In a previous blog, I wrote about how fast revenue from Royalty Free images is growing. The reasons for this growth include:
1. Royalty Free (RF) images are cheaper than Rights Managed (RM) images. The price difference is narrowing, as RF suppliers gradually raise their prices. But, it is still probably half as expensive to use RF as to use RM.
2. It is simpler to use an RF image. You can do almost anything to it that you want to, with an RF image, including re-using it forever, and not have to worry about it. Of course, you are not supposed to resell an RF image, or claim complete ownership of an image that incorporates all or a portion of an RF image. Those distinctions are generally lost on most users, and RF producers are not rushing into the courtrooms, to educate them on these subtleties!
3. Some RF images are better than many RM images. With the money available to hire models, rent props, and arrange and style RF image shoots, the RF shops are out-producing RM shops. For a simple, clean, comtemporary lifestyle image, the right choice is now often RF.
So, why WON'T RF take over?
1. RF has to stay mainstream. Big expensive production shoots have to aim at big parts of the image market. However, there are many small pieces of the image market that will not attract the attention of the RF shops. RM suppliers should be able to continue dominating these, for at least several more years.
2. Innovation and creativity can't be defined and structured. Individual artists will always find new ways to make art and new things to express. RF can follow, but RM will lead.
3. Some clients want uniqueness and variety. Whether they go to high end boutiques or to thrift shops and swap meets, a large chunk of the fashion world likes looking for some special. The RM world will remain a source of variety, unexpected ideas, inspiration, and charm. It will also be where buyers will have to go, if they want to use an image exclusively or if they want to resell an image, commercially.
4. RF has to deal with a potentially devastating competitor--the high end subscription. To make it easier to type, I am going to dub the subscription model, SF, for "Subscription Free."
Five current purveyors of this SF model are:
Ablestock; $799 per year for 46,000 photos and a lot of graphics.
Photos.com; $599 per year for 30,000 photos and a lot of graphics.
Photospin; $299 per year for 10,000 photos and illustrations and a lot of other graphics.
Liquid Library; $1,500 per year for 75,000 photos and graphics.
Fog Stock; $599 per year for an unclear number of photos.
As you can see, for between $299 and $1,500 per year, SF subscribers can use thousands of high resolution, RF images. The file sizes offered are generally over 12MB and many of the images are high quality. In effect, SF buyers are getting good-quality RF images for about a penny each, instead of the typical price of between $150 and $300 each.
By the way, the SF players listed above all seem to run various "sales" and "special offers." Most allow users to join for as little as one month for a fraction of the full-year fee. During that time, a user could download hundreds of high resolution images and use them thereafter, forever.
SF is a logical continuation of the overall RF model. I expect to see major new players enter soon, who will help stabilize the pricing of SF subscriptions and standardize the terms and conditions of the model. Most image producers will probably keep some images in the RM model, put some into RF, and put some of the RF into SF. Enough people know how much money the early players in RF made--and will hope that early participants in SF will get the same benefits.
Other models lurk on the margin of the industry. iStockPhoto allows artists to provide images directly to customers at prices of $1.50 per image or less. OnRequest Images allows customers to commission custom shoots from artists, at prices that are comparable to the cost of RM. These models may take pieces of both the RF and RM markets, but will probably hurt RF more. A buyer who is willing to take a chance on RF, will also be interested in other new ideas and opportunities.
My bottom line prediction for ten years from now?
If I am right, there is no shame in maintaining a focus on RM (as my company, Index Stock, continues to do). It will remain a leading portion of the market, and a respectable place to be doing business!
However, it is prudent to reach out and participate in the rest of the industry, as well. In this way, both image producers and image distributors can have a diversified portfolio of related products, with which to amaze and confuse our customers.
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