Jain Lemos » Photography and Publishing

In response to “Use-Based Pricing: Corbis Moves in Right Direction,” Jain Lemos said: “I am not convinced that the rights-managed model should disappear entirely, and promoting that idea too soon could have a negative impact that Corbis and others don’t intend. Perhaps rights-managed and [traditional] royalty-free are going away on their own, but they have worked well for many years, and I’d hate to see the baby thrown out with the bath!”

To discuss whether it is time to get rid of the rights-managed model, we need to identify its two basic elements: the ability to license exclusive rights and the ability to license rights based on use.  In today’s market, it does not benefit most photographers to try to keep all their images available for exclusive licensing, since the vast majority will never license an image for exclusive use. Nearly all licensing of rights-managed images is for non-exclusive use. I will acknowledge that rights-managed licensing does benefit agencies, and those rare photographers who are lucky enough to hit the jackpot, to be able to license exclusive rights to images.

The problem with the rights-managed strategy is that no more than 1% to 2% of all the images licensed around the world today are licensed as rights-managed, and that share is declining every day. Everything else is being licensed as royalty-free or subscription. Thus, those sticking with the rights-managed model are severely limiting the number of customers who will even be aware that their images exist, let alone license them for use.

On the other hand, the ability to license rights based on use rather then file size is absolutely critical to ever being able to maximize revenue from one’s production. What we need is not to keep rights-managed licensing alive, but a new model that separates licensing exclusive rights from use-based licensing. The salvation of use pricing will be when the microstock sellers—who already own the customers—recognize that they need to do a better job of pricing based on use in order to grow revenue. The chance that the rights-managed model is going to come back in all its 1990s glory is gone much like the chance of typewriters coming back into general use.

Microstock sellers do recognize that, in order to grow revenue, they need to find some way to limit certain uses for their base file size prices. That is what their Extended Licenses are all about. Microstock sellers price some things by use in a very limited way. They just do not put enough use types into the Extended Licenses category. They are also trying to raise prices on some images by offering higher priced premium collections. On the other hand, they are severely hampering themselves by trying to build use modifications around a file size model and would be better off if they could go to a new model that is completely based on use.

Part of the argument for sticking with file size is that the royalty-free sellers want to keep pricing simple, but if customers were to really read the microstock licensing agreements, they would find that in most cases the rights they have purchased are harder to understand and track than the average rights-managed license. It would also be possible to build a model based entirely on use that is simpler for the customer to understand than the existing microstock model, but microstock does not appear to be moving in this direction.

The world is changing, and what everyone needs to do is think outside the box, rather than hold onto the old ways of doing things and justify long-held beliefs.

Lemos responds: “That rights-managed licensing handles the issue of exclusivity is only one of the model’s components. If you want to talk about pricing structures, that is another matter, too. Rights-managed licensing conveys who was granted rights and for what purpose exactly. While total exclusivity is seldom sought, industry and format exclusivity (i.e., no other billboard sales) is often a factor to clients. Tracking is also the only method for agents and photographers to analyze trends. Even if only a small percentage of the collection’s sales are rights-managed, information can be extracted. Rights-managed licensing builds the very type of statistics that a business such as yours utilizes.”

In my opinion, industry and format exclusivity are seldom sought, even when we are just talking about rights-managed sales, and sales with such exclusivity represent an infinitesimal percentage of total sales. So it comes down to: do you want to ignore 99% of potential customers in order to be able to address the needs of one-one-hundredth or one-one-thousandth of 1% of the customers? You cannot address all the customers, because a very large percentage will not even consider rights-managed images. You have got to address one group or the other, and it makes more sense to address the infinitely larger group.

Of course, tracking types of uses can be very valuable in analyzing trends, but that can be accomplished by switching from a file-size system of pricing to a use system—and the use system does not have to include exclusivity. In addition, while microstock and royalty-free sellers cannot provide use information, the statistics they do provide to photographers are of much more value than that provided by rights-managed agencies, because the rights-managed agencies hide so much of the really useful information.

Lemos said: “I don’t see any reason why we should not hold onto and promote the existence of rights-managed licensing as an option, while we test and embrace new ways of doing business. To start declaring that it is over or soon will be is unnecessary and potentially damaging chatter. The rights-managed model helps photography retain value. Let it stand!”

To allow rights-managed to continue to exist until it dies a normal death is fine, but to promote it among photographers is to encourage them to sell their new images in this manner. That is probably doing the photographers a disservice. At some point, it made sense to stop promoting typewriters and film cameras even when a few were still being sold. The same may now be true of the rights-managed licensing model as it is currently defined.

This entry was posted on Monday, March 8th, 2010 at noon and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response.