My Thoughts on SmugMug’s Price Increase
A lot of people have asked me over the weekend what I think about SmugMug’s price increase. On Friday SmugMug co-founder Chris “Baldy” MacAskill presented a video outlining why SmugMug needed to raise prices. Basically it comes down to the fact that Pros really do use a TON of storage and now more than ever. SmugMug (like everybody these days) uses cloud storage and replicated storage for terabytes of data (possible for a single customer with today’s DSLRs and fast bandwidth speeds) is EXPENSIVE.
Back in 2005, when SmugMug last changed their pricing, it was harder to really flood a site with with serious storage. Bandwidth speeds were slower, file sizes were smaller, processing technology wasn’t as fast. Today Nikon’s D800 has a whopping 36.3 megapixel image. We’ve grown used to super fast bandwidth and now with my new MacBook Pro the only thing slowing me down in Lightroom is me. I can process so many more images today in Lightroom than I could with Photoshop back in 2005.
So SmugMug was faced with a tough decision — continue losing money on many of their best customers, or raise prices. Well, they had other choices as well, but none of them fun. They could start charging based on how much storage you use, but this would hit their highest grossing Pros even harder in many cases. They could start throttling your upload speeds to slow you down. Can you imagine how frustrating that would be (that’s how most of the cheapo cloud storage backup providers do it for dollars a month). They could take a higher percentage of your photo sales, but again this would cost many working photographers even more money.
What SmugMug decided to do is to ask their business customers (the ones who use the most storage and make the most *money* off the site btw) to pay $100 more.
Nobody likes to see prices raised — especially the working Pro photographer. Times are tough and every penny counts. It bothers me though to see SmugMug being attacked online. If Canon charges $100 more for a lens do Pros complain? Sure, but not like some of the comments I’ve read regarding SmugMug’s price increase. If Canon raises the price of a lens $100 does David Pogue from the NY Times feel the need to tweet about it? Canon, a huge nameless faceless corporation can raise prices and people don’t even notice, but SmugMug an accessible family run business does it and people take it out on them.
I pay Canon $500/year for their platinum CPS service. This is a service that gets me things that are valuable to me (discounted repairs, expedited shipping, loaner lenses), things that ultimately help me make money. It’s a cost to me but I justify it because I make money off my photography. I bet a lot of the other Pros on SmugMug use this service too. It’s part of the cost of doing business.
It’s odd for me to see people trying to compare this move by SmugMug as Netflix like. Huh? A consumer DVD rental company vs. a professional services company used to sell your photos? Let’s compare the situation to something a little more similar. Last year I made about $3,600 off my Flickr photos. I made this money through the Getty/Flickr deal. Flickr charges me $25/year to store my photos and won’t let me sell my photos myself on Flickr. Do you know how much Flickr/Getty grossed with my photos? About $18,000.
If people want to complain about high fees, how about complaining about Getty/Flickr payouts. Last year they took around $14,400 of the money made by *my* photos. You see Getty pays photographers 20% and keeps 80%. SmugMug on the other hand gives Pros an ecommerce engine that can sell both stock and prints and they pay out 85% of mark ups and keep 15%.
Yesterday a client contacted me about using a photo for stock that I own. I had to redirect them to Getty because Getty also demands an exclusive right on my images that they represent. Bummer! 20% instead of 100% sucks. I still use Getty/Flickr though. It’s a cost of doing business. SmugMug likewise is a cost of doing business for a photographer. If you don’t want to do it for business then just use the cheaper plan without the ecommerce engine.
The fact of the matter is that Pros have flocked to SmugMug because it gives them a very valuable tool that they need. Unlimited storage, an ecommerce engine with a high payout and really some of the most amazing customer service on the planet. They are a truly wonderful unique family run business operating in the photography space. What they are not, however, is a charity. They are in business to make money and they can’t continue losing money on their most active customers year in and year out. If someone doesn’t need the ecommerce engine the price is the same. If someone DOES use the ecommerce engine though (the biggest storage users and the ones making money off the site) then they will have to pay more. This sounds fair to me.
So those are my thoughts on SmugMug’s price increase. I support the company, one that has done so much for the photography community, and hope that this tough business decision is something that people can come to terms with and move on beyond.
[Disclosure: SmugMug is a former sponsor of my former photography show Photo Talk Plus, they are not a current sponsor of anything I’m doing though as we’re taking a break with the show. I also consider many of the wonderful people who work there personal friends.]