DIMdump

Analysis #31--Do Illustrations Do Well?

One of my readers recently asked me if we want more illustrations.  Of course, my immediate response was an emotional "yes," because I have always LOVED illustrations!  In fact, we changed our name from Index Stock Photography to Index Stock Imagery (back in 1998) because we liked illustrations so much, we didn't want to be "just photos."

We have about 11,000 illustrations on our Index Stock Imagery Web site.  This is a pretty large collection, as illustrations remain relatively rare within the stock image world.  We made them easy to find on our site, by giving our users a special filter that will automatically pick out our illustrations (look for it underneath the search box, on the left side of all of our sites).

Do illustrations license well?  Do they license better than photographs?  To study this question, I looked at our licensing history for the period from November 2004 through October 2005 (our 2005 fiscal year).  I compared the average earnings per image for our illustration collection against the average earnings for our entire 1,000,000 image library.  I used data only on images that were available digitally, during that period, and included both rights managed and royalty free images (about 24% of the images in both our illustrations and photographic collection are royalty free).

 

I was pleased to see that our illustrations generate almost 50% more revenue per image, than an average image.

I have commented before on the fact that relatively few of the images in our collection are licensed each year.  Over time, about 10% of our images get at least one license.  In 2005 alone, about four percent of our collection was licensed.  In contrast, about seven percent of our illustrations were licensed.

Here is one more interesting fact.  Our royalty-free illustrations generated less money than our average image (almost 40% less).  Our rights managed illustrations generated 44% more than average.  (Overall, we are seeing similar per image revenue generation from our rights managed and royalty-free images.  Remember this is revenue per image per year--not revenue per license.  Royalty free images are licensed more often, but at a lower rate, than rights managed images.)

Taken together, this data suggests to me that:

1.  Our customers like illustrations.  They seem more inclined to use an illustration--when one is available--than a photograph.
2.  Customers will look down further in a search, to find an illustration.  As a result, a higher percentage of our illustration file gets seen and licensed, than for our file, overall.
3.  Higher end rights managed customers will pay up to keep control of an illustration.  Lower end royalty free customers probably associate RF illustrations with clip art, and discount their value.

I plan to write further about the relative performance of the different image types and categories in our file.  For the moment, I invite you take a look at our people illustrations.  Aren't they cool!?

Analysis #30--How Do Subscription Users License Images One-Off?

In my last post, I gave the first part of my answer to the question from my salesperson Glen, about how Index Open affects Index Stock licensing.  As you recall, Index Open is my stock photo agency's royalty free photo subscription product (www.indexopen.com).  Index Stock (www.indexstock.com) is our 1,000,000-image strong one-off photo licensing product, for both royalty-free and rights managed images.

I showed in my previous post that Index Open users who registered on Index Stock's Web site actually bought more one-off licenses, than the average Index Stock Web site registrant.  While I had some evidence that those who bought and Index Open subscription were heavier-than-normal users of images, our subscription product did not appear to be seriously cannibalizing our artists' revenue.

I next wanted to investigate whether Index Open subscribers license one-off images differently than the other users of our Index Stock site.  For instance, many people have characterized photo subscription as "low end" customers.  If so, they should be paying less per image use, than other Index Stock registrants.

As before, I compared those customers who bought Index Open in the first quarter of 2005 with those customers who registered on Index Stock during the same period, but did not buy an Index Open subscription (either then, or later).  I averaged the price per image paid by these users, for their one-off licenses on Index Stock.  As you can see, they pay essentially the same $600 per image average license fee.

I next looked at the pattern of licensing activity, over time.  As you can see below, Index Stock registrants spent more money on one-off licenses in the first month after they registered, than they did later on.  In contrast, Index Open subscribers seem to have a steady pattern of buying--perhaps even a steadily increasing pattern of one-off licensing!  This is very encouraging information, as it suggests that photo subscription buyers continue to license images one-off, even when they have a solid subscription product like Index Open, as a creative resource.

Remember how I compared the Index Open users with their colleagues who had registered on Index Stock, but had not bought an Index Open subscription?  I did that analysis again, so I could contrast their one-off license purchase pattern.  As you can see, the colleagues had a similar flat profile, to the Index Open subscription buyers.  It may be that steady buyers of stock photos are more likely to want a subscription product, than those who have a one-time need.  Makes sense, doesn't it?

So, what is the bottom line effect of royalty-free photo subscription products, on one-off licensing behavior?  From what I can tell, subscription buyers may initially do a little less one-off licensing than they might have otherwise (based on the data in the previous blog).  However, they don't seem averse to paying a normal fee per image, when they need a one-off license (this blog's first chart).  Those who buy subscriptions probably differ from our normal one-off buyer in their need for a steady supply of images (as shown in the other two charts in this blog).  For regular buyers, having the choice of finding an image in a photo subscription makes good economic sense, and is convenient creatively.  Since the amount we may have lost through cannibalization seems to be less than the added revenue we receive from subscription fees, the overall effect of subscriptions on artist earnings should be positive.

Please feel free to ask questions (thanks again to Glen for this one), and let's see if we can come up with more answers about how photo subscription products will change our industry.

Analysis #29--How Does Subscription Affect One-Off Image Licensing?

One of our salespeople (Glen) asked me a very good question, recently.  He wanted to know if our Index Open subscription product helped or hurt our Index Stock one-off licensing business.  It took me about a month to find the numbers I needed to answer his question, and analyze them in depth.  I was encouraged to see that our subscription product appears to support and perhaps even improve, our one-off photo licensing.

Before I plunge into numbers, let me remind my readers about how Index Stock Imagery's two high-end products fit together.  Our largest and best-known product is Index Stock (www.indexstock.com).  Index Stock offers its customers their choice of more than 1,000,000 images.  About 250,000 of these are royalty free--the rest are rights managed.  Our average license fee per image on this site is over $500, and typical customers are advertising agencies, design firms, corporate designers, and publishers.

We serve these same customers with a royalty-free subscription photo product called Index Open (www.indexopen.com).  This tool allows its users to download up to 25 high resolution (50MB) images per day, during their subscription period.  The Index Open collection has rapidly grown to more than 80,000 images, from more than 80 different professional artists.  We offer one month, six month, and one year subscription terms.

We have promoted Index Open to those who register on the Index Stock site, as a great everyday source of images and as a basic creative tool.  We have made it easy for Index Open users to find images also on Index Stock, by automatically executing all Index Open searches simultaneously on Index Stock.  This allows Index Open users to see what is available on Index Stock with a single click of their mouse.  (For instance a search for "business" on Index Open shows there are 5,286 business images available to those who have bought our subscription.  The "get more" area at the top right of the search results tells Index Open users that there are "16,975 more Royalty Free and 15,831 more Rights Managed images on this subject on Index Stock."  Pretty cool, huh?)  This feature gives our users an easy choice between our subscription and one-off licensing models.

The first thing I did was compare the registration databases for the Index Stock and Index Open Web sites.   (All of my analysis was done on Web-registered users.  We have some customers still who do not use our Web sites, but it is a small number and shrinking rapidly in terms of activity.)  I found that about 60% of our Index Open subscribers were also registered on the Index Stock Web site.

I then focused on just those people who either bought the Index Open subscription or registered on Index Stock, in the first quarter of last year.  I looked at the average total value of one-off licenses each of these groups bought on Index Stock, in the ten months after they signed up.  By using the same time period for sign up, and by using a standarized period after signup to track sales activity, I hoped to make the data consistent and comparable.

I was pleased to see that customers who had bought an Index Open subscription, still bought a substantial amount of one-off licenses, during the ten month period.  In fact, it seems they bought about 20% more one-off licenses, than our average Index Stock customer.  Of course, Index Open customers also bought at least one Index Open subscription license, during this time.  Add that revenue to the one-off revenue, and these are pretty good customers for both us and our artists.

Did you notice that I had a third bar on this chart?  I was worried that there was a selection effect in my data.  Perhaps subscription buying customers are the most active licensors of stock images, in general.  If so, my result might be badly biased.  These customers might have been licensing many times more one-off images than "ordinary" customers, before they bought Index Open.  We might then have cannibalized some of this revenue, by converting what would have been one-off licenses, into subscription downloads.

I was able to test this question pretty directly, thanks to an interesting anomoly.  It turns out that a number of our Index Open subscribers work with colleagues who have not bought Index Open, but who have registered on Index Stock.  I was able to look at the average buying of these colleagues.  I found that they bought quite a bit more than an average user of the one-off Index Stock site.  I suspect that the $120 per customer difference I measured is due to cannibalization of some of our one-off sales by Index Open.  However, when you add back the $600 to $1,000 we earned on subscriptions for each Index Open customer, we have still gained net revenue, for our artists.

Now, some skeptic out there may say that these colleagues are actually sharing the subscription of the Index Open user!  If this were true, then I might have underestimated their original level of Index Stock licensing activity.  I suppose this is possible, but not that likely.  First, most people don't like sharing anything that has their log in and password.  Second many Index Open subscribers use their full 25 image download capability, at least once in a while.  (See my previous blog on this.)  They would not want to "go to the well" and find it dry!  Third, most of the customers on this list are bigger companies.  Each person working there is likely to have her or his own budget and workflow.  The non-subscriber may not even know yet, that Index Open exists and is being used elsewhere in his or her shop!  Finally, I used data from the first quarter of 2005, when the subscription marketplace was just starting to heat up.  I don't think these users would change behavior and start sharing a subscription in a few months time, even if they knew Index Open was available.

I've got more to offer on this subject, but will save it for a future blog.  For now, I take pleasure in seeing that our subscription products are building revenue for our artists, rather than destroying it.

Industry Comment #20--The Dirty Secret of Ranking

Over 200,000 of the more than one million images in my stock photo agency’s library contain the keyword “people.” Have you ever wondered how we decide what image from those 200,000, to show first?

Of course, the first element in ranking generally is the quality of the match between the search string a user entered and the metadata the stock photo agency has added to its images. There are many tricks and twists available when a user has typed in a long search string. But, because 57% of all searches done on our site contain only one word, we need to use other tricks to put our images into order.

Does image rank matter? It is hard to say. There are many variables associated with each image licensing decision. However, in certain categories such as royalty-free lifestyle images, there are many competing suppliers with similar product lines. In these “commoditized” subject areas, it seems likely that a hierarchy similar to search engine ranking may exist. According to a Marketing Sherpa study, the top three lines on a text Web search get 60% of all clicks. Pushing a set of images twenty or thirty pages down in a search result probably would cut their license fees by 50% or more.

There are several ways that stock agents could rank images:

1. Random. I know of one agent who uses random ranking. I find it extremely annoying. I don’t search linearly for images, but recursively. In other words, I may try the same word several times, as I wander around an image site. On the randomly-sorted site, if I see an image I like, but neglect to put it into my lightbox, I may never find it again!
2. Newest image first. Most of the celebrity and news stock photo agencies work this way (see Newscom for a well-organized and clean example). Whatever has come in most recently, hits the top of the list. This makes good sense for news images, but doesn’t seem suited for general purpose stock photography.
3. Best image first. Doesn’t this sound like a great approach? Make the first image the one that is the most creative, most artistic, and most interesting image that matches a certain search term. Of course, the problem lies in deciding which image is the most beautiful or marketable. I know of two approaches:
   1. Human editors pick the top images. This approach gives consistent results, but requires “tuning” of the editor’s taste to match the taste of stock photo customers. Without this correction factor, the editors can get away from current market trends, and develop a view that misses the reality of their market.
   2. Customers “vote” for top images. This approach purports to give power to end users to express their views. However, it can lead to self-perpetuation (an image that is “voted up” will stay highly ranked, because its higher starting position gets it more viewing opportunities) and to style lag (what was popular yesterday remains popular for too long).
4. Most profitable image first. This it the “dirty secret” I mention in the title of this blog. Major agencies are starting to rank images based on how much of the revenue they keep from each license. That means that an agency that has created and owns its own images will put those images first (and keep 100% of all licenses). It will then follow its “owned” images with the group of images on which it has negotiated the lowest commission payout. It will show last the images it makes the least on. This policy is not enunciated on the Web sites of these agents. Some of them make it especially hard to spot, by hiding the names of the party who contributed the image, deep in their site.
5. Sell the top ranking. Some search engines are starting to charge extra fees, if you want your link to show up in the “preferred” area. I don’t know of any stock agents that have tried to extract this type of fee from their image contributors—yet!  I doubt that it would fit our industry association code of ethics, but a lot of the new players in the stock industry aren’t PACA members.

Which approach do we take, here at Index Stock? Option 3a, of course! While it is more work for us, we feel a human-based ranking gives our customers the best possible search result. Our approach favors those artists who give us their best images. That seems fair, and is easily understood. To keep things simple, we do not tell our salespeople what our profit margin is on an image. Their goal is to satisfy a customer and maximize the revenue we generate for our artists, not to maximize our gross profit.

While we endorse Option 3a, Option 4, the “most profitable first” approach, seems to be sweeping the industry. Recently, several of our distributors approached us and threatened to “demote” our images, unless we cut our commission percentage. For about fifteen years, the “standard” payout from a stock agency to a distributor had been 40%. Now, distributors are now demanding 50% or even 60%, with image ranking as their lever.

A change in ranking could easily cut the license revenue from a distributor by 50%. Therefore, it could seem rational for a stock agent to agree to a cut in payout from 60% to 50% of gross revenue (a 17% drop), instead. However, accepting this cut might invite a further cut later. Further, if the distributor is investing heavily in shooting and promoting its own material, it is likely to push up these images to the top. Then, its agent partners will see even fewer revenue opportunities.

There is a risk for our distributors, from this strategy. If our percentage gets too low, we will eventually make more total revenue for our artists by going around our distributors, and marketing directly to their customers. I estimate that the “break point” for this strategy is somewhere between a 50-50 split and a 60-40 split in favor of the distributor. We hope our partners will understand this, and not push us to the point where it makes more sense to buy email lists and do our own pricing and marketing, instead of relying on them.

Analysis #28--Lifestyle Image Categories

In previous posts, I've talked about the importance of categories and about which categories do well in RF and which do well for US Travel.  Some of my readers probably are bored of categories, at this point, so I will try to lure everyone back into the discussion, by talking about Lifestyle images.

For those not "in the business," the term Lifestyle connotes fast cars, good clothes, and a nice bottle of wine.  For stock agencies like mine, Index Stock Imagery, the term is more technical.  It means an image that will suggest to image users an activity, emotion, or social situation.  These people image can be used to sell products, promote concepts, and communicate stories.  As such, they are one of the two core tools of those who use images for advertising.  (The other main group are concept images.)

I divide Lifestyle images categories into three groups:

1.  Women, men, couples, girl, boy, teenager, children, baby, mature adults, families, and the catchall for what is left, people.  These categories hold images that are just of people.  They may be interacting (with emotions or not).  But, many are portraits that look a lot like the snapshots we all take of our own families, children, or spouses.

2.  Occupations, education, public service.  These images cover the work sides of our lives.

3.  Sports and leisure, shopping, social issue, wedding, holiday, religion.  Outside of work, we play, pray, and pay. 

The leader in sales per image terms is (drum roll, please)--shopping!  Number two might be less of a surprise to those in our business--social issues!  Yes, these are two things that sell well, and that we never seem to get enough of.  Within shopping, the best subcategory is "store interiors."  Makes sense, since it is the heart of the shopping experience and very hard to get (since you need a property release from the store).  Within social issues, the biggest is "demonstration."  This is another tough one do do, since you need model releases on a lot of people, at once.

Buried inside some of the bigger categories are some high-powered subcategories.  For instance, women couples, indoor babies, boys with cats, and teenagers engaged in sports.  There are also some laggards.  They include sanitation workers (surprising, since this is a tough job that is a metaphor for many things), several "minor" sports such as gymnastics, skateboarding, and speedwalking, and mature adults in silhouette (guess we have too many of them?).

There is a lot more information to share in this area, but I think I'll save it for private conversations with our artists.  Here is a list of the major categories in order of their popularity (on a per image basis), for your reference (and comment).

Shopping (even the worst-performing subcategory--malls--does well)

Social Issue (drug abuse is the worst performing area--probably too grim)

Vacation (spring break is the hottest area)

Teenager (subcategory indoor has the most images, and does pretty well)

Woman (women with animals do well, and we don't have many images in the area)

People (unfortunately, the physically challenged subcategory does not do well)

Man (surprisingly, we only a couple of men in evening wear)

Child Boy (boys doing hobbies don't do well)

Children (eating and drinking images do pretty well)

Education (got to love campus scenes!)

Public Service (park rangers and prison guards are popular)

Couple (bicycling and jogging just don't sell)

Sports and Leisure (would you guess wrestling is a top subcategory?)

Child Girl (outdoor shots are middle of the road on earnings and we have a lot of images)

Entertainment (give up on festivals, they aren't selling well)

Occupation (hard-working lab technicians are number one!)

Wedding (best to take shots of brides and grooms, as a couple)

Family Style (forgot hiking--not much revenue)

Religion (funeral subcategory images do worse than the rest)

Mature Adult (gardening is a big hobby, but not a great earner)

Holiday (Thanksgiving get overshadowed always by Christmas)

Industry Comment #19--Scams, Scum and Scum

Last Thursday, my stock photo agency, Index Stock Imagery, was hit by a variant of what is known as the "Nigeria Scam."  Here is what happened:

1.  Someone obtained one of our checks.  It must have been one that we wrote to an artist, for a commission payment, because it was written on our Bank of America checking account (which we use only for this purpose).

2.  That person used our check as a template and created a number of forgeries.  These forgeries simulated Bank of America check stock, bank transaction codes, and security information.  They also had a copy of our CFO's signature on them.  The copies were good--professional quality.

3.  The group involved created checks in denominations ranging from $10,000 to as much as $150,000.  Then then presented these checks to businesses and banks all over the country.  In just two days, they attempted to pass more than $1,000,000 worth of fake checks.

It should be no surprise to learn that we didn't have $1,000,000 in that account.  If the scammers knew anything about the stock photo industry, they would not have chosen us to attack!  Plus, Bank of America noticed the checks, and realized they were frauds.  So, the scam ring probably didn't get much for their efforts.  For all I know, they might even have lost $5,000 or $10,000 on their effort.  After all, they had the overhead of making the fake checks and distributing them to a surprisingly large network of confederates.

Of course, our daily operations were completely disrupted.  We had to close our account and open a new one. Bank of America could not figure out how to pay the good checks (those we actually had written), while still rejecting the bad checks.  So, all of our good checks are now bouncing.  The balance in the account is frozen, because Bank of America doesn't know for sure what it should clear and should not.  So, we have to find another account and different funds to support the replacement checks we are writing for our artists.  Each time one of our checks bounces in one of our artist's banks, our artist gets charged a $30 to $50 fee.  If you figure there are 100 to 200 checks involved, we are out $3,000 to $10,000, just in bank fees.  Add the pain and suffering of dealing with this mess, plus the missed mortgage payments and hassles for our artists, and we lost at least as much as the scammers.

We haven't seen any FBI agents in our office, yet.  No alarm bells rang.  I don't hear any speeches saying "this shall not stand" by the President or posturing by our attorney general/candidate for governor.  It seems that scams like this one are part of daily business, these days, and no one in our government or legal system really notices them.

Does this piss you off?  Ok, stack on top of this scam, the cost of spam.  Not only the suffering of opening your email every day and finding 400+ spams that offer you Viagra, disgusting sexual adventures, or bizarre ads in Russian, Chinese, or Japanese.  But also spams that contain viruses or tracking worms.  Thanks to McAfee, Spamnet, and our Sprint email filtering system at work and ZoneAlarm, Windows Firewall, and AdAware at home, my poor laptop continues to survive.  But, for how much longer?  Even if each of these attacks has only a 0.001% chance of succeeding (one in 100,000), at 1,000+ attacks per day, the odds are against me!

Look at it another way.  We are a legitimate business.  If someone registers with us, and wants to hear more about our products, we send them emails.  Those who receive our emails seem to like them.  We get open rates over 10% and our unsubscribe rate is under 1%.  But, we estimate that 20% to 50% of the emails we send are blocked by corporate and private spam filters.  That takes money out of the pockets of our artists, and deprives our customers of information they want.  And it is not our fault, it is the fault of the scum that clutter up the world with spam!

Another example.  My blog is a modest effort, with relatively low traffic.  Even so, some people want to post spam comments and spam trackbacks.  They have some kind of robot posting machine that does this.  I have to log on to get rid of those entries.  Otherwise, what traffic I get would be siphoned off to sites that would embarrass me...

Not pissed off about this, yet?  Spend your time writing an original blog.  Find time in between everything else to do research, think about things, and post your idea.  Then, post your prose and wait.  One day later, some $%#&*@ in Singapore grabs the first 100 words of your blog and posts it on his site.  He links at the bottom of your entry, to your site, so you are supposed to feel flattered.  But, he didn't ask your permission and doesn't mention that he didn't write the post.  Plus, he sells ads on his site...and doesn't give you a share of the money he is making off you and the other 100 people he "harvests."

Scam, Spam, and Scum.  Remember the movie Network?  As Howard Beale said, "I'm mad as hell and I won't take it any more!"  I wish I knew what to do about it.  Here is my modest plan:

1.  Ignore all your spam.  If EVERYONE NEVER BOUGHT ANYTHING from a spam email, they would stop doing it!  NEVER buy from from someone who spams you.

2.  Permit all your good email.  If you are not careful, you may be blocking emails from your friends, potential business partners, even that friend from high school you always wanted to hear from, again!

3.  Every time you get sent to a spam site (one of those ones that lure you in with their high Google rank and "borrowed" content) leave right away! Please DON'T click on any of the ads they carry.

4.  Be careful.  When you are on a Web site and you start getting asked for personal information, look for reassurance.  We have to get social security numbers for our artists, so we can pay them.  We have to get credit card numbers or Purchase Orders from clients, so we can bill them.  We are really careful with this information--you be careful, too!

5.  Vote for people who understand the problem, and will do something about it!  We need help--stronger laws, international treaties, more FBI agents...heck, I'd be happy to see the Marines get involved!  Forget invading Iraq and giving Iran a hard time.  Let's do something about getting rid of Internet scum.

You may not be pissed about this, but I am!  Please do your part to rid the world of these folks.  And, give me more ideas about what we can do, as a community, to get rid of scams, spam, and scum!

Industry Comment #18--The Vice of Voice Menus

Hope you won't mind if I pause talking about categories, and indulge myself in a brief rant.  I am SO tired of listening to voice mail menus--aren't you?

My company, Index Stock Imagery, has a live receptionist.  When you call us, either there is no one here (yes, we go home at night) or you speak to a human being.  I recently had the excuse to call three of my competitors--and got voice menus and voice mail, each time.

I mentioned this to my sister and she told me that there is a whole site devoted the to subject of voice menus, voice mail, and avoiding same, plus lots of other sites that share my dim view of using machines to talk to people.

gethuman -- a site devoted to instructing us on how to reach a human, when you need one

Tricks of the Trade -- lots of professional secrets, including how to avoid talking to machines

lifehacker -- advice to simplify and streamline your life, and put the geeks in their proper place

I'm happy that other people don't like voice menus.  I assume that they agree with my reasons, for preferring humans to machines:

1.  If we are lucky enough to get called by a customer, we want to talk to her or him!  We don't want that wonderful, kind, interesting person to have to make a choice between hitting a 1 or a 2!  We want that lovely person to talk to one of our equally lovely salespeople and give us some of her or his lovely business!

2.  Want to find someone at Index?  We want you to be able to reach that person, too!  A receptionist can page the person you are looking for, quiz his or her colleagues about where the person is, and even ask you to wait while we come back from the bathroom or getting a snack.  And, if you decide to leave a message, you don't have to worry about getting cut off, half way through a sentence.

3.  Not sure exactly who you need to talk to?  Not sure what you want to ask?  A lot of times, when I call a company, I don't know if I need to talk to accounting, customer service, or sales.  Doesn't it make more sense to speak to someone who knows everyone, and can help you get to the right place?

4.  The CEOs of those other companies probably spend a lot of time listening to their voice messages.  I hope they enjoy listening to stock brokers, leasing companies, those fake police beneficial association people...  I don't get those messages, because a human being knows I don't want them.

5.  Does it cost more money to have a reception person?  Those menu machines don't come cheap, and our reception people do a LOT of other things.  Doing image research for the sales team, adding keywords to images, checking invoices, processing inbound emails from our agents...could a voice mail system do all those things?

6.  Can a voice menu machine say "Good morning," every day?  Can he or she wish you "Happy Valentine's Day," the way our receptionist, did this morning?  Machines are good for a lot of things, but they are not great at dealing with people.

Feel free to disagree, and tell me the wonders of allowing a customer to leave you an important message at midnight.  I can answer with letters and emails from customers, artists, friends, and family, who all appreciate not having to agonize over which number to choose!  Why get hung up on, by a machine that doesn't understand you?  I'd rather rely on the intelligence, good manners, and charm of a human being, any day of the week!

Analysis #27--Image Categories and US Travel

What U.S. state is most popular?  One way to measure this is to look at our licensing information by category.  As you can guess, we have a separate category for each state, with subcategories for major cities and sites within each.  It is pretty easy to add up the sales made over the last three years, and announce which states were the overall revenue leaders for that period:

New York

California

Massachusetts

Florida

Washington, DC.

(Please don’t argue that Washington, D.C. doesn’t count as a state!  FYI, at just over 570,000 residents, the District of Columbia has a bigger population than Wyoming and about the same as North Dakota, Alaska, and Vermont.)

There are probably no surprises on this list, nor would it be surprising that these five states lag at the bottom of the list:  Oklahoma, Mississippi, Delaware, Kansas, and North Dakota.  (Poor North Dakota!  Over the past three years, images of it generated only 0.2% of what those of New York brought in.)  If we take the analysis one step further, we can express return in terms of annual revenue per image in the file for each state.  This allowed me to adjust for the fact that major states like New York and California have many more images (5,800 and 6,205 respectively) than less photogenic states like Iowa and West Virginia (33 and 30 respectively).  This adjustment changes the order dramatically, and gives us a whole new order:

Iowa—nice to see a “Midwestern” state get credit for something other than corn and cattle!

West Virginia—one of the few states we have no subcategories for.  Guess no one in our library could think of a special site in this state, that needed its own file.

Arkansas—a cool state, that is more than just the home state of the Clintons.

Maryland—Baltimore has had a big renaissance, and this state’s beaches and meadows are beautiful.

Michigan—nice to see a “Midwestern” state…oh, I said that already.  (Remember, I’m from Ohio and LOVE the Midwest!)

Can data like this lead to a geographical strategy for U.S. travel shooting?  Are there cities or sites that are underrepresented in our file or extra popular?  Given the broad sweep of images and subjects in this area, we probably have to go down one more level to get an answer.  Here are five category/subcategory combinations that look promising to me:

1. Detroit, Michigan.  This city has changed dramatically in the past ten years.  We don’t have many images of Detroit, and a lot of them are not up to date.
2. The White House.  We have just over 60 images of this American icon.  I’m not sure what new angle we could get on this image—but there is a good opportunity here, if you’d got an idea.
3. New York Snow Scenes.  We don’t get that much snow in New York.  But, when the white stuff covers our grime and grit, it is beautiful.  You can’t force it to happen, but when the forecast is snow, grab that camera and get outdoors!
4. Newport, Rhode Island.  If you haven’t seen the mansions, the harbor, the shops and the streets of this ancient (for the US) city, take a camera and go!  Stay at one of the bed and breakfast places and don’t forget to use vinegar on your fries—real Rhode Islanders don’t use ketchup.
5. The Corn Palace, South Dakota.  OK, this one may not be fair, because we only have two images of the Corn Palace and it is hard to know how much more room there is, for such a specialized subject.  However, I want to make the point that there are hundreds of interesting, unique, local subjects, that deserve to be recorded.  Each time a new museum opens, a state capitol is renovated, or a new statue is erected, why not get us a shot for our library?

Please don’t expect instant miracles, if you give us more images on these subjects.  But, it probably makes sense to focus on areas like these (we have less than 100 images on most of them), rather than working in fields that have already been ploughed, planted, and harvested, too many times.

Analysis #26--Image Categories and RF

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:

 

I then collected information on how many images there were in each subcategory and how much money each subcategory had earned in licenses, over the past three years. I included all types of earnings—whether from domestic licenses, foreign licenses, or some of the new electronic image uses, we have pioneered. By dividing the earnings by the number of images, I determined the annual earnings per image for each image subcategory.

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.

Analysis #25--Image Categories are Useful

Our stock photo agency, Index Stock Imagery, has assigned each of the images in its collection to a single category and subcategory. There are about 2400 possible category and subcategory combinations, ranging from lifestyle-oriented topics such as Concept—business and Couple—outdoor; through specific technical or product subjects such as Architecture—church, Land Transportation—truck, and Medical Science—physician; to natural history subjects such as Zoology—bear; and including more than 1100 travel-related topics such as Kenya—Portraits and Texas—San Antonio.
People have questioned the need for this system in an image world that seems largely driven now by keywords.  In many cases, the category and subcategory names are also keywords.  (For instance, church, bear, and San Antonio are all valid keywords.)  Many people feel that categorization is a remnant of the past--of a time in our industry where we had no digital files, and each image had to be put into a single folder in a physical filing cabinet!
I look at our categories from a different perspective.  I find that they help me sort through and organize the license data we generate, and put it into an actionable framework.  An image of San Antonio could be primarily a nature image (and categorized as Flowers--wild, e.g. image 565953, or Family—mother & child, e.g.  image 489150a), for instance), an architectural image (categorized as Architecture—door, e.g. 404679) or even an abstract restaurant interior (Architecture—restaurant, e.g. 259506a).  When our image metadata experts tagged an image with the Texas—San Antonio category and subcategory, it tells me that the primary message of the image is travel and tourism-related.  I can therefore do things like:
1.  Recommend that artists go to San Antonio to shoot more images (or stop going there, if the images we already have are not doing well).
2.  Point a travel-oriented client to a set of images on San Antonio and be sure that the client will see the type of images that he or she expects to see.
3.  Analyze how San Antonio, Boy—outdoors, or Family—mother & child images are doing this year compared to previous years, or how travel, lifestyle, or concept images are doing, in general.
4.  Check to be sure that we have current images in key categories. Last year, we added more than 250,000 images to our file.  We tried hard to encourage submissions that would fill the holes in our file--and would keep our collection looking fresh and relevant. (Our most recent addition to the San   Antonio subcategory are about a year old.)
I plan to write a series of blogs about our category system and the information it conveys.  I'll finish this entry, and start the series, by noting a few category/subcategory areas that are obvious holes in our file.  Please point us towards any sources of the following types of images:

Couple—women: One of our best-selling subcategories, but we have only 19 images.

Historical—old west: Another good-selling subcategory, but only 32 images.

Industry—home building: A huge industry that is in the press, all the time. But, only 8 images in our file.

Insect—worm: Yes, the lowly worm sells well—all three images!

Washington DC—cathedral: Yes, our capital city has a cathedral, and images of it are popular. But, we have only seven examples in our file.

Sport & Leisure—water polo: Not a mainstream sport, but probably one that has upwardly mobile connotations. Our fifteen images of it sell well.

Switzerland:  For some reason, people seem interested in images of Switzerland.  Zurich, the Matterhorn, Geneva, and the Appenzell are all big sellers. Interestingly, other Swiss subcategories like Friebourg, Klosters, Lugano, and Berne, generate almost no revenue. Of course, some of this variation could be random, but most is probably driven by the conventional view of Swiss tourists.