Tuesday, May 8, 2007

Business Models for Microstock Photography Sites

Well, finally I have the time to sit down again and write for my blog. Let's take a look at how the microstock sites work this time.

There are two business models for the many microstock sites. One is the commission model, the other is the subscription model.

The commission model charges the buyers a certain amount for a photo, then the photographer gets a cut from 20% to 50%, depending on individual site policy. This model is more conservative, as the site owner will always have a positive cash flow as long as there are sales. The buyers have more flexibility because they can buy as and when they need a particular photo. However, sites with this model usually have limited sales for the photographers, the only exception is iStockPhoto. Personally, I have sales from those sites, and had received payments from them before, but the amount is small.

The subscription model poses a higher risk for the site owner. The buyers pay a fixed amount to have the right to download up to a certain number of photos a day/month. The photographers are paid on a per download basis. Then where is the risk? The amount a buyer pays usually is lower than the amount the site has to pay the photographers for that number of downloads. So if all buyers download to the full every month, the site will be in net negative! But, this model is very good for photographers. The buyers usually download more than necessary and the photographers have pretty decent income. ShutterStock is the best site operating on this model.

There are some sites who are hybrids of the two.

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