Many photographers who have entered the stock photo business in the last 5 to 10 years have trouble understanding why photographers who have been producing stock photos since the 1980s and 1990s are so unhappy with how the business had declined. I’d like to provide a little historical perspective.
In 1989 I published the first edition of Negotiating Stock Photo Prices to help photographers understand what they were likely to be able to get for various uses of their stock photos. At the time prices were based on how the image was to be used – in some type of advertising, brochures, educational books, newspaper or magazine editorial, etc. – and the circulation. Virtually all uses were in some type of printed form so size of the use on the printed page was also a factor. The Internet use was just getting started and anyone who wanted to use an image on the internet complained that they had no budget for such uses and were just experimenting with this new technology.
My book provided prices for over 40 different use types. To give readers some idea of those prices the following schedules provide an idea of the prices for various Advertising and Magazine Editorial uses.
| ADVERTISING |
|
|
|
| Circulation; |
1/4 Page |
Full Page |
Cover |
| Over 3,000.000 |
$1,375 |
$2,750 |
$4,125 |
| 1,000,000 to 3,000,000 |
$825 |
$1,650 |
$2,475 |
| 500,000 to 1,000,000 |
$650 |
$1,320 |
$1,980 |
| 250,000 to 500,000 |
$550 |
$1,100 |
$1,650 |
| 100,000 to 250,000 |
$495 |
$990 |
$1,485 |
| 50,000 to 100,000 |
$440 |
$860 |
$1,320 |
| 20,000 to 50,000 |
$385 |
$770 |
$1,155 |
| under 20,000 |
$330 |
$660 |
$900 |
| |
|
|
|
| |
|
|
|
| MAGAZINE EDITORIAL |
|
|
|
| Circulation |
1/4 Page |
Full Page |
Cover |
| Over 3,000.000 |
$450 |
$790 |
$1,380 |
| 1,000,000 to 3,000,000 |
$400 |
$700 |
$1,225 |
| 500,000 to 1,000,000 |
$350 |
$610 |
$1,070 |
| 250,000 to 500,000 |
$300 |
$525 |
$920 |
| 100,000 to 250,000 |
$275 |
$480 |
$840 |
| 50,000 to 100,000 |
$250 |
$435 |
$760 |
| 20,000 to 50,000 |
$225 |
$390 |
$680 |
| under 20,000 |
$200 |
$350 |
$610 |
Photographers and stock agencies regularly got these prices and sometimes more for particularly unique images. Seldom would anyone license a use for less. When working through a stock agency the photographer normally received 50% of the gross license fee as a royalty.
I updated NSPP four times and published the 5th edition in 2001. Over the decade price rose 10% to 15% compared to 1989. Some prices for large circulations, which were rare, rose even more. In rare cases images were licensed for as much as $30,000 for unlimited advertising use for a year.
The above prices were for Rights Managed (RM) uses. The RM business remained strong through the 90s and into the 2000s. There were always people who wanted images, but most professionals and stock agencies ignored them and focused on the users who were willing to pay reasonable prices.
From the point of view of photographers these prices were reasonable based on what it cost to produce the images customers wanted and operate a successful photo business. Many could earn a good living producing stock and a very few did extremely well.
Royalty Free
In the early 90s it became possible to place digital files of images on CD Rom discs.To deal with low budget user demand, several organizations started collecting photos, editing them for what they believed would be marketability and placing relatively small files of each image on discs. They sold these discs for around $300.
The number of images on these discs ranged from about 300 initially to about 50 later. Disc buyers could use any image on the disc for virtually any purpose whatsoever as often as they wanted. This was called Royalty Free.
Initially, given the relatively small image file size most user found that the images were only good for small spot uses and nothing that could be printed very large. It was virtually impossible to use any of the images for any major advertising use. In addition, given the variety of subject matter on each disc most users discovered that very few of the images on any given disc actually worked with any of their future projects. Nevertheless, there was a growing demand for this product.
The original disc producers discovered that the only way they could sell the discs was to produce expensive print catalogs that showed at least some of the images on the discs. On top of this there were huge mailing costs to distribute the catalogs to potential customers. And there was a limit as to what customers would pay for such image collections. As a result, the producers determined that all they could afford to pay image creators was 20% of gross disc revenue, not 50% as was the industry standard.
For the few photographers who had a large number of images in these discs the revenue they earned wasn’t too bad, but as the business developed and more photographers wanted to participate many photographers might only have one or a few images on any given disc. Thus, if a disc of 300 images sold for $300 each photographer would receive $0.20 for each of their images that appeared on the disc. Thus, a lot of discs needed to be sold for a photographer to earn much money.
In the late 90s as Internet technology developed it became possible to search for images online. In was no longer necessary to print and distribute catalogs to show people what the agency had to offer. Now customers could go online, search an image collection using keywords, select the specific image they wanted to use and just pay to use that image. In addition, the Internet eventually became fast enough that a usable, high resolution file could be delivered instantly to the customer. This not only reduced the time to get the image to the customer, but it also eliminated shipping cost.
This killed the production of CD Rom discs. Price to use a single image delivered online were much higher, often nearly as much as a single disc had cost. Stock agency distributors benefited greatly from the reduction in their costs. But, the principle that image creators should only receive a royalty of 20% of the fee paid for the use of a Royalty Free image had been established. Stock agency distributors received all the benefits from the advance in technology. Creators did get a higher Royalty when one of their images was actually used. But before they had been paid for each disc sold regardless if any of their images were ever used by a customer.
Three of the most profitable disc producers were Photodisc, Digital Vision and Digital Stock. Getty Images set up a
subscription service with Photodisc and Digital Vision In February 1996. In September 1997 Getty merged with
Photodisc In March 1988 Corbis acquired
Digital Stock.
Getty in 2006
During the early 2000s Rights Managed and Royalty Free managed to co-exist. On average an RF license cost about half what was charged for an RM images. In addition, from the customer’s point of view there were more restrictions on how an RM image could be used.
During this period Getty Images was still a publicly held company. As a re(sult it was required to provide
detailed quarterly information about it sales. The
2006 annual results released in January 2007 provide some revealing statistics. Note the average fee per image licensed and the average gross return per image in the collection. At that time there was nearly one sale annually for every image in the collection.
| |
Images |
Images in |
Gross |
Average Fee |
Return per |
| |
Licensed |
Collection |
Revenue |
Per Image |
Image In |
| |
|
|
|
Licensed |
Collection |
| RM |
607,945 |
973,933 |
$325,930,000 |
$536.12 |
$334.65 |
| RF |
1,053,751 |
787,281 |
$308,170,000 |
$292.45 |
$391.44 |
| Total |
1,661,696 |
1,760,214 |
$634,100,000 |
$381.60 |
$360.24 |
By the end of 2006, while sales overall were still rising, the percentage of cheaper RF images used was rising faster than sales of RM. The number of RM sales per quarter had been declining as more and more customers found RF images that were perfectly satisfactory for their projects. At this time Getty was carefully editing both the RM and RF collections and only accepting images from top producers who had studied the market and understood what customers wanted.
The average price of an RM image licensed in 2006 was
$536 while the average price of a traditional RF image was
$292. In 2006 63% of the images licensed were RF and only 37% were RM. Also see these
sales trends from 2003 to 2007.
Also included in the 2006 RF figures were sales of
iStockphoto which Getty acquired in February 2006, but these lower priced sales made up a very small percentage of Getty’s total RF sales for the year.
Microstock
Going back to the early 2000s despite the availability of lower priced RF there were still customers who complained that stock images were too expense. Since it was now easy to upload useable image files to the Internet some graphic designers started uploading images they had produced themselves for some of their own project and encouraged others, in other parts of the world, to use what they had produced for free.
When the designers needed a new image for one of their own projects they could access the site and maybe find an image from someone else they could use.
It wasn’t long till a few entrepreneurs built sites that formalized this sharing process, charged a small fee to cover their costs of operating the site. The collected a small fee for each image downloaded and paid image creators a very small fee every time one of their images was used. This solved the problem to a certain degree of some users downloading a lot of images without ever sharing anything.
Two of the early developers of such sites were
iStockphoto and
Shutterstock. These sites paid image creator less than $0.50 every time one of their images was downloaded, but the number of downloads began to grow enough that it became interesting for some photographers who had no need to use images themselves to concentrate on just creating new images that others could use.
It took several years for any of these sites to get a large enough collection of usable images to have an impact on the overall stock photo industry sales. By 2006 Getty Images decided that iStockphoto was becoming enough of a factor that Getty needed to try to put some controls on this segment of the business.
Getty acquired iStockPhoto.
The global financial crisis of 2007 – 2008 probably helped microstock because more and more image users were forced to cut costs and get by with the cheapest images they could find. Getty and other stock agencies tried to keep RM and traditional RF prices at 2006 levels, but they began losing more and more customers to microstock. Finally, in the 2013-2014 period Getty appeared to give up and began to lower its prices for RF, and later RM, to try to compete with microstock.
Premium Access
Sometime before 2008 Getty realized that there were certain customers who needed large quantities of images, but couldn’t afford to pay the standard per-image prices most customers were paying. To deal with this they went to a few select high value customers and tried to determine the maximum they could pay annually for photography. Then Getty would offer them a contract where the customer would pay 1/12th of its annual figure to Getty every month. The customer could then use as many RF images as they needed anytime during the year. Getty called these deals Premium Access.
Presumably, if the customer started using a lot of images Getty would try to negotiate a higher annual price. Getty’s argument for this practice was that they at least held onto the customer and kept them from going to a competitor to get the images they needed. Initially, Premium Access sales were a very small percentage of total sales.
In October 2008 photographers and other complainants tried to stop this practice and launched a
copyright infringement suit against Getty, but due to the cost of pursuing the suit they were later forced to drop it. The complaint claimed that Getty had licenses use of some pictures for as low as
$2.08.
Getty liked the predictability of regular monthly payments rather than a big sale one month and little or no sales for several month when the customer didn’t need as many images. So they started trying to do Premium Access (PA) deals with more and more of their customers in order to lock them into using Getty. For customers who needed few and fewer images Getty was willing to do annual deals for less and money. Also, over the years they decided to give PA customers full access to not only the RF images but RM images as well.
Over time customer psychology begins to change. Once a year the prices is set for the maximum they will need to pay for photos. They no longer need to worry about carefully choosing what they will use before downloading. Thus, when they start researching for a project, they download any, and every, photo they think might work. Later, they make the decision as to which photo or photos to actually use. This is particularly true as image collections get larger and there are more photos to review.
The price-per-photo used makes no difference to Getty because the photos themselves cost Getty nothing. What’s important to Getty is that they get an upfront guarantee for all the money the customer is willing to pay, no matter how miniscule the price. Their only worry is losing the customer to a competitor.
Recently, I examined the sales records of one major photographer and found that over 60% of his sales were part of
PA deals and a number of the license fees were for as low as
$0.11.
Another major photographer found that
81% of the licenses of his images in the first 9 months of 2000 were PA deals and his average royalty
for all PA mages licensed in 2020 was
$2.73 per-image.
General Pricing in 2017
In an analysis of
2017 sales of a few major photographers I found less than 1% of the sales were for prices of $1,000, another 10% were for prices between $100 and $1,000 and 50% were for prices less than $10. One-third of the images licensed were for less than $5.00. Based on this analysis, I determined that the average price-per-image licensed during the year was about
$29.
If the average price-per-image licensed was $29 and gross Creative revenue was $280 million then the figures in the fourth column are the approximate average license fee per-image and the the figures in the fifth column are an estimate of the number of images licensed in the price range.
| |
Percent of |
Percent of |
Average |
|
Estimate |
| |
Total Sales |
Total Revenue |
Per Image |
|
Total |
| |
of Records |
of Records |
Licenses |
|
Images |
| |
Examined |
Examined |
|
|
Licensed |
| Over $1000 |
1.06% |
32.40% |
$1810.00 |
|
47,700 |
| $500 to $1000 |
1.80% |
16.31% |
$616.00 |
|
81,000 |
| $200 to $500 |
5.60% |
29.61% |
$306.00 |
|
252,000 |
| $100 to $200 |
2.89% |
7.28% |
$131.00 |
|
130,050 |
| $100 to $50 |
4.50% |
5.67% |
$71.00 |
|
202,500 |
| $50 to $20 |
11.41% |
3.53% |
$26.00 |
|
513,450 |
| $20 to $10 |
18.12% |
2.44% |
$13.00 |
|
815,400 |
| $10 to $5 |
21.48% |
1.67% |
$7.40 |
|
966,600 |
| Below $5 |
33.14% |
1.09% |
$2.90 |
|
1,491,300 |
Recently, I analyzed 9 months of 2019 sales of another major Getty Images supplier and compared the results with the first 9 months of his 2020 sales. The average gross revenue per image licensed in 2019 was
$33.83 while the average for 2020 was
$21.06. It is important to note that this photographer’s collection was mostly RM in 2019, but at the beginning of 2020 Getty stopped licensing all RM images and photographers were required to either convert their images to RF or remove them from the collection.
Since the photographer receives a 20% royalty his average royalty was
$4.21 per-image licensed. Keep in mind that the average RM royalty in 2006 was about
$268 so his royalty per-image licensed has dropped about
98.5% since 2006. Of course, it is possible that the photographer is licensing a lot more images now than in 2006 so his gross income may not be as bad as these figures indicate.
Most photographers I’ve talked to who have had images with Getty since before 2006 are earning
10% or less of what they were earning in 2006 despite the fact that they have contributed many new images since that time.
Getty no longer publishes sale figures, but I believe gross annual revenue for their Creative Collection (RM and RF not including Microstock) has dropped from
$634.1 million in 2006 to less than $280 million today. Getty has a much larger collection now than in 2006 (29,423,950 compared to 1,760,214), and it is certainly licensing a lot more image uses. But, not anywhere near enough uses to make up for the lower prices.