Why Creators Receive 20% of Royalty-Free Sales

Posted on 2/12/2009 by Jim Pickerell | Printable Version | Comments (3)

Photographers frequently ask how royalty-free still photography got started and why creators only receive 20% of royalty free sales. Here is a little history.

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Comments

Betsy Reid Posted Feb 12, 2009
With macroRF increasingly cannabilized by micro and subscription, contributors may no longer be so accepting of this low revenue share.

Those stock companies offering them more than 20%, and in a few cases substantially more, are positioning themselves well to attract photographers who deliver the kind of premium imagery that will be less vulnerable to low priced alternatives.

Don Farrall Posted Feb 12, 2009
This is all true, however image resellers like Getty and Corbis do have considerable expenses that relate to driving customers to their sites. In spite of the seemingly high percentage that these companies earn from the sales, Corbis has yet to turn a profit, and Getty when operating at it’s peek was only earning overall profits in the low 30% range; not out of line for what was, at the time, a publicly traded company. Now both of these companies are experiencing difficulties, and any suggestion that photographers should be earning a higher percentage is a bit misplaced.

Sure I would rather be earning more than the 20% that I earn, but I do value Getty’s ability to reach buyers. Over the years, for good or bad, Getty has pushed up the price being paid for RF imagery in order to make more money for themselves and for contributors.

Most of the credit for the sale of individual image downloads, the current backbone of the stock industry, can be traced back to Photodisc. The movement away from disc sales was the best thing that could have happened, but it was an outgrowth of this early model.

There have been players that paid higher percentages to photographers, where are they now? Out of business. Alamy is the exception, and while they have recently decreased the payout percentage, they remain way out in front in terms of the percentage of royalty payout. On the down side, Alamy has spent very little on advertising and despite the size of their collection, their overall sales are not that high. In spite of the higher royalty percentage, Alamy RPI is well below that of Getty. So making more per sale, of less sales in the end does not make more money.

The fact is, in the stock photo industry, the distribution is worth more (costs more) than the product. Our industry is not the only one where this is the case. A pair of Nikes cost $7.00 to make. Most of the furniture we buy in the US is made overseas and is marked up five fold by the time we buy it in the furniture store. Book authors receive something like 3-5% royalties. I’m not suggesting that photographers should receive less, we are already at a point where many (traditional RF) photographers have quit participating due to decreased sales volume, but it is very unlikely that the market can sustain a higher payout. There might have been a possibility prior to the introduction of microstock, but the current pressure is not in contributors favor.

The bottom line is that at 20% royalty, plenty of photographers have been willing to participate, and plenty have made a very good living at it. It’s tougher now, but that is not because of the percentage of royalty. Microstock agencies should be paying a higher percentage, (and charging more), but they are not having trouble finding willing contributors.

Jim, you have outlined the history correctly, and the article does answer the question, which I have heard before as well. Since most here will automatically consider that anything that has been put in place by an agency is one sided, evil, and unfair, I thought I should suggest that people consider the bigger picture in an equally historic light.

Don Farrall

www.donfarrall.com

Greg Ceo Posted Feb 12, 2009
Could it be that microstock and RF will merge at some point?

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