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SAA White Paper: Straight Talk About Stock Licensing Models, Part 2 |
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Written by Stock Artists Alliance, Edited by Betsy Reid
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Saturday, 25 February 2006 |
Editor's Note: This is the second of a multipart series covering stock licensing models that we will be publishing over the next few weeks.
SAA
recognizes the urgent need to expand industry-wide understanding about
how stock licensing models work for the creators, users and
distributors of images. SAA’s White Paper: Understanding Stock
Licensing Models is downloadable from the SAA web site at www.stockartistsalliance.org . Many of the points made in that paper form the basis of this report.
A Very Brief History
“License by use” was the original stock licensing model. Since it was consistent with the traditional pricing structure and terms of assignment photography, the Rights Managed approach had been universally understood and accepted by all parties – photographers, distributors, picture buyers and clients.
Introduced in the early 1990s by stock distributors, Royalty Free
introduced the concept of a “license by unit” model. By standardizing
unit pricing and by first exploiting the economies of digital search
& delivery, RF was quickly adapted by clients as an amazing bargain
for acquiring images.
Despite industry-wide concerns about the RF model, the competitive pressure distributors felt to meet the growing client demand – and the impact it was having on their core RM businesses – resulted in nearly every established stock company launching an RF division. They were joined by new companies who were investing primarily in RF production and distribution. It’s fair to say that the “license by use” model was moved to the backseat while stock industry refocused its resources on RF and, as a consequence, made possible the unimpeded encroachment of RF on RM.
In less than a decade, stock irrevocably changed from a world of printed catalogs and analog files to an Internet marketplace with two directly competing licensing models, both widely used. Today, it is estimated that RF accounts for the larger share of licensing volume while RM continues to generate the larger share of revenues. Today, variations and hybrids are appearing which combine these models and invent new ones. The evolution of stock licensing models continues as distributors fight for market share by seeking to appeal to clients with an even bigger bargain or a better offer.
The RF Shock Wave
The introduction of RF sent a shock wave through the first generation of stock photographers who were accustomed to a business of exclusive relationships with their stock “agents” and RM licensing terms. They watched as the industry embraced this new licensing model that not only commoditized images by selling them as “units” for low prices, but also offered the image creators a dramatically reduced share of the revenues than the RM model.
Even so, success stories circulated about some photographers who profited from RF, especially when it was first introduced and clients snapped up the first generations of RF product. As the business grew, competition greatly intensified, productions became more expensive, and the compensation offered to photographers declined.
Today, most stock photographers engage in RM licensing. Some engage in RF, and many more have considered it but have serious reservations about doing so. They question the RF business proposition to photographers, and how a decision to engage in RF might impact their RM business and the industry in general.
They feel the pressure from many fronts. They are being urged to shoot RF, to submit images that do not make the RM “cut” for RF, or to move RM images already online but not selling well into RF. The argument being that it’s better to make something from your images (on any terms), than get nothing at all.
Photographers who value the ”license by use” model are faced with a conundrum. Is it smarter to engage in RF or not? A first step is to consider what might give pause, by looking critically at the impact of RF on the stock industry up to now and into the future.
Lost Customers, Lost Revenues
Current stock industry revenues are estimated to be between 1.5 and 2 billion dollars a year and have flattened out in the past few years after a period of growth. There is compelling evidence to suggest that RF is responsible for diminishing the potential revenues to be made through image licensing by a significant amount. RF has not only deflated the fees paid per license, it has given away potential for future licensing revenue as well. Another source of lost revenues is the high level of unauthorized uses suspected for RF images, a result of the mis-perception by clients that RF is a carte blanche license.
Image Overload
The sheer volume of RF content is dominating image searches. In addition, the same images are everywhere, as many RF collections are represented on over a hundred distribution channels. In contrast, RM images have far more limited distribution. New RF images continue to flood the marketplace, due to aggressive production and relatively loose editing standards. Yet, the emphasis on developing “top volume” and “creatively edgy” content leaves many client needs unmet.
Despite the glut of RF images everywhere, Right Managed continues to claim a significant segment of the market and maintains strong appeal among discriminating image buyers. Industry surveys confirm that clients continue to perceive RM as offering the “freshest” images and they associate it with the highest quality, confirming that there continues to be high value associated with RM licensing model.
Go to Part 1 Continue to Part 3
About SAA
StockArtistsAlliance (SAA) is a global trade
association dedicated to the interests of Rights Managed stock
photographers worldwide through advocacy, education and community.
Learn more about what SAA is doing to help stock photographers at www.stockartistsalliance.org and SAA invites professional photographers, dedicated students and allied industry professionals to apply for membership.
Our StockArtists web site at www.StockArtists.com features over 200 portfolios of SAA member images available for Rights Managed license.
©2005 StockArtistsAlliance. All rights reserved.
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Last Updated ( Sunday, 05 March 2006 )
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