25 Nov 2009 Microstock and the Long Tail
The long tail theory applies to microstock in many different ways. Let’s take a look at a few and see what we can learn to help us sell more photos.
What is the Long Tail?
In popular media, such as movies, music and books, a small number of products achieve a high volume of sales. They’re ˜hits’ and ˜best-sellers’. A slightly larger number of products achieve reasonable sales, but not nearly as much as the hits. The remaining products produce very little in terms of sales, but there’s a lot of them, thus creating the “long tail”.
The long tail was noticed when Internet based businesses started carrying a much larger range of products than physical stores could manage. The theory was that the tail was so long that the infrequent sales of a very large number of products added up to more than the combined sales of the small number of high-selling hits. This is a massive advantage for online stores over physical stores. The advantage for customers was that they could more easily access a greater range of products.
Demand by Subject
The sales performance of different subject in the microstock market follows the long tail curve. ‘Business teams’ and other uber-popular subjects make up the hits and sell in large quantities. In the middle are a larger number of more specialized subjects which sell less frequently. Finally, a huge number of rare niches form the long tail.
Supply by Subject
Most top-earning contributors focus on the most popular subjects to maximize sales potential. Many new microstockers follow the same logic, but without having a competitive level of quality first they struggle to achieve any meaningful quantity of sales. To compete in the most popular subjects, photos need to be substantially better and/or unique.
The niche subjects that make up the long tail have less demand and so attract less competition. However, sales are much less frequent, making it more difficult for photographers to cover costs of production. Photos of subjects with limited demand – long tail photos – need to be produced at minimum cost because the return potential is so low.
Whenever I travel I shoot some photos with the intention of adding them to my stock portfolio. On a not-so-recent trip to Tasmania with my family, we visited a site with a rare rock formation known as “tessellated pavement”. I took quite a few shots for stock, but, having never heard of tessellated pavement before, I suspected the shots would be among the lowest demand subject in my portfolio. They were indeed long tail photos. I submitted eight photos which have only produced 26 sales in almost two years online.
The lucrative gaps in the market where competition is low and demand high are difficult to find. However, picNiche does exactly that, helping you find the under-supplied gaps in the market by analyzing keyword supply and demand.
Where available, all statistics support the idea that the long tail theory applies to contributor earnings in microstock. Here’s some data points:
- At the peak of the long tail chart is Yuri Arcurs who previously announced his earnings in microstock had passed the milestone of US$1 million per year. He’s ranked #1 on the Fotolia rankings and #2 on iStockcharts.de. His crown as the top selling microstock photographer hasn’t been publicly challenged.
- Further down the chart are my own modest microstock earnings which are currently slightly under $10,000 per year. This is a long way down from Yuri’s earnings level, but it appears it could still be higher than 99% of other contributors. My current overall Fotolia ranking is 756 and my current ranking on iStockcharts.de is 1149. Given iStockphoto advertises having over 60,000 contributors and Shutterstock advertise over 200,000, my ranks suggest that the vast majority, perhaps 99%, earn less than $10,000 per year. This makes a very long tail.
Individual Contributor Portfolios
Most microstock contributors report that a large portion of their earnings are produced by a small portion of their portfolio, often citing the Pareto principle, the 80/20 rule.
Here’s my top 20 photos by all-time earnings from all agencies (except Fotolia and 123rf who don’t provide earnings by photo) in descending order.
Recognize the shape? My portfolio clearly follows the long tail pattern. It may not be the same for all portfolios, but I suspect it will be very similar for the majority.
Other Long Tails in Microstock
I suspect that if microstock agencies charted the sales performance of their portfolio of images they’d observe a long tail pattern. We can get a partial view by sorting search results by the quantity of downloads. For most searches at most agencies (where the data is available) you’ll observe that the quantity of downloads starts very high but drops off very quickly relative to the total quantity of search results. Inevitably, there’s a lot of photos with a single download (plus many more with zero).
If anyone had enough data, they could likely observe a long tail of microstock agency performance too. A small number of agencies seem to account for a disproportionate quantity of sales, followed by a long list of agencies who do relatively little in sales volume.
Long Tail Sales Help Agencies, Not Contributors
The reason online stores can cater to the long tail is simply because of the low cost of offering an additional product for sale – a low marginal cost. It’s often just a few extra database entries as opposed to all that’s involved for a physical store to get another product onto their shelves. Without that low marginal cost, it’s not profitable.
The marginal cost for microstock agencies is also very low. Review, file storage and bandwidth costs are likely much less than a dollar per photo. A single sale will likely make an individual photo profitable for the agency.
However, most contributors would struggle to get the marginal cost per photo, including production, meta-data creation, distribution and overheads, under a single dollar. Additionally, contributors receive a smaller portion of the sale price, making it much tougher to cover costs with niche photos.
So while the long tail makes microstock a great business model for buyers and agencies, it’s not so for contributors. If there’s limited competition for the niche, they might do better to place their photos in the traditional stock photo market where they’ll receive a higher return per sale. My Tessellated Pavement photos may have earned me more with a higher price at Alamy given there’s limited competition for that topic in the microstock market. However, Alamy is actually well supplied with photos of this particular rock formation, so I probably haven’t missed out on too much potential revenue.
Traditional Stock Photography and the Long Tail
Most traditional stock photo agencies haven’t, cannot and probably don’t want to cater to the long tail. The exception is Alamy who have a massive and rapidly growing portfolio of crowdsourced photos that very much caters to the long tail. By automating both the contributor and customer interaction, they’re free from the limitations of other traditional agencies.
What Can We Learn from the Long Tail in Microstock?
- If you want to create photos in the most popular subjects, expect that you’ll be competing on quality
- If you want to create photos in long tail niches, keep your costs (and expectations) modest
- Photos with a small market (low demand) might earn more in non-microstock markets
- Don’t believe anything you read about microstock being an “easy” way to make a “lot” of money as a contributor. Very few make a lot of money and the vast majority make very little.