24 Aug 2015 Can a Netflix-style $9.99 Unlimited Subscription Model Succeed in Microstock?
$9.99. That is what services like Netflix and Spotify charge for unlimited service. The standard subscription in microstock is $250 for 750 images per month. For microstock agencies to adopt a low-cost subscription model would be a HUGE leap, but not dissimilar to the leap made by Netflix and Spotify in their industries.
One big difference is that by the time movies and music get to Netflix and Spotify, they’ve already earned money for the owners. No such additional earning opportunities exist for stock photographers. But some companies are already starting to move in the direction of cheap, unlimited subscriptions, and I know others are seriously exploring the possibilities.
How could this model work in the stock industry?
How the Business Model Works
The model is based on simple pricing: one flat membership fee grants access to all content, with no limit. The low price is justified by a limited license, with users renting rather than owning content. End your subscription, and all your movies and music disappear.
While lots of companies have adopted cheap unlimited subscriptions, Netflix and Spotify are the major trendsetters.
This system has shown success in converting content thieves into paying customers: music and film pirates found it more convenient to start paying for content once legal access became affordable and unrestricted.
To make this model work, a company needs to build a massive paying customer base and keep them engaged for a long time.
Unlimited Subscriptions for Stock Images
To my knowledge, nobody is currently using this model in stock photography, but a few companies come close.
VideoBlocks does it with footage, but only for the part of their collection that is wholly owned. The marketplace for contributors is not included.
StockUnlimited also launched with a wholly owned collection, currently including only vectors, but with plans to add photography and footage in the near future, perhaps before the end of 2015. Their unlimited subscription is $9.99 per month today but will be doubling tomorrow.
LifetimeStock, a microstock producer rather than an agency, in selling direct via their website is starting with a $9,99 subscription for up to 1000 downloads a month; while not unlimited, the price/download availability rate of this plan is very close.
Finally, there’s YAYimages, whose subscriptions all feature unlimited downloads, although the $9.99 price point includes only small images which remain hosted on YAY’s servers, although they have some cool online editing functionality to customize them.
Stock Images are Not Movies or Music
Customers in the stock industry have very different buying habits than music and film consumers. Those products are consumed repetitively by potentially millions of customers, a scale that stock photography cannot come close to matching.
There are also more ways to make money from music and film. Films generate product placement revenue, cinema ticket sales, and physical media sales (DVD, Blue-ray), while music makes money from concert tickets, merchandising, and download sales. Revenue from unlimited subscriptions comes in after all of these more lucrative sources. Stock images, on the other hand, are purchased for commercial purposes by relatively few people, with no other revenue streams.
Making Cheap, Unlimited Subscriptions Work with Contributor Content
Unlimited subscriptions at $9.99 work fine with wholly owned content. It just means companies have to produce or buy enough content to make the price worthwhile for the customer. The main issue is making it work without wholly owned content. How would contributors get paid?
One way to structure royalties would be divide a percentage of the subscription revenue among contributors, according to which content is downloaded. This model already exists with some subscriptions and works fine with high prices and download limits. Without those protections, the per-download royalty would be minuscule, and it would be an impossibly tough sell for contributors. Another option would be for customers pay a very low flat fee per download, which is riskier for the agency.
How Could It Succeed?
A lot of people believe it’s only a matter of time before $9.99 unlimited subscriptions take over the stock imagery business. Others say the market won’t sustain the model; of course, the same was said about movies and music. People also doubted that RF and microstock were viable ideas.
So will the cheap, unlimited subscription model become a reality? If it does, and it includes contributor content, agencies have to solve some tough problems to make it work.
What do you think?
Alexandar Iotzov
Posted at 13:20h, 25 AugustThis model, maybe is good for customers, but not good for stock agencies and photographers/videographers. We are seeing that the model is not working well even for NETFLIX. They started from $8.00 but now increased the price to $9.99 and I’m sure that NETFLIH soon will increase the price again. All this listed stock agencies that are happy from this model are very low tire agencies and trying to keep their mouth over the water with low prices. By the way best model is maybe Fotolia model of dollar club working in parallel with major website of Fotolia. I’m sure that the customers will admire this model but which of the stock agencies decide to go with this model soon will closed their websites.
Lee Torrens
Posted at 13:34h, 25 AugustGreat points Alex! Judging by the Netflix share price it’s actually going quite well for them. But what you point out about the top agencies not doing this is very true. We’ll have to wait and see whether there’s ever enough pressure on them to start playing in the cheap subscriptions space. Hopefully not! 🙂
Steve Francisco
Posted at 08:29h, 26 AugustThis model implies that if you end your monthly subscription, your license ends. That doesn’t fit well with image use. For example, if an image used under this model is printed in a text book or magazine article, how do you stop its use once the subscription ends? It’s out there in hard copy.
With video or music, you don’t keep a copy of the content after using it. You need your Netflix or Spotify account to use the content. Images can be stored outside of the content provider and easily copied.
To make this work I would think a company would have to really limit allowed uses and tightly control access to the content. For example, if limited to online use only (blogs, web sites) and requiring a coded link back to the provider to allow delivery. This is quite a departure from the current microstock model of “buy a license and use forever”.
If licenses ended when subscriptions are cancelled then it would also make sense to pay contributors a portion of the monthly fee if that buyer has used their images. This could mean a steady monthly revenue over time. If over a year a user has used 1000 images, and of those 50 were from one contributor, then that contributor should get some percentage of the revenue. The revenue would be ($9.99 x 12 / 1000) x 50 = $5.99, so if the rate is 50/50, the contributor would get about $3/year from that one customer.
Lee Torrens
Posted at 10:12h, 26 AugustAwesome insights, Steve!
I think YAYimages see themselves more like Netflix and Spotify, hence their use of the word ‘streaming’, except that it isn’t really streaming if – as you point out – the license exists beyond the life of the subscription.
Thanks for sharing your thoughts.
Christian Toksvig
Posted at 11:42h, 26 AugustAlex is right (above). Use of visual content often takes place outside of the setting of the content provider. And it would be very inconvenient for the customer if they had to remove all content after the subscription ends. That would essentially mean the agency was holding the customer captive forever. At StockUnlimited, we have solved this issue by allowing our customers to keep everything they have used in projects after the subscription ends. This way, a customer does not have to remove any files from websites (possible but annoying) or printed matter (impossible). Files they have downloaded but not used must be deleted. That way we are protected against hoarding and customers are not locked in forever.
As Lee states above, we are indeed planning to invite contributors onto our platform at a later stage.
MichaelJay
Posted at 08:31h, 27 AugustI think the major point missing here is the customer base: Spotify and Netflix are addressing consumers as the customers. In stock imagery, the consumers are the ones reading the articles or watching the ads that are being created with our images but our content is not being “licensed to view” by consumers but “licensed to re-publish” by publishers. Only a few of those are private people, most are companies or at least businesses. Therefore, comparisons between stock imagery and consumer oriented business models are not working out.
So IF there was a business model allowing unlimited use of streamed images, it could only be profitable if it would be consumer-centric. As far as I know the music streaming services are still required to pay a fixed (even if very low) fee for every song that is being played. For me as a supplier to the stock image industry this could work as well: Getting paid by the number of views my images get when they are being used – for an image published in the HuffPost I would get a rather nice amount, for a local blog I would probably get the fraction of a cent. But that would also mean going back to a RM model somewhat, just using modern technologies to track the uses. And I doubt it will work out as this type of business model wouldn’t be profitable for the agency offering it.