There have been many claims made over the years, that royalty-free licensing destroys value. I haven’t seen much systematic research on this—or a lot of credible evidence.
I’ve decided to offer my contribution, to this debate. I hypothesized first, that royalty free has penetrated the 2400 different image categories in the Index Stock collection, at different rates. In other words, while about 25% of our images are royalty free, some categories of images might remain 100% rights managed and others might be 100% royalty free.
My guess proved correct. The penetration of royalty free varies between subcategories:
One would expect royalty free images to flow into those image categories that had the most earnings potential. After all, most royalty free images are created especially for the stock image market, by large, well-run production houses such as ImageSource, PhotoAlto, and DesignPics. These houses know what the market needs, and should tend to focus their spending on subjects that sell well.
I got a satisfying surprise, when I compared the earnings per image against the percentage penetration of royalty free for each of our subcategories. The average earnings power of the images in the subcategories with high royalty free penetration was systematically below those where royalty-free had a smaller presence:
For those who might like to criticize my methodology, I want to point out that I grouped the data by 10% ranges, in order to simplify the analysis. I standardize the annual earnings, by expressing each subcategory’s production as a percentage of the amount earned by the average image, during the period studied. Each data range included at least 25 examples. My data covers only three years of results and includes only sales information from my agency, Index Stock Imagery. During the time of my study, there were probably major shifts in the penetration percentages of some subcategories—as royalty-free images flowed into our file. I used the percentage of penetration at the end of the period.
Whatever flaws there could be in my study, the result does stand scrutiny by one important test—it fits with what our day to day experience tells us. Our salespeople try every day to encourage clients to license more images, better quality images, and of course, more expensive images. They find it harder to convince a client to pay the premium needed to get a rights-managed image, when there are many excellent royalty-free alternatives.
If you are artist who is dedicated to creating royalty free images, my study suggests you should focus on the image categories that have a low royalty-free percentage. In those areas, your images will stand out as lower-priced alternatives to the prevailing material, and should sell well. If you are an artist who is dedicated to creating only rights-managed images, my study holds a less positive message. It seems unlikely that many major, attractive image categories will remain untouched for long, by the royalty-free model. Therefore rights managed-oriented artists should expect to see a declining return on their work, in the future. Most should seriously consider participating also in the royalty-free marketplace. (Index recently opened this option to its artists, when it for the first time, began accepting images directly into a royalty-free licensing model.)
There is an old saying, “If you can’t beat them, join them.” We may be at that point, in the rights managed/royalty free debate.
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