29 Apr 2008 Cutcaster – Next Generation Creative Marketplace
The simple rules of supply and demand state that when supply rises faster than demand, the price falls. The concept of microstock opened the supply channel to the world, and the price level is in proportion to that supply. Top quality images still sell in the macrostock market, and now we’re finding a lot of images taking up the midstock middle ground.
Until now, buyers could choose microstock, midstock or macrostock prices. Cutcaster does away with price segregation and allows images to naturally find their pricing sweet spot anywhere along the pricing spectrum.
Where microstock is a revolution for the industry, flexible pricing may be what brings the market back together – the next generation of marketplace for creative media.
Cutcaster is introducing price elastic trading to the stock photography and stock footage markets. They do this by first enabling contributors to set their own prices for each media item or allow the Cutcaster algorithm to find a suitable price. Buyers are then able to buy at the set price or make an offer at a lower price. Negotiations are managed on the site and if an agreeable price is reached the sale is done.
Over time and with lots of input, this enables a price equilibrium to be determined for each individual media item. Contributors are free to override the algorithm and set their prices above the market price, but they will expect fewer sales. Likewise they can lower their price below the market price to attract a higher volume of sales.
It’s also extremely flexible for buyers. They can license images at a price that matches their budget, choosing the appropriate quality and license conditions for each purchase.
How it Works
The Cutcaster algorithm draws on many metrics to determine the market price that’s suggested to contributors. Some of those metrics are, “time, demand, the amount of supply for a particular image, views, exclusivity, keywords, costs for photographers, what it would cost a buyer to create the file, return on investment for taking time to upload content into marketplace, return on investment for searching for content etc”. The algorithm price automatically adjusts in line with these metrics, thus responding to market trends and the current popularity of different subjects.
Contributors can override the algorithm and choose their own pricing. The algorithm will still suggest a price which the contributor can use as advice. Contributors can also set a starting price from where the algorithm will start making adjustments. The system can essentially optimize the price for maximum return for each individual item of media in a contributor’s portfolio.
Will it Work?
One of the challenges they face is the standard catch 22 that any new agency currently faces: how to attract contributors without buyers and how to attract buyers without contributors. Various creative strategies or brute force (buying) approaches have worked to various degrees for other agencies and Cutcaster is employing them all. They have secured funding for their marketing efforts and are leveraging their price elastic model as a novelty hook to attract both contributors and buyers.
Another challenge is the competition that already exists in the market. With the microstock revolution still revolving and midstock now broadening the variety of options available to both contributors and buyers, Cutcaster will have a lot of work to grab the attention of this scattered market. They need to attract the contributors who aren’t interested in microstock and the buyers looking for a more professional image or other licensing options.
Finally, buyers can download instantly at the set price, but they lose this ability if they want to negotiate on price. These buyers many have become accustomed to instant access in the microstock market and online macrostock offerings, detracting from the appeal of negotiating on price. Those buyers not prepared to wait for contributors to respond to the negotiation request in order to get the image they want at a price within their budget will need to buy at the set price.
The flexible pricing model works for the buying and selling of companies on the stock market, so there’s no doubt the theory is sound. Applying that model to the creative media market is an idea whose time has come. It’s up to Cutcaster to demonstrate that they themselves, and their particular implementation strategy, will be the ones to make it happen.
|Minimum Image Size||2 megapixels|
|Licenses||Royalty Free, Editorial and Extended Licenses|
|Compensation||40% or 50% for exclusive content|
|Pricing||Set by user. Choose a static price or choose the pricing algorithm|
|Payment Methods||PayPal, Moneybookers and Check|
|Payment threshold||$20, paid by 15th of following month|
|Referral Program||10% for buyers, 5% for sellers, both for a two year period|
|Application Process||None, just start contributing|
|Exclusivity||Optional per media item – earns an additional 10% royalty|
|Upload Methods||FTP, HTML form, CD submission|
|Delete images?||Yes, immediately and individually|
|Headquarters||San Francisco, USA|
(Details and stats updated 2010-10-06)
As if dynamic pricing wasn’t enough, Cutcaster have some more cool features.
Coming soon, negotiate Rights Managed terms. Buyers and sellers will be able to negotiate specific aspects of a Rights Managed license in addition to the price.
Project Requests – much like similar features at other microstock agencies, Cutcaster allows buyers to submit requests to the market for particular content.
If Cutcaster is successful with their current model it will indeed be the next generation of creative marketplace. The current market has instant and cost-free distribution, complete price transparency, and fully informed buyers and sellers. The market has the necessary requirements to support sophisticated pricing.
Cutcaster boss John Griffin asks for insights and opinions rather than telling people his version of how it is. He and his team spent two years researching pricing methods in use within the industry and sourcing perspectives from both contributors and buyers. I’m easily impressed, but John has impressed me a lot.
For contributors like myself who are still relatively new to selling photos and other media, Cutcaster represents an opportunity to understand our portfolio as it’s seen by the market. How do I know that the photos I have in the microstock market wouldn’t earn more at midstock prices, or visa versa? Cutcaster will give you this information, help you understand the difference, and hopefully generate sales at the same time.
It’s an exciting time to be in any creative market and it would be a lot more exciting with Cutcaster’s model at work.