Stock image producers often have two misconceptions about subscription licensing services: They believe (1) that subscription licensing is simple, and (2) that for a very low monthly fee customers are allowed to use any image for any purpose. Neither statement is true.
There are major variations among the subscription offerings of various companies. This can be demonstrated by comparing, for example, Shutterstock to the new Britannica Image Explorer.
Unquestionably, more images are currently downloaded from Shutterstock than any other subscription service. The company recently reported that its customers had downloaded over 125 million images since 2003; between 30 and 35 million of those were likely downloaded in 2009.
Shutterstock: Not So Simple
At first glance, Shutterstock pricing seems simple. For the right to download 25 images per day, the customer is given the options of paying $249 for one month, $709 for three months, $1,349 for six months or $2,559 for a year. If customers really downloaded 750 images a month, they would get the images for pennies, but almost no one consistently downloads the maximum number.
If a customer only wants a few images per year, there is an option of five downloads for $49 or 25 downloads for $229. Small file sizes for use on the Web are available through another set of subscription packages; 12 downloads during the span of a year for $49 or 60 downloads for $229.
Yet these are not the prices for everyone. The customer has to make some decisions about image uses, reminiscent of rights-managed licensing.
Wait — aren’t these royalty-free images, meaning buyers can use them any way they want? Not exactly.
Customers who purchase traditionally priced royalty-free images online or on CDs have much more flexibility in how they can legally use them than is the case with single or subscription-based microstock images.
It is not possible to summarize all of the typical microstock use restrictions. It takes Shutterstock more than 4,100 words in its license agreement to explain to customers what they are, and are not, allowed to do with the images licensed through the Web site.
The 250,000 Impression Limit
In general, customers can use the images in most of the ways people use images, so long as there are fewer than 250,000 impressions. But that varies depending on the type of use, so it is important to check the language for each specific use.
Easily understandable are 250,000 brochures, pamphlets or catalogs, but images cannot be used on a package if the manufacturing run is likely to be more than 250,000. It cannot be incorporated into a film, video or multimedia presentation if the audience is ever likely to exceed 250,000 — does anyone know when they are producing such a product?
Images can only be used in eBooks, “including multi-seat license electronic textbooks, provided that the number of potential seat licenses or end users is fewer than two hundred fifty thousand (250,000) in the aggregate.” Every category of use has different limitations.
There is, however, a way to get around the 250,000 restriction, and many of the other limitations. The customer can purchase an enhanced subscription (some companies call it an extended license).
If you only need two images per year where the use would not be covered under a standard license, you can get those for $199; five images will cost $499 and 25 images — $1,699. These prices are quite close to what is being charged for many rights-managed uses today.
It also important to remember the image creator’s percentage through Shutterstock is based on the gross fee paid by the buyer rather than a much lower “net” fee after several sub-agent percentages are removed as is the case with many rights-managed and traditional royalty-free sales today.
Not too long ago the limitation level for many microstock companies was 500,000 impressions. Perhaps in the not-too-distant future this standard license limit will come down to 100,000 impressions. The whole idea is to find some way to charge larger, more commercial and professional users more money than consumers to use images.
Brittanica Image Explorer: A Different Model
In contrast, Britannica Image Explorer is a very different type of subscription offering. One of the most important distinctions is that it is focused on a very narrow and specific market segment — education — rather than trying to service all types of users.
By narrowly defining its market, Britannica can offer a product that is better tailored to that market’s needs. A key distinction is that the only file size they offer is low-resolution (150 dpi), because that’s all the market needs. This eliminates the risk of the photos being used for commercial purposes, which require a larger file.
The images offered through Britannica Image Explorer are normally licensed at rights-managed or traditional royalty-free prices. But since the only file size offered is so small, and only educational consumers are allowed to access the database, very low prices for each individual use are reasonable.
Educational organizations will make one large payment to Britannica for the rights to access the database. This price is based on the number of students or members who will have download rights, and Britannica will track the number of downloads for each image, so the creator can be paid a portion of the gross fee based on the actual number of downloads of his or her images.
The license is also clear. If anyone wants to make any use of an image not specifically allowed in the license, or any type of commercial use, they must go to the image owner and obtain a separate license.
Unlike the situation with Shutterstock, there are two middlemen — Universal Image Group and Britannica — between the creator and the consumer. But even with this extra layer, given the percentages each middleman is taking, it seems likely the creator will earn more per download from a Britannica sale than from a standard Shutterstock license.
In addition, it seems unlikely that these educational consumers will even consider a Shutterstock image given the design of the offering: Shutterstock would be much too pricey.
In sum, the important thing to note is that subscription offerings can be designed in many different ways for different customer groups. Photographers should examine the specifics of each offering and not treat all subscriptions as equal. It also seems likely that other subscription products will be designed for specific market segments and niches in the near future.