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?