Royalty Free content proliferation

Features

Royalty Free content proliferation

By Chris Ferrone July 13, 2006

Observers of the stock photo industry can’t help but notice the increase in the numbers of new Royalty Free collections appearing in the market place. One might even say the rate of new RF brands coming on-line has accelerated to become an arms-race with producers stockpiling new content. A visit to the CEPIC Conference in Biarritz last month confirmed the trend. Several companies launched or began to promote in earnest their new RF brands at the Conference. The new collections come from both existing RM companies looking to get into the RF game and new production companies established for the sole purpose of creating RF content. To get a sense of what drives this RF production frenzy, we contacted a few of the industry veterans leading the charge.

At CEPIC, the stock photo industry consulting firm, PepperStark, presented four RF brands now seeking distribution. Liz Pepper, one of the principals in the firm, cites several reasons for the burgeoning ranks of RF producers. “Following a substantial round of acquisitions of some medium to large RF collections some hefty competition has been removed and the market opened up to new production companies breaking onto the scene,” Pepper says. “Some people who have sold their collections have money to re-invest in new production and the opportunity to make further millions – from image revenues as well as from a potential future sale of the collection several years down the line. These people and others within the industry certainly know what content sells. Analyzing what images are being used in the market or researching the material that is lacking and in demand helps calculate return on investment figures and secure investment for production.”

Jennifer Hurshell, co-founder of GoGo Images, a new RF production company specializing in ethnic Chinese and Hispanic lifestyle imagery, also believes the new market conditions demand more content: “RF growth has been outpacing RM for some time, as a result of the fact that end-users can now deploy more targeted messaging to their key audiences via a vastly expanded number of marketing channels. On the one hand, clients will undoubtedly continue to both custom produce imagery and source relevant RM as ‘hero’ images, i.e., images that are absolutely central to the creative strategy of a major marketing campaign, and benefit from the exclusive rights obtainable to protect the ‘look and feel’ of such work. On the other hand, the availability of so many new media apertures, e.g., the proliferation of digital channels etc., means clients have the opportunity and the need to rotate messages and visual content much more frequently, sometimes on a daily basis. This marketing channel proliferation, however, has not resulted in increased budgets, so RF has become an very attractive image sourcing option, particularly for those programs driven by speed to market and rotation objectives.”

The matter of budgets raises the question of pricing for RF. In a market of abundant supply as well as pressure from subscription and micro-stock businesses, can one reasonably expect a continuation of the increasing prices we have seen for RF over the last several years? Bas van Beek, a partner in Hill Creek Pictures of Amsterdam, sees RF pricing holding firm or increasing for high quality imagery despite the growth of lower price business models: “An interesting figure to see would be the world wide RF turnover growth in relation to the tremendous growth of availability of RF images. Every economist will then conclude that the price level will be hard to maintain. One already can see a spin off price dump by subscription models. Besides that; how can a RF distributor differentiate itself from against competitors selling the same images in the same country? (Apart from the iPod that these days comes along with every RF image purchase?) Also here, every economist will proof a downward going price level. Ultimately, however, the RF pool will become segmented; cheap images will be cheaper and excellent images will retain a higher price level.”

Veteran stock shooter, Tom Grill, of Tetra Images agrees with van Beek, but wonders whether the present conditions will hold for the long term: “The market has already hit a saturation point. In fact, it has hit this several times in the past 15-20 years. Each time something new comes along in terms of marketing technique or emerging market to absorb the overflow. Both micro-stock and subscription stock are two such models that have opened up to serve the new market needs for lower priced images. Micro-stock is currently marketing to those areas, such as the internet and Powerpoint presentations, where high resolution images are not required and costs must be kept low. Subscription serves a market niche where there is a need for a lot of material on a regular basis. Neither of these areas are currently competing with regular RF sales, but that is only for now.”

“So the impetus is for regular RF to retain or increase its current price structure,” Grill continues. “This is being spurred on by the fact that many top quality RM photographers are now switching to RF and producing a very high level product. This newer product will only distance RF even more from the micro and subscription sites.”

Grill offered an interesting take on the micro-stock business and how it might evolve. “The micro-sites made the same mistake that early RF made when it arrived upon the scene,” he argues. “They priced their product too low, and cut the photographer royalty from 50% to 20%. We forget that RF was initially priced at $14-19 on the low end. It took RF years to massage the prices higher to a level where the lower royalty rate was then sufficient to cover better quality shoots that could compete with RM. The micro-sites have made the same mistake and have shot themselves in the foot with their $1, $3, & $5 pricing, and now they are suffering from the same competitive disadvantage – namely, that quality RF photography using expensive models and locations cannot be produced and show a return at such a low price level. Consequently, the micro-sites (just like early RF before them) have to limit their offerings to inexpensive shoots involving landscapes, still life, and backgrounds. You will notice that the only people shots are done with amateur models and involve poor photography primarily shot using lower level digital cameras.”

“That said, we really do not know where this will lead, just as we did not know where RF would lead at its early stage of development. If the micro-sites can lead their customers to a higher price level and offer photographers a robust market where royalty returns will begin to cover more expensive shoots, then it may not only survive, but could usurp a larger market share. This will be particularly at the expense of the lower end RF market. Of course, we should keep in mind that the current RF resellers only need to lower their lowest tier pricing to remain competitive.”

Grill concludes, “It will be an interesting evolutionary development to follow. Probably the greatest threat to the current crop of micro-sites is the further proliferation of copycat micro-sites as they compete with one another for talent and customers. The biggest threat to the micro-sites, themselves, is that, once they carve out a successful market area, it’s too easy for anyone else to join in and steal market share. “

The following list of over thirty relative new-comers to the RF production business shows that few are put off by the advent of the micro-stock business.

Alaskan Express (AlaskaStock)

arabianEye

Author’s Image

Big Cheese Photo

Bilderlounge

Blend

Cut and Deal

DesignPics