Another kind of conflict arises from the particular appeal of RF images to clients promoting "sensitive” products, as in the following case in which the billion-dollar software company licensed the same image as the marketer of erection-enhancement tablets. The Cincinnati Enquirer reported:

“The black-suited man in the print ad wears a wide, satisfied smile. But is he selling computer software - or a sexual aid? Actually, both.

As more cases of conflicts arise, we expect client frustrations to increase. The ease of RF unit pricing is hardly sufficient incentive to gamble with the potential consequences of conflicting uses by anyone else who can pay a few hundred dollars for an image, let alone a chief competitor.

Pricing for the Digital Age

According to the RF unit-pricing approach, an image used in print should cost a lot more than an image used electronically. So, the RF license for a textbook costs more than a web page, and a poster costs more than a web banner ad. As a result, all electronic uses are discounted, even high-value licenses which require only small file sizes - such as for a major internet banner ad or a web site home page.

This disconnect between price and use in RF licensing becomes an increasing concern as clients shift more of their spending into digital media. With the spreading use of broadband along with the growth of online advertising (expected to double in the next five years) and emerging new digital media, there will be increasing demand for images in smaller file sizes.

By discounting electronic media uses, RF has trapped the industry into a pricing equation that undervalues licenses for the growth sector of the market, a serious issue looking forward that needs to be addressed for the health of the industry.

Devaluation of Images

RF has also dramatically affected how clients value images. Giving away virtually unlimited rights for anywhere from a few dollars to a few hundred dollars diminishes both the financial and creative value of professionally created images for clients. Today, more assignment photographers are finding that clients working with them increasingly question the costs associated with producing an image, and more and more are pressuring for lower fees and more rights in commissioned work.

Rock-Bottom Royalties

A shock to most photographers even today is that RF contracts offer them such low royalties, usually netting them TEN PERCENT or less of total licensing revenues. While the published royalty rate in an RF contract likely reads 20 or 25 percent, that does not figure in the standard “distributor’s cut” that commonly takes 60 percent or more off the top of each license fee paid.

This is because nearly all RF transactions involve two middlemen – a brand company and a distributor - who take a combined share of 90 percent of the revenues, so what’s left for the photographer is usually 10 percent or less. Some RF contracts drop royalties even lower if the images are bundled on a CD (or even a downloadable  “virtual CD”), resulting in royalties to photographers dropping as low as 5 percent.

Consider a quick comparison between the net revenues that a photographer would receive from an RF versus an RM image. Looking at single image prices only, it’s fair to estimate that an average RF license fee is less than $200, whereas the average RM license fee is well over $500. Assuming the photographer nets 10-15 percent from an RF license and 30-40 percent from an RM license, the RF image would need to be licensed 5 to 10 times more often than the RM image for the photographer to net the same amount.

A commonly heard rationale for the minimal royalties offered to photographers is that the volume of RF sales offsets the lower share paid to them. If so, wouldn’t the same logic apply to the distributors? Distributors also cite higher “marketing costs” for RF than RM. In short, it appears the only reason photographers commonly get such rock-bottom royalties is because the deal has been accepted by enough photographers to make it stick.

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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.


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