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General Stock Discussion / Microstock has more in common with Uber, Airbnb, Netflix, Tinder, than you think
« on: September 26, 2016, 08:00 »
In 2001, Istockphoto launched a unique business model consisting of crowd-sourced Royalty Free (RF) microstock photography. Anyone, anywhere could join and contribute to the growing image bank and earn a percentage on the sale, usually 15%. Istockphoto set the prices of images to an average of just $1 and allowed users to buy credits that were exchanged for imagery. Selling RF for such a low price was not the norm at the time. Overnight, Istockphoto changed the rules of the game.
Royalty Free vs. Rights Managed
Without getting too technical, Royalty-free refers to a licensing method under which image rights are sold at a flat rate for almost all purposes. The price for the image is often dependent on the image size (high or low resolution). On the other hand, the traditional photographic model is of Rights-Managed (RM) licensing, when an image license is priced based on how the image will be used. RM licenses has the added advantage that protects both the photographer and buyer as they usually come with usage restrictions, including length of time, regions, image size and often exclusivity. Therefore, due to these restrictions, it is with no surprise that the images are generally pricier for the buyer.
Advances in technology
The early 2000s were a highly-profitable time for market leader, Istockphoto and upcoming competitors such as Corbis, Alamy, Shutterstock (focusing on subscriptions), Fotolia and Dreamstime. Advances in technology meant that most photography enthusiasts were finally able to afford powerful PCs & large monitors, fast bandwidth, entry-level DSLRs and post-processing equipment.
The sites sold a business-model fairy-tale. The mere thought of earning passive income, from a fun & creative outlet, while working at home in pyjamas was enough to attract a fair number of photographers, including myself. Even if in reality the remuneration was inadequate for the time invested. So what if it didnt earn so much, the alternative was for those images to gather digital dust. Ego-driven photographers could brag to your friends & family that they were real professional photographers earning passive income. Microstock entrepreneurs knew this psychology and exploited amateur contributors by literally throwing pennies at quality images.
Many amateurs with particular niches did well and honed their craft. Those amateurs who thought it was easy and shot pets, flowers and rainbows either adapted or outright gave up. I was stubborn in that I initially joined in 2009 but gave up after a few rejections. Even then I would have been behind the curve and by the time I gave it a serious go, in 2012, I had no choice but to play catch-up.
If you cant beat them, join them
As the microstock business model matured, more professional photographers began contributing to microstock sites as they saw the potential to get on the bandwagon and earn on quantity rather than quality. Many of these established photographer had to bite the bullet and accept the new reality of selling their images from $200 RM to $1 RF. Those more experienced contributors who adapted with the new times generally did well for themselves and made a side income to cover some costs.
However, many were not enticed by the low pay-outs. They didnt jump on the bandwagon and continue to despise the microstock model for arguably destroying the profession along with the contributors that led to its demise.
A rocky relationship
Microstock agencies business model is such that they need contributors to profit, just like a plant needs water to survive. The relationship between contributor and agency is often rocky with many contributors accusing agencies of making deals that only benefit themselves, such as an 80:20 split towards the agency and significant licensing changes.
In 2006, Istockphoto, since owned by Getty Images, caused an uproar by allowing consumers to embed millions of its photos for free for non-commercial use on websites, blogs, and social media platforms. In 2011, there was further fury triggered by Gettys decision to change its contributor agreement, thus allowing the right to include all royalty-free content in its subscription package. Getty also removed the right for contributors to block Getty selling any of their images on a royalty-free basis.
Serious contributors were/are faced with tough choices. Put up with the changes and keep contributing, stop contributor, or most drastic of all pull out their portfolio entirely. Many did pull out completely and migrated towards fairer models such as those provided by Stocksy on an exclusive basis, established in 2013 or Alamy with their 50:50 split on RM material.
The microstock superstar, Yuri Arcurs, summed it out best when he said in his blog At some point the professional gets tired of selling 12 course testing menus at 0300AM at burger prices.
A wider trend
There appear to be similar patterns in other seemingly unrelated service industries. In our information age, the only way any developed economy is going to get richer is by becoming more efficient. Here are some examples where greater efficiency is challenging the status quo and consumers have never had it so good:
Music: Most people used to buy CDs before Napster & file-sharing many now listen to Spotify for free, with ads. In June, 2015, Spotify had more than 75 million active users, including about 20 million paying customers leaving many artists and labels reeling at the effect on sales;
Films: Remember Blockbuster? Cinema audiences are down - all thanks to online-streaming such as Netflix and Amazon Prime;
Hotels: Why pay for a hotel if you can fine cut-price holiday accommodation?
Mobile chatting: Whatsapp, the messenger app, has disrupted the telecom companys bottom lines as consumers rather text or make data-based calls;
Dating: Even some prostitutes are up in arms over Tinder taking over their business!
Online poker: Back in 2006, serious poker players, including myself, were once able to make a nice profit from low and middle stake games. Ten years on, theres less easy money around, even at low stakes, as either bad players have quit or have improved;
Low-cost airlines: Now competing head-to-head to with standard airlines on short distance flights.
Uber, the ultimate disruptor
Uber, the popular ride-sharing service, is in my opinion, the ultimate disruptor since the service was set up seven years ago in San Francisco. Recently, in dozens of city, there have been many instances of taxi drivers and their respective associations, blocking roads and unfortunately being violent and/or verbally abusive to Uber drivers and their passengers. Regulation, as often is the case when it comes to technology, has been slow to catch up to level the playing field.
Similarly, with microstock, most Uber drivers are unhappy with the deal they receive. At the onset a 25% doesnt seem much, especially comparing to microstock which is closer to a 60-75% cut but drivers face significantly more costs including taxes, petrol, insurance, maintenance, etc. The site, notcooluber.com gathered significant statistical evidence on LA Uber drivers and their conclusions are that drivers only earn an average of $2.89/h and thats before car maintenance fees. Uber drivers accuse the company of misrepresentation on the reality of running a successful business.
Average Microstock earnings are likely to also be below minimum wage and photographers also incur substantial investments, at the very least: time and equipment. Its no wonder that so many photographers and Uber drivers quit after only 6 months, with a bitter taste in their mouths. Its just a bad business model for contributors.
On the other side of the coin, the consumer has never had it so good. For example, Shutterstock now boasts a 100 million RF portfolio - thats a lot of cats! High quality images at dirt cheap prices.
Adapt or die
Nothing productive comes from feeling nostalgic for the good old days of selling stock images for Rights-Managed $500+. Except for a select few, those days are gone and wont return.
A solution is a compromise: promote the most talented microstock contributors to the major collections within niche boutiques. These new premium images could then be sold at substantially higher returns. These would have to be new images as no buyer will be willing to pay more for an image that has been sold thousands of times for peanuts. Stocksy and Shutterstocks Offset are interesting and I have applied to be contributor at both.
In addition, I would like to see a microstock sites allow contributors to submit RF mobile phone photography. After all, the Instagram square look with filters has proven popular with many buyers.
The world is changing fast and as serious photographers we must adapt accordingly. Good luck.
Alexandre Rotenberg
Fine Art Travel Photographer
www.arotenberg.photoshelter.com
Royalty Free vs. Rights Managed
Without getting too technical, Royalty-free refers to a licensing method under which image rights are sold at a flat rate for almost all purposes. The price for the image is often dependent on the image size (high or low resolution). On the other hand, the traditional photographic model is of Rights-Managed (RM) licensing, when an image license is priced based on how the image will be used. RM licenses has the added advantage that protects both the photographer and buyer as they usually come with usage restrictions, including length of time, regions, image size and often exclusivity. Therefore, due to these restrictions, it is with no surprise that the images are generally pricier for the buyer.
Advances in technology
The early 2000s were a highly-profitable time for market leader, Istockphoto and upcoming competitors such as Corbis, Alamy, Shutterstock (focusing on subscriptions), Fotolia and Dreamstime. Advances in technology meant that most photography enthusiasts were finally able to afford powerful PCs & large monitors, fast bandwidth, entry-level DSLRs and post-processing equipment.
The sites sold a business-model fairy-tale. The mere thought of earning passive income, from a fun & creative outlet, while working at home in pyjamas was enough to attract a fair number of photographers, including myself. Even if in reality the remuneration was inadequate for the time invested. So what if it didnt earn so much, the alternative was for those images to gather digital dust. Ego-driven photographers could brag to your friends & family that they were real professional photographers earning passive income. Microstock entrepreneurs knew this psychology and exploited amateur contributors by literally throwing pennies at quality images.
Many amateurs with particular niches did well and honed their craft. Those amateurs who thought it was easy and shot pets, flowers and rainbows either adapted or outright gave up. I was stubborn in that I initially joined in 2009 but gave up after a few rejections. Even then I would have been behind the curve and by the time I gave it a serious go, in 2012, I had no choice but to play catch-up.
If you cant beat them, join them
As the microstock business model matured, more professional photographers began contributing to microstock sites as they saw the potential to get on the bandwagon and earn on quantity rather than quality. Many of these established photographer had to bite the bullet and accept the new reality of selling their images from $200 RM to $1 RF. Those more experienced contributors who adapted with the new times generally did well for themselves and made a side income to cover some costs.
However, many were not enticed by the low pay-outs. They didnt jump on the bandwagon and continue to despise the microstock model for arguably destroying the profession along with the contributors that led to its demise.
A rocky relationship
Microstock agencies business model is such that they need contributors to profit, just like a plant needs water to survive. The relationship between contributor and agency is often rocky with many contributors accusing agencies of making deals that only benefit themselves, such as an 80:20 split towards the agency and significant licensing changes.
In 2006, Istockphoto, since owned by Getty Images, caused an uproar by allowing consumers to embed millions of its photos for free for non-commercial use on websites, blogs, and social media platforms. In 2011, there was further fury triggered by Gettys decision to change its contributor agreement, thus allowing the right to include all royalty-free content in its subscription package. Getty also removed the right for contributors to block Getty selling any of their images on a royalty-free basis.
Serious contributors were/are faced with tough choices. Put up with the changes and keep contributing, stop contributor, or most drastic of all pull out their portfolio entirely. Many did pull out completely and migrated towards fairer models such as those provided by Stocksy on an exclusive basis, established in 2013 or Alamy with their 50:50 split on RM material.
The microstock superstar, Yuri Arcurs, summed it out best when he said in his blog At some point the professional gets tired of selling 12 course testing menus at 0300AM at burger prices.
A wider trend
There appear to be similar patterns in other seemingly unrelated service industries. In our information age, the only way any developed economy is going to get richer is by becoming more efficient. Here are some examples where greater efficiency is challenging the status quo and consumers have never had it so good:
Music: Most people used to buy CDs before Napster & file-sharing many now listen to Spotify for free, with ads. In June, 2015, Spotify had more than 75 million active users, including about 20 million paying customers leaving many artists and labels reeling at the effect on sales;
Films: Remember Blockbuster? Cinema audiences are down - all thanks to online-streaming such as Netflix and Amazon Prime;
Hotels: Why pay for a hotel if you can fine cut-price holiday accommodation?
Mobile chatting: Whatsapp, the messenger app, has disrupted the telecom companys bottom lines as consumers rather text or make data-based calls;
Dating: Even some prostitutes are up in arms over Tinder taking over their business!
Online poker: Back in 2006, serious poker players, including myself, were once able to make a nice profit from low and middle stake games. Ten years on, theres less easy money around, even at low stakes, as either bad players have quit or have improved;
Low-cost airlines: Now competing head-to-head to with standard airlines on short distance flights.
Uber, the ultimate disruptor
Uber, the popular ride-sharing service, is in my opinion, the ultimate disruptor since the service was set up seven years ago in San Francisco. Recently, in dozens of city, there have been many instances of taxi drivers and their respective associations, blocking roads and unfortunately being violent and/or verbally abusive to Uber drivers and their passengers. Regulation, as often is the case when it comes to technology, has been slow to catch up to level the playing field.
Similarly, with microstock, most Uber drivers are unhappy with the deal they receive. At the onset a 25% doesnt seem much, especially comparing to microstock which is closer to a 60-75% cut but drivers face significantly more costs including taxes, petrol, insurance, maintenance, etc. The site, notcooluber.com gathered significant statistical evidence on LA Uber drivers and their conclusions are that drivers only earn an average of $2.89/h and thats before car maintenance fees. Uber drivers accuse the company of misrepresentation on the reality of running a successful business.
Average Microstock earnings are likely to also be below minimum wage and photographers also incur substantial investments, at the very least: time and equipment. Its no wonder that so many photographers and Uber drivers quit after only 6 months, with a bitter taste in their mouths. Its just a bad business model for contributors.
On the other side of the coin, the consumer has never had it so good. For example, Shutterstock now boasts a 100 million RF portfolio - thats a lot of cats! High quality images at dirt cheap prices.
Adapt or die
Nothing productive comes from feeling nostalgic for the good old days of selling stock images for Rights-Managed $500+. Except for a select few, those days are gone and wont return.
A solution is a compromise: promote the most talented microstock contributors to the major collections within niche boutiques. These new premium images could then be sold at substantially higher returns. These would have to be new images as no buyer will be willing to pay more for an image that has been sold thousands of times for peanuts. Stocksy and Shutterstocks Offset are interesting and I have applied to be contributor at both.
In addition, I would like to see a microstock sites allow contributors to submit RF mobile phone photography. After all, the Instagram square look with filters has proven popular with many buyers.
The world is changing fast and as serious photographers we must adapt accordingly. Good luck.
Alexandre Rotenberg
Fine Art Travel Photographer
www.arotenberg.photoshelter.com
