iStock has made an announcement yesterday, sending out a newsletter to contributors detailing the changes they are planning to introduce on September 13, 2014 which effectively changes the whole system how iStock is pricing images in the future. iStock co-founder and Getty manager Brad Ralph has also published an Open Letter on the PR site of Getty Images, detailing the past development and the reason for those changes.
The changes in a nutshell
“More customers need more content, for more projects, distributed in more ways and in more formats and on more platforms. This sets a great foundation for continued iStock growth. It also means we must adapt iStock to service these new customers, to meet the increased demand from existing customers and support the realities of new higher resolution project requirements.” (from the iStock Newsletter)
- There will only be two collections: Essential (former “Main” collection) and Signature (former “Signature”, “Signature+” and “Vetta” collections)
- There will only one price for each file, independent of size
- iStock will change their credits and pricing, old credits will be converted 5:1 to new credits
- The reduced Vetta royalty rates (22-28%) will be removed, exclusive contributors will earn their 25-45% on all images going forward
- There will still be the ability to nominate images for the higher layer (former Vetta or Signature+) which will have no impact on pricing but they will be mirrored to Getty Images
Not all the details are known yet: iStock has not published the pricing for the new credits. But old credits were priced at $2 for the smallest package and you will get one new credit for five old credits, the basic assumption must be that the new credits will be valued at $10 for starters. Anything else would alienate existing buyers who spent their money already and would feel that the value of their money has been reduced. Discounts for larger packages (and the introduction of the new system) are likely to bring down the effective pricing, though.
The effect of the changes on credit pricing
iStock's vector lead Bortonia has published an overview of the old vs new pricing as a chart. With the assumption of the 5:1 change towards the new credits, you can also conclude:
- Former Main images have cost 2-8 credits depending on size. They will now cost one new (or 5 old) credits for any size which equals the former price for a Large resolution
- Former Signature images have cost 7-30 credits depending on size. They will now cost three new (or 15 old) credits for any size which equals the former price for a Medium resolution
- Former Signature+ images have cost 20-60 credits, former Vetta images have cost 45-170 credits. They will now cost three new (or 15 old) credits. A massive price reduction for all those images
The effects for other media: Vector and Video
- Former non-exclusive vectors could be priced anywhere between 1 and 22 credits in the old system. They will now all be valued at 1 new credit, equaling the second-lowest tier in the past
- Former exclusive vectors were priced 2-28 credits with Vetta vector at 40-55 credits. They will all be valued at 3 new credits, equaling the middle of the five standard price tiers in the past, without the potential premium pricing for Vetta
- Main Video were priced at 17 credits for a Small Web size and up to 95 credits for HD 1080. Those will all be priced 6 new credits in the new system, equaling 18 old credits or about the smallest price
- Vetta Video was priced at 60-170 credits in the past and will now be priced at 18 new credits, equaling about 90 old credits
iStock had a very complex pricing structure in the past, with up to seven collections, containing images priced at 7 price levels depending on size at some point, totaling a combined 49 possible prices for the buyer. This was very hard to understand for the customer, and we have to assume that the simplicity of other agencies' offers were more appealing. By reducing the system from seven to four collections last year, and now down to only two collections, iStock has certainly achieved a system much easier to understand.
Setting the price independent of size is a trend we could see happen more often in the future: In the past, the image resolution was also used to identify the potential use of the file. Smaller sizes were effectively not usable in print while larger resolutions were too big to be effective in online use. Although with the “royalty free” license, the user was legally allowed to use images in any media, it was an effective way to price “print uses” higher than “online uses”.
Internet lines have become better, even with mobile connections the users are watching videos and large size images on devices that have gained in screen size and resolution as well. Therefore, image buyers are more likely to need larger resolution for online uses while at the same time the value for them has not increased. The “all images, all sizes, one price” claim of Shutterstock has a broad appeal to buyers in this aspect. Following that trend makes iStock more attractive again. We would not be surprised to see other agencies follow up in that kind of thinking pretty soon.
What is in it for contributors?
“With the changes you are about to see on iStock, we are disrupting our current business model to go back to our roots, back to the basics. Simplifying is what we did best when we started – affordable prices and great content. Content found only from iStock.” (Brad Ralph, Getty Images)
With every change, there are obviously risks and potential rewards for contributors which are hard to predict. Especially since some of the details (mainly the pricing of the new credits) still missing, it is impossible to come up with calculations.
However, given the raw facts we know so far, Main / Essential images will hardly be affected. The new pricing will match the Large resolution of the past, and the percentage of image licensed at higher resolutions was not very big. If the credit prices are not reduced dramatically, it can be expected that the average royalties paid for those images will essentially stay the same.
The (old) Signature files are now priced at the former Medium size. With the assumption that buyers were less price sensitive on the Main collection but more on the higher priced collection, we assume the average downloaded size in Signature was somewhere between Medium and Large. For those images, we expect a small lowering in the price levels and royalties paid. It is not very likely to be a dramatic drop, though.
For the old Siganture+ and Vetta images, the drop in price and therefore royalties will be significant, though. The new pricing sounds like it is about 50% (Signature+) or up to 80% (Vetta) lower than it used to be. This is partly compensated by raising the Vetta royalty rates. But overall those numbers indicate that a drop in royalties per download of around two thirds has to be expected.
On the positive side – especially for exclusive contributors – the images in the new Signature collection will become much more competitive: Being priced “only” three times more than Essential rather than 10 or 20 times of the former Main files, we might see buyers hesitate less to download one of those exclusive images. As a result, the drop in royalties might partly be compensated by higher numbers of downloads.
Overall, the new system obviously can only have a positive impact on contributors if it manages to attract new clients (or bring old clients back) to iStock rather than competing sites. This is very hard to predict, so we can not come to a final conclusion for this.
Further reads on the topic
The changes are being discussed among many, and we are trying to keep track of it all. Here are all the links you might want to check:
- iStock information website for buyers
- Discussions of those changes among contributors can be found in the iStock forum
- There is a discussion as well on MicroStockGroup, of course, more biased towards non-exclusive contributors
- Former iStock hero Sean Locke has put up his take on the changes at his blog
- Jennifer Borton (bortonia) has summed up the price changes in a simple table
- MichaelJay has put up a more sarcastic piece about the changes on his personal blog