Pro-Imaging

A Brief History of Stock Licensing Models

Picture libraries had long existed as a niche resource for commercial and editorial image users, but it was not until the 1980s that stock started to become widely used as an alternative source. For clients accustomed to assignment pricing and dealing directly with photographers, stock collections offered an attractive option for finding immediately available images without paying for the related production expenses.

The original stock business model was Rights Managed (RM), also referred to as Rights Protected. This “license by use” model grew out of the traditional pricing structure and terms of assignment photography, so was universally understood and accepted by all parties - photographers, agents and clients. Stock agencies maintained extensive files of RM images and promoted a select group in printed catalogs that were published several times a year. Stock agencies serviced clients by re searching and compiling images for clients to review, and fulfilling orders by shipping them transparencies.

As the quantity, diversity and quality of the stock image collections improved, so did the level of clients and uses. With the rapid evolution of digital technology in the early 90s, the stock industry moved quickly from analog to digital and the image “catalogs” moved from print to searchable web sites. The need for client service declined as more of the functions were automated. Digital technology also provided the tools for the development of an alternative stock business model, Royalty Free.

Introduced in the early 90s, Royalty Free offered clients a streamlined approach to stock image licensing by exploiting the economies of digital search, e-commerce and digital delivery. It also introduced simplified pricing, casting aside the traditional “license by use” model and shifting to a unit-pricing approach. With the introduction of Royalty Free, the stock industry moved into the commoditization of the image licensing process.

RF was originally marketed as CD collections that bundled groups of up to 100 images by theme and consisted largely of simple “clip art style” imagery. Priced at a few hundred dollars for a disc, this was an unprecedented bargain for image users. With the growth of searchable websites, RF expanded to online delivery of single images. Single images offered clients the option of purchasing a range of file sizes (from 1MB to 70MB) with varying price points (from $29 to $499).

While CD collections continued to sell, single images quickly became the dominant RF product.

The Royalty Free business model had initially targeted lower budget users and uses, but that all changed when the broader market of existing stock users responded enthusiastically as well, perceiving RF as a  “bargain” and “hassle free” alternative to RM. Visuell, a leading international publication in the picture licensing industry, described RF’s appeal to clients in this way:

“Even though RF is on no account cheaper than RM material in many application areas, clever marketing strategies – supported by pithy claims like “Buy once and use as often as you like” – appeal to the way of thinking of those who like to save a penny or two.”

Clients of all sizes and budgets bought up CDs and built up in-house picture libraries to use everything from comps to ads. Now that higher budget clients were purchasing RF single images, RF marketers shifted strategy quickly to meet the growing demand and address their image needs. Having saturated the market with basic CD collections, they focused on developing higher production images of people in lifestyle and business settings - the top-selling Right Managed subjects - and directly targeted RM clients and uses.

Feeling pressured by growing client demand for RF – and the impact it was having on their core RM businesses - one by one, nearly every established stock company launched an RF division. They were joined by new companies who invested primarily in the RF business. It’s fair to say that RM was moved to the back seat while stock distributors re-focused their resources on RF and, as a consequence, allowed the unimpeded encroachment of RF on RM.

In less than a decade, stock changed from a world of Rights Managed catalogs and analog files to a digital marketplace with two directly competing licensing models, both widely used by image buyers. Today, it is estimated that RF accounts for over half of the volume of licenses made while RM continues to generate significantly more revenues, estimated at two thirds of the total stock market. Looking ahead, it’s clear that the industry is facing serious challenges should it continue on this course.