Michael Jay Fotograf Berlin

Selling photos across agencies

The new iStock offer

The Credit Exchange Information by iStock

The Credit Exchange Information by iStock

It’s been four days now since the announcement, the information has become a bit clearer over time and has sunk in. My initial, sarcastic response on the topic is still alive, and I don’t see reason to change a single word. But now is the time for a more thorough review of the facts we know, and do some maths and guess work.

What is the big plan?

If you followed my blog for a longer time, you might remember my thoughts on the market I published in July 2013, when I already predicted that iStock will introduce their own image based subscription model to compete better with Shutterstock. While I did not predict this week’s changes in particular, it is an expression of the same base thought: Shutterstock keeps posting record revenues each quarter, and as they are stock market listed, we can’t even avoid reading them.

Obviously, Getty is the only party having insights into their own revenues but from the reports we can see from contributors, we can at least conclude, none of the big changes they implemented since early last year have had a significant, positive effect on their own revenues – or stop bleeding customers to Shutterstock.

The new move is clearly another step to compete with what the market considers the better offer: Image based pricing, instead of a size based credit system. Though the new implementation at iStock is another failure in meeting the market’s demands in one important step, the base line is very obvious. Despite Brad Ralph’s public statement “we love to do it our own way”, all of the changes applied since early 2013 are just a try to copy their most successful competitor.

What is the possible outcome?

For me as a non-exclusive contributor, the base numbers are easy to calculate: In the new system, all of my images will cost $15, independent of size. Bulk buyers will get discounts, so they might be priced down to $8 each, and in some cases additional promotions might bring down the base price as well. So in effect, my assumption is that most of my downloads will be priced around $10 in the future.

As I am on the 17% level, this would lead to an average royalty for $1.70 per download. This is far above what I did get in 2014 so far which averages less than $1 (not considering the even lower earnings from the partner program). Then again, it is in the same range of royalties which I earn on Shutterstock for image pack downloads.

But you can already see: It looks like this is going to be a raise for me, on image pack downloaders. Which is not really a good sign for the customer because that also means a raise for buyers’ prices for my images. And that’s the cheap kind of image.

For exclusive contributors, the calculation is a bit different: At the current stage, most exclusives probably have their images in Signature, Signature+ and Vetta collections. Those images will all become available at prices from $24 to $45 per image. Independent of size, based on the $8-$15 range stated for future credits. Assuming as above, that the average credit will rate around $10 for buyers, the exclusive contributors can expect to be paid between $2.50 and $4.50 per credit, depending on their royalty status. If we assume that most images will remain in the new Signature collection (and not moved down to Main), this would mean a typical $7.50 royalty for base level exclusives, and $10-12 per download for most of them. Probably not far below what they have earned in the recent past on average.

But consider the image price for a second. $45 is definitely not much for a premium image like those initially chosen for and added into the Vetta collection. It is a heavy discount for buyers wanting that kind of image.

Then again: How many small business owners, designers or bloggers do you know that would be willing to pay $45 for one single image they just need for their website, small brochure, in the corner of their posters or on their blog? I doubt there are too many of them.

Does that mean, exclusive are totally lost? Not necessarily: For one, you could argue that most of the small and cheap buyers have already left iStock for good; or they moved to the non-exclusive content that was available for $3 or $5 in small sizes. Or exclusives will finally get images moved to the Main collection as well, as has been asked for in March already. This could at least level the field when competing with the cheaper non-exclusive files that look very similar to the basic content many exclusives are contributing as well.

How about the true premium content?

It does not really address the question what is going to happen with the real premium images that are around at iStock. Don’t get me wrong, I still laugh about many of the exclusive members who are merely uploading mediocre content (and I know how mediocre content looks because I produce a lot of it) but think their images should be worth more because they can’t be found anywhere else. But many of them are mere copies of concepts well covered – or, unfortunately that happens a lot as well without any idea how to avoid it: Is being covered quickly by others. Those images are not worth more than a few dollars, despite photographers having had that assumption for some time. But the market only pays true value, not the producers’ perception.

BUT: There is a group of contributor I still appreciate a lot because they truly produce superior images. And I have not seen many examples of that type of artist at Fotolia nor Dreamstime nor Shutterstock. At all those places, there are some exceptional photographers but the huge number is still to be found at iStock (if we talk about the microstock segment).

Many of those contributors I am talking about have been complaining about Vetta type images mostly disappearing from the top of searches. This might be intentional, and actually it could be in their favor now. Would you want those images to be sold for $45 or even less? Probably not. And probably Getty sees some more value in those images as well. With those images still having the option to be mirrored to Getty Images and their websites (as the direct contribution to Getty seems no longer to be an option, they rather source their images from other parties like Flickr, EyeEm and partner agencies), it might be not too bad if those images won’t be shown too prominent at the future iStock pricing.

The problem is likely to be happening in the “in between” area, what may have been the Signature+ collection. At some point, contributors were able to put their own content into the E+ collection. Which I consider one of the biggest mistakes in the history of iStock. We all are the worst judges of our own work. And pricing image licenses should be done from a customer point of view, not of “production costs”. Then again, it allowed iStock to keep the Vetta collection “tight”, at least until it was flooded with the second-bests of the agency partners and finally mixed in with the business-oriented Agency collection rather than the artistic value it once held.

But it ended up with many of the S+ images not being true values for the customer but what the contributor considered his best shot to make an extra buck – again, I am not judging anyone as I have done that myself while I was still allowed to do. In effect, there is a whole mass of images that was overpriced with a handful being undervalued. As it looks like, iStock/Getty is not going to take a closer look to those images to make a clearer division. And that’s where I assume exclusive contributors will lose most.

What iStock still fails to address

I see this with a mix of sarcasm and sadness as I still love the place iStock once used to be: A creative exchange between artists of different kinds, photographers, illustrators, designers, buyers and sellers. And I still love the opportunities it once gave to everyone, making decent money from things they created with love from buyers who found what they needed at prices they could afford.

Getty has never understood this market, and none of what they have changed since taking more control in 2010 has indicated they have learned anything since. They are known to their customers they can actually talk to on the phone and with sales people visiting them to sign big contracts.

As Jonathan Klein dismissively mentions in a recent interview, “99 percent of the traffic on GettyImages.com will never buy a picture”. While it is likely to be true, that is most likely exactly the 99 percent that iStock initially targeted: Buyers who can not afford to pay $20 for a single image because they will never earn back that money – but who are dedicated enough to beautify their personal blogs with $1 images.

Shutterstock at least has seen parts of those customers – after having had their “every image, every size, one price” claim to gain market share in the corporate field, they eventually introduced at least on differentiation: Users of small images can have 12 images at the same base price as those with print size needs pay for 5 images. There is no indication that iStock has recognised this part of the market, despite having been founded for exactly that.

Another aspect is that – no matter what has been said or is being said now – there is a huge gap between the collection size and quality in comparison to the main competitors. Despite having accepted millions of images that would fail any quality assurance at the other competing sites, iStock is not going to catch up with the number and variety of images others have to offer.

This would not be that critical if there was an additional offer iStock had to make. And indeed iStock would have that kind of offer. But they neglected to clearly show this to customers for a long time now. Instead, they just raised the prices across the board on all exclusive images, being more valuable or not, removed all visible indications what is their actual premium offer over time, trying to sneak in the more expensive images in the middle of their regular stuff. Completely intransparent to the customers, so they ended up being confused why one image costs X and the other one next to it costs five times more. Apparently this problem is not going to be resolved even with their new system.

What is to be expected as the outcome

In the short history of the internet, there have been some examples of a first mover finally being overtaken by a competitor. The initial idea was successful on its own but someone else figured out how to do it better. Altavista has been replaced by Google, Netscape has been replaced by Internet Explorer, and the Explorer later by Chrome and Firefox. Then again, other companies have survived and even become bigger by taking over competitors.

The latter was the strategy of Getty Images for 15 years in a market that was split among many small companies. However, they failed to do so with Shutterstock in time, and by not learning from iStock’s success and how it happened, they allowed a competitor to gain market share and momentum. This is hard to stop. And it will certainly not be successful by (badly) copying the competitors’ business model. Neither will it be successful with the people who are not used to work in this kind of environment.

While I expect Getty to stay strong in the field they know best, in the big media companies and many of the large advertising agencies, I do not see anyone in the company having made any meaningful statement how they could gain back iStock’s home territory. Therefore, the new pricing will certainly help in making the business transactions easier for both, the buyers and the agency. And this might even help in gaining some overall appearance of the site towards customers. But I doubt that it will have significant positive impact on gaining market share, it is merely a try to keep the status quo.

 

2 Comments

  1. Hi Mike! Good post! myself and many RM suppliers are in fact seeing a big upswing at Getty, the house-collection in particular.
    Shutterstock have never posed a threat to Getty, two totally different markets and frankly I am sure Getty have had just about enough troubles in the micro sector.

    SS, ever since the IPO have been a shakey outfilt, falling in and out of troubles with many major contributors, factories included and personally I seriously doubt their strategy, at least at present. They are vulnerable and not something I would invest heavily in today. Its turned into a subs-agency and a hang-out for newbies and people who just wants some extra income.

    About IS, same as you I have a very soft spot for the IS we used to know, they were the pioneers in micro, the staff we used to know were top notch and as you say a great hang-out for creatives exchanging ideas and thoughts.
    I really hope they will succeed in this venture and OH!! and that they will take us poor independents a little bit more serious, especially in collections and searches.

    me 2-cents mate! best. Chris.

  2. Pingback: The new iStock is live | Michael Jay Fotograf Berlin