2006 and look at the proportional share for the previous 12 months, only 52% of total revenue came from RM. Clearly, RF has been steadily gaining share of the total market and RM has been losing a lot of ground.

Right now Getty is only planning to put RM images into RR. But this is also the perfect licensing model for high end RF images. One of the problems that Getty and all the RF producers face is how to raise prices of some RF images without pricing them out of the reach of many buyers. The problem with RF pricing is that it is based on file size, not usage. I would expect to see Getty begin to move some RF images as well as a significant portion of RM images into the RR model.

Getty is starting with 8 categories, but there is no reason that they can't expend that number as time goes on. They started with 8 flexible license packs and now they have 13. I would expect them to start with one RR brochure use, but there is nothing to keep them from later having one price for internal use and another for cover. One price for under 250,000 products and another for over 250,000. Customers would still have the advantage of unlimited duration of the license and rights territory which is one of the major reasons customers choose the RF model.

With RF, if you need an 18 MB file for your usage then you pay the same price regardless of whether the use is for print advertising or editorial. With the RR system the same file size can be offered at different price points.

Getty says specific pricing information will be made availble at www.gettyimages.com in late August, when the rights-ready model is launched.


Copyright © 2006 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: jim@scphotos.com

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  

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