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I got a few emails that still challenged my assertion, and it appears I
haven't emphasized strongly enough the most compelling arguments
supporting this thesis.
All of
my research supports the premise that the primary cost of licensing
images is not the license fee, but the overhead associated with finding
and acquiring the right image. The overhead and administration of a
project that would involve photo licensing shows that the actual license
fee ranks very low on the budget—hence, low on the buyer's priority
list. My 2007 surveys of buyers showed that.
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If the person responsible for finding images for a project is paid $60/hr,
and this person spends 2-3 more hours looking for a photo just to
pay $1 vs. $50, this translates to paying someone $120-180, just to save
$50. People who control budgets know that the license fee for photos is
negligible to the total cost of production, even at the traditional stock
photo rates. The bigger the project, and lower the proportion of the
license fee for the image(s).
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Those who sell images are dropping their prices because they're looking
at their competition, not the buyer. Further, there is absolutely no
evidence to show that sites that have lower prices sell more images. There
is definitely a perception that there's a correlation, but that's
because people are comparing apples to oranges. Getty sales vs iStock
sales are not apples-to-apples because the two entities vary dramatically
in search engine results (and other important factors). People talk about
microstock sites more, and they link to them (in blogs, discussion
forums) and the quantity of images on microstock sites is rapidly
growing. So naturally, these sites get higher rankings in search results.
Search engines don't rank sites because they have lower prices. They rank
sites by size (content), links, and a black magic formula that is best
described as "dispersion of discussion in and around the net." In short,
microstock sites have more content and get more attention. Hence, better
rankings, which translates to more traffic, which attracts more
photographers to submit images to them, perpetuating the feedback loop.
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In my 2007 survey, those who indicated they were aware of—and use
microstock sites—most don't go to them because the prices are lower;
it's mostly because those sites ranked higher in search engine results,
where the buyer starts.
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Because search engine ranking drives traffic—especially the untapped
(and unaware) segment of the global economy that doesn't use stock
agencies—and because the greatest cost in photo acquisition is time,
not the license fee, 90% of the time-savings is the image results the
user gets on that initial search. If it takes the buyer to a stock agency
site—microstock or otherwise—then the deal is nearly done. Price
notwithstanding.
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This is primarily why I have advocated for years that stock sites should
focus their entire effort towards optimizing search engine rankings. While
they could have done something about it in the past, the rise of social
networks and the plethora of image-related websites and apps has made it
impossible for agencies to rank highly on image-search rankings on their
own. In today's market, they have no choice but to either partner with,
or acquire/be-acquired-by a social-networking site.
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The Getty<->Flickr combination is a very pragmatic example. Yahoo
is circling the drain, and it needs to shed its non-performing assets and
focus its attention on ... something. Whatever that is, it isn't
Flickr, and there aren't a lot of buyers that would be interested in that
asset, except for Getty or Corbis. The combined product would involve
retooling Flickr to be far more socially active (to keep up with modern
social networking trends), and to integrate licensing/acquisition
into the user/social experience. Most importantly, to provide incentive
programs for photo submitters to participate economically. (I've written a great deal about this in the past.)
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Of course, perhaps Yahoo should just buy Getty. Facebook is getting into
the game, which tends to lead one's eyes towards Google, but they are
still struggling to play catch up in the social-networking arena, and
their photo division is not run by someone with a disposition towards
stock or an awareness of the economics of the photo industry. The company
is more interested in building assets that support their advertising
model. There's no evidence that "licensing" is on their radar—a pity
because they would be on the forefront of the Web 3.0 economic model,
where images would play a huge role. (See here.)
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In the meantime, there's a $25B shadow economy in peer-to-peer photo
licensing that's up for grabs. (See here.)
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So, you ask, "how do you convince agencies of this?"
I've been trying
since 1998.
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(For fun, see this web archive of my site from 1999
discussing this topic.)
Labels: agencies, analysis, corbis, economics, flickr, getty, licensing, photo agencies, photo business, photography, photography business, pricing, search engines, stock agencies, stock
photography
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