How does demand for images compare to what many agree is an
oversupply?
Everyone believes that the advent of the Internet has led to many more images being used today than five or ten years ago. While that is true, this increase in image uses has not resulted in additional revenue for image producers. In fact, just the opposite has happened. In 2008, I estimated gross worldwide sales for still stock images and illustrations at $1.8 billion. Today it is at $1.45 billion.
There are several reasons for this decline:
- So much content is available that prices for lots of uses have dropped dramatically.
- Microstock has given customers many more choices at very low prices.
- The state of the economy has had some impact, but economic recovery is unlikely to result in much growth in demand for printed products or improvement in the demand for images to be used in print.
- The number of pages available for editorial content in print publications continues to decline, resulting in fewer editorial and advertising images being used.
- The growth in image usage is on the Internet, but the prices paid for such uses are much lower, often no more than one tenth of what would be paid to reach the same number of customers with a printed product.
- Print uses, which have always generated much more revenue than electronic uses, are declining as advertisers spend less money.
- When the planned use is on the Internet customers are more likely to be satisfied with pictures they produce themselves than they would be if the image were going to be used in a print.
- The Internet is a video medium. There will be greater demand for short video stories (such as those produced by Turnhere) rather than increasing use of still imagery.
- With a continually increasing supply of imagery, the sell-through rate (percent of images that actually sell) is steadily declining. There is nothing on the horizon that looks like it will lead to a change in this dynamic.
10. People are being bombarded with too much information. They are beginning to turn off and become much more selective.
11. People have a relatively fixed amount of time to spend viewing media of any kind. The amount of time any individual spends cannot grow indefinitely.
Breaking down the numbers
Based on Getty Images’ figures at the end of 2007, the company licensed rights to about 600,000 creative rights-managed images per year. Getty also licensed rights to a little over 1 million royalty-free images.
After some interpolation of Alamy’s 2008 and 2009 figures, it appears the company licensed a little less than 200,000 images per year. But Alamy’s revenue was down 27% in 2009 compared to 2008 due to a decline in licensing fees. The company is not losing sales, which appear to be about flat, but revenue is declining due to price reductions in an effort to hang onto customers. Anecdotal information from other image suppliers and distributors indicates that this trend is not unique to Alamy, but representative of what is happening thoughout the industry.
Getty Images likely licenses between one-third and half of all the rights-managed and traditional royalty-free images worldwide. Thus, based mostly on Getty’s figures, I put the worldwide rights-managed total of images licensed at 1.5 million and double that number for traditional royalty-free images. (Traditional royalty-free sellers have pushed their prices so high of late as a result of the pressure from microstock that I may be overestimating the number of units licensed.)
Thus, we have a total of approximately 4.5 million images licensed from traditional sellers at more or less traditional prices. In the best case, that number has been flat for a number of years, and now is probably in decline. The revenue generated from these sales has definitely been in decline, because sellers have been lowering their prices in an effort to compete with microstock.
Microstock and subscription
iStockphoto licensed rights to 17.55 million images in 2007. In 2009, iStock said that gross revenue for the year would exceed $200 million. Based on the average royalty per download reported by many photographers, I estimate that iStock licensed rights to between 25 million and 30 million images in 2009.
In addition to iStock, there are many other microstock sellers—123RF, Dreamstime and Fotolia—generating significant sales. Many photographers who are represented by all these brands report that iStock is their second or third most-productive agency, and that they earn more from the combined total of all the others than from iStock alone.
Then there is the subscription seller Shutterstock, which recently disclosed that it has licensed rights to 125,000,000 images since 2003. There is every indication from contributors that for most of this period the number of downloads on an annual basis grew steadily. I estimate the company had 30 million to 35 million downloads in 2009.
Together, iStock, two or three other big microstock agencies and Shutterstock could easily have had in excess of 90 million downloads in 2009. And then there was Jupiterimages’ big subscription operation (since changed to Thinkstock).
Finally, there are all the editorial subscription sales made by Getty Images, the Associated Press, Reuters, Bloomberg and Agence France-Presse. Putting all the microstock and subscription licenses together, the total images licensed in this category were probably between 125 million and 150 million in 2009 compared with 1.5 million rights-managed sales and 3 million traditional royalty-free sales.
Flat demand
Demand for imagery at traditional prices is declining slightly in terms of number of images licensed and significantly in terms of revenue generated.
While the demand for imagery at microstock prices has grown astronomically since 2005, the microstock business may have also reached a plateau—at least based on disclosed sales of some of the top producers at iStockphoto. Microstock may even be experiencing a slight decline in terms of the number of images needed by customers. Microstock revenue is still growing due to price increases.
In all, demand is flat, while supply continues to grow at an astronomical rate. The number of all images licensed (both microstock and traditional) divided into the gross revenue generated currently yields an average of about $10 per image used.