Is RPI A Useful Measure?

Posted on 3/7/2008 by Jim Pickerell | Printable Version | Comments (1)

Companies offering stock images for sale need to continually provide customers with new material and a greater "depth of choice." But as growth in number of images exceeds growth in revenue, RPI automatically falls. The problem is that older images in the count have less chance of selling and that skews the averages.

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Copyright © 2008 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: wvz@fpcubgbf.pbz

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.

Comments

Tom Grill Posted Mar 10, 2008
For years now, I have used RPI as a prime tracking indicator of stock photo sales. Many times photographers have told me that they use this indicator but prefer to eliminate their earlier material from consideration because it is too old, because it is not as good as their current material, or because it doesnâ€™t rise to the top of agency search engines, etc., etc. Frankly, I view all of these explanations as delusional excuses. Hereâ€™s why:
Stock photography -- like movies, like books, like plays, like song writing â€“ is a long-term royalty producing business. Sure, royalties diminish over time, but the goal is to produce a body of work that has longevity and will continue to throw off income for as long as possible. We do not manufacture a product that, once sold, needs to be replenished in order to produce further income. We produce a body of work that -- in its entirety â€“ continues to throw off income for years to come, as many years as possible. Does the income from older images diminish over time? Of course. The point is that, in the aggregate, the entire body of material works together to produce an ever-increasing income for the photographer.
I am repeatedly asked what is the longevity of an image, and have always had difficulty giving a straight, simple answer to this question. Reason is, I still have many, many images with Comstock that were produced over twenty years ago that continue to sell briskly â€“ many of them even out-selling new production. That said, there is no doubt, particularly in the internet age, that image sales deteriorate over time. To accommodate the factor into my long term financial royalty planning, this past year I developed a new theory of image longevity, which I call, â€œimage half-lifeâ€.
Image half-life is the period of time it takes an image to fall to a position where it is producing half of its original RPI. One reason I adopted this theory is because most images do not die a sudden death. Many live to a ripe old age (a la my Comstock images already mentioned), which is the ultimate goal of a good stock shooter.
Let me give an example of my theory in action: I have one agency where the images I have with them are earning half of their original RPI after seven years. That means these photos have a seven year half-life. Presumably I could expect their financial return to halve itself again in another seven years, and so on. Let us say, hypothetically, that an image I put with this agency today will earn $10 per month ($120 per year) for the first few years and then drop off to half that amount within seven years. Applying half-life calculation allows me to predict future income from this source. In point of fact, this is really a method of taking several RPIâ€™s into consideration at the same time and averaging them out for an overall picture.
For instance, we have the current RPI. That is $120. We have the half-life RPI. That is $60. We know exactly how many images (call it 2000 per year) we are producing for that agency. We can now calculate how much we will make, using our current rate of production, over a fixed period of time. This allows us to plan for the future and for retirement â€“ NOT for just the present (a mistake made by many stock photographers). That is, if we ceased production after seven years at 14,000 images (at 2000 per year) with an average RPI of $90 (current RPI averaged with half-life RPI) that agency will throw off $1.26million per year diminishing to half that amount in seven years afterwards. This is important planning information for any stock shooter. It tells us quite accurately what income we can expect from that source. It also tells us how many images we would need to produce per year (about 375) just to keep the current annual income steady.
(Keep in mind that numbers used here are hypothetical, although quite practical in my experience.)
Bottom line is that RPI is one of the most important indicators a stock shooter can use in judging success. RPI does vary over time; it does vary from agency to agency; it does vary from photographer to photographer. In other words, it is hugely subjective, but that is the whole point and what makes it so valuable. When used properly and knowledgably, it is the single most important financial planning tool available to a stock photographer.

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