Are the UK a Barometer of Global Pricing Trends ?

16.00 H - 17.00 Pricing The Image II

Is the UK a barometer of global pricing trends (BAPLA) ?

The second of the afternoon’s seminars on pricing was designed to present the preliminary findings of the pricing surveys carried out by the British trade association BAPLA. BAPLA carried out two general online surveys – firstly of BAPLA members and, more recently, of Cepic members. BAPLA is also in the midst of carrying out some more detailed surveys of both members and clients relating to particular market sectors. The presentations were given by Tim Harris and Joanna Santander – and the session was rounded up by BAPLA CEO, Linda Royles.

Tim Harris, chair of the BAPLA Rights Committee, introduced the seminar with a quick summary of the results of BAPLA’s most recent short surveys relating to book publishing. BAPLA members reported the general downward movement of reproduction prices across the board and an increase in “preferred supplier” deals. Members are also more likely to check what competitors are charging when pricing for new media or complex projects. The web has brought more transparency, but it has also brought the microstock sites which are impacting strongly on prices – and agencies are less sure about pricing as a result.

On the other hand, clients reported that prices had either decreased or remained the same and they were aware of having much stronger bargaining positions than ever before. They also found that a number of agencies were still unsure about how to price electronic or bundled rights. Increasingly, clients are driven by the need to get this type of clearance and they tended to prefer a flat fee structure to the more granular traditional pricing model.

The key influences on buyers were felt to be (in this order):
• The visual strength of the image
• Price
• Ease of delivery
• The relationship with the supplier

Although relationships were still important, buyers are increasingly turning to royalty-free and microstock sites to source general creative and editorial imagery – not least because these sites are now offering much higher quality imagery.

For these initial surveys BAPLA spoke to around a dozen clients and a representative sample of member libraries. In addition, they conducted an online BAPLA members’ survey that drew information from over 100 respondents. Among the many interesting findings were the following:

• About 1 in 5 agencies have online price calculators and roughly the same number offer full web-based e-commerce
• A significant minority earned over 50% of their income from automated online sales
• About two-thirds had a fixed minimum price that they would not undercut
• This minimum had dropped over the last two years – and tended to stick at around £30-50 – although a handful of agencies still stuck to a minimum of around £75-100
• Just under 50% reported prices to be static, and over 40% reported a drop in prices
• Although 10% introduced a (usually minimal) price increase, a whopping 1 in 3 reported a substantial drop in prices by 20% or more
• Just over 10% still charge service fees and 1 in 3 charge layout fees
• If offering a bulk discount, suppliers would routinely discount up to 50%.Other more targeted questions revealed that enormous variety of responses to the changes in the industry. Overall most BAPLA members show that they are aware that they need to remain flexible in their approaches to pricing – many reported a willingness to discount heavily in particular circumstances (e.g. bulk purchases) and to offer high-spending and regular customers better offers to ensure that they continue to return.

In other respects the survey results did not reveal any clear hidden trends. The picture business – like so many others – is running hard to stand still in the digital age – and hoping that, by remaining flexible in their approach, they will be ready to respond when a clearer picture emerges.

Presumably the question relating to the % of sales being made via automated online pricing was only aimed at the 21% of respondents who offer this facility. If so, it was surprising to learn what a small percentage of these agencies earn more than half their sales income from this. It would now be useful to know more about the reasons for this. If most of the respondents were small agencies, presumably this was related to the cost of upgrading website software to enable this. However, as template ecommerce websites become more sophisticated this may well change.

Following Tim, Joanna Santander of Alamy Images presented a report on the wider international survey of pricing trends. This survey was intended to answer the question, “ Is the UK a barometer of global pricing trends ?” . The international survey was circulated to Cepic members and produced responses from agencies worldwide – with most respondents coming from the USA, Germany, the UK and Spain. Once more, respondents reported that prices were either decreasing (48%) or remaining static (43%).

Reflecting anecdotal evidence, it was clear that pricing in the editorial market had declined by between 25% and 50%. As a result of this and the increasing supply of images, pressure has built up to drive down prices and support discounting through bulk and preferred supplier deals. Alongside this is the fact that suppliers are demanding a broader range of rights within each licence. In addition, there is strong evidence that, in the face of microstock, royalty-free prices for small files are being driven down.

When asked to assess the factors that were most influential in affecting pricing trends, most respondents pinpointed the effects of both local and global competition (both were given equal weight), closely followed by client demands (67%). Clearly these factors are driven by the over-abundance of imagery. The reproduction fee average for inside book usage was broadly the same across Europe (c €40-110) but surprisingly base rates remained much higher in the US and Japan (c98), possibly the result of local conditions. For example, the US has a state-wide system of preferred suppliers that may help to keep baseline prices buoyant.

If you compare this with the average prices for an “All media buyout”, respondents reported roughly the same band of prices in Germany, the US and the UK (c €2500-12500) – but substantially lower prices in the rest of Europe. Half of the global respondents maintained a minimum reproduction fee – far fewer than in the UK alone. About a quarter of respondents reported having a very small number of competitors (fewer than 5) in their main market – probably indicating specialist agencies. Another 28% reported fewer than 10 competitors. However a tiny 1% of respondents reported that their competitors numbered over 100. Undoubtedly the main competition still comes from the big four – Getty Images, Corbis, Jupiter Images and Alamy. Others named include the Bridgeman Art Library, akg-images, The Art Archive, Cover (Spain), Fotolia and Grazia Neri – which may reflect a preponderance of heritage image libraries amongst the respondents.

One statistic that will come as a relief to traditional suppliers is the estimate that no more than 60% of suppliers felt that their market was being sold to from overseas, whereas over 80% sold directly to other countries. Once more this may reflect the strength of specialist agencies.

The survey also tracked the effect of currency exchange rates on prices – and found that the strength of the euro has helped to maintain sales income while sales priced in dollars had gone down. Another key question related to the % increase charged for online versions of printed products. This increase ranged from 10 to 50%. If a set fee was charged, this averaged €40-50. Some 8% of agencies did not charge extra – or included online usage within their original print fee.

Finally, anecdotal evidence shows that clients themselves have tighter budgets, This encourages them to put even greater pressure on suppliers to agree low flat fees or preferred supplier arrangements with no assurance of volume of images. They are also expecting broader rights for no extra fee. Clearly, the new pricing models (such as flat fees and RF subscription deals) being introduced by major players such as Getty Images and Corbis and the impact of microstock are having a substantial influence on price.

Overall, although the UK survey results were marginally more positive, the broad answer to the proposition that the UK is a barometer of global pricing trends is a qualified ‘yes’. As a major centre of both image production and publishing, the UK has always been a useful barometer for the industry and, even though sales have gone global, the concentrated nature of the industry and relative importance of its trade association combine to give this research a global importance.

BAPLA are now following on with further short telephone and online surveys of both members and clients about other market sectors, such as advertising and promotion; electronic media; magazine and newspaper publishing; display; merchandising; and television. They plan to make the results of these surveys available to members as each sector is completed.



This report on Bapla’s Pricing Seminar II was prepared by Angela Murphy, a London-based consultant in Digital Image Management and Rights Clearance (email: angela@angelamurphy.co.uk)