Stock License Types

Introduction

In stock photography, rights are sold to use an image. The sale of use rights is known as licensing. There are 2 main types of licenses used in stock photography: Rights Managed and Royalty Free. A Rights Managed license gives the user permission to use an image for a specific purpose only and the price charged relates to this usage. A Royalty Free license gives the user the right to use an image for any purpose and the price relates to the particular size of file that is purchased. Sellers of stock photography use these 2 license types and package them in various ways to attract buyers. Subscriptions and microstock are two ways in which Rights Managed and Royalty Free licenses are packaged for sale.

Rights managed license

The traditional licensing model used by picture libraries is known as 'Rights Managed'. The basic principle of this model is that images are paid for according to the usage required. Each usage is calculated separately and an image is sold for a 'single use'. Traditional picture libraries use complicated formulas to calculate the price for the usage based on factors such as:

details of use - billboards are charged higher than books
editorial or commercial - with commercial use such as advertising claiming higher rates than editorial
print run - how many brochures or newspapers will be printed
position - an example would be the cover of a book or the inside of a magazine
size - is it used quarter page or over a double page spread
duration - how long an image will be used, for example, at a trade show
territory - will it be used locally or worldwide
client - is the client a multinational bank or a not-for-profit

As there is some managing of the license the client expects you to do, it is best to avoid any conflict of interest. For example, selling the same image to two competing companies, whether they are competing newspapers or competing corporates, is a very bad idea and likely to lose you clients and trust in the industry.

FIGURE 1 Rights Managed pictures on the Africa Media Online site marked as RM. Rights Managed pictures are sold primarily to editorial markets. Some high end advertising sales also happen on a Rights Managed basis, particularly where the client is wanting exclusivity for a period of time

Pros and cons for a photographer in using this license

Rights managed sales traditionally produce a higher rate per image, which usually looks like a fair rate to a photographer. Any of your images that have recognisable faces that are not model released, or images of property that require property release but do not have them, have to be sold using a Rights Managed license.

Royalty free license

The second licensing model is know as 'Royalty Free' and was developed after Rights Managed. Royalty Free images are sold by file size. A high resolution version of an image with a large file size (such as 60 MB) would cost more than the low resolution version of the same image with a small file size (such as 1 MB). No restriction is placed on the use of these images once the client has purchased the file other than any terms and conditions agreed in the license. Royalty Free licenses are easier for clients to work with as they do not need to come back and renegotiate if the image they used on a brochure is now needed for a poster. As the supplier of the image is not informed of every use of the image, however, there is less control over the same image being used by competitors at the same time. Buyers purchasing Royalty Free licenses understand this risk.

FIGURE 2 Royalty Free images on the Africa Media Online are marked as RF in line with common practice. Royalty Free images tend to be sold to both commercial and editorial markets. With the requirement of having model and property releases, however, they tend to be produced by photographers setting up specific shoots with paid models. For this reason their use in editorial markets tends to be quite specific.

Subscriptions

Using the Rights Managed and Royalty Free licenses as a base picture suppliers have created all types of models for selling images. One popular model is to sell subscriptions.

Subscriptions can work on either a rights managed or royalty free basis. A subscription is simply an agreement with a supplying stock agency that a client may use a certain number of images, or an unlimited number of images for a certain fee, over a specified time frame. As the number of images used is usually higher than if the buyer was purchasing one image at a time, the price per image tends to be significantly lower. So if a buyer is committing to purchase a subscription, which ties him or her in to buying a large amount regularly, the resultant cost per image tends to be quite low.

Subscriptions work well for clients who need to use large numbers of images. In general only large picture libraries can offer subscriptions as smaller libraries will be unlikely to be able to supply enough new images to clients month after month.

Microstock

A number of factors have affected the pricing of images to a point where images are sold on some sites for $1 or less. These cheap images are known as microstock. Microstock has emerged as a significant force in the stock industry over the past decade. The model usually works using the Royalty Free license and buyers, more often than not, have to buy a subscription to access the images. Images are offered for very low prices. The factors influencing this included:

the number of digital images available since digital cameras have made it possible for keen amateurs to take professional quality images
the ease of using online databases to manage images
the entry of the “man-on-the-street” into publishing and image usage through blogs

The advent of microstock has had an impact on all the licensing types with pressure to reduce rates to compete against them.

The prices generated from all these licensing models differ from one picture library to another based on the country the library is based in (for example prices in Germany are higher than in China) and the individual policy of each picture library. Certain professional stock industry organisations have produced guidelines to try to standardize pricing. Prices, however, remains variable and often the end price is a result of some amount of negotiation with the client.