The business case for buying a DAM system to enhance productivity by helping users to find assets more quickly is fairly widely understood by most end users. In some situations, however, either that isn't enough to justify the expense of a new DAM system or there are additional factors that cause organizations to look for other ways to make the investment case stack up.

This is when the subject of revenue generation with DAM often first gets discussed. In this article, I will outline several key areas where end users often go wrong with their DAM revenue generation initiatives and what you can do to avoid them.

Revenue Generation Using DAM - Is It Worth Attempting?

If you are contemplating revenue generation using your DAM solution, you need to be fully aware that you are effectively starting a business and, as such, both the risks and your chances of achieving your revenue objectives require sober assessment.

In the stock media industry, the overall revenue distribution is less 80/20 and more like 95/5 in favor of the established major players (some of whom are multi-billion dollar enterprises). Many smaller libraries often struggle to cover their costs and the competitive environment is getting tougher, so the odds are not favorable for new entrants.

In the case of images, the 'micro stock' libraries have further lowered the cost bar and increased the supply of very cheap but usable stock assets. The economics of the stock media industry are not completely like a commodity market, but at an aggregate level, they do have many of the characteristics of one, so it's essential to have some points of differentiation.

Why Will Anyone Buy Our Stuff?

This is a hard question to answer but you need to think about it very early on. A good reason is because you own the copyright to assets which another third party cannot offer and anyone who wants to buy it must go through you (see previous point). Organizations that have unique content, for example, historical images/footage or artistic works seem to do better than more easily reproducible material which asset buyers can get from alternative sources. If your material isn't that special, no one will buy it unless you compete on price (which, as explained, is difficult to do these days).

How Will We License Our Assets?

There are a wide range of licenses you can use when offering your assets for sale. For images, these tend to boil down to two basic types: rights managed and royalty free. With rights managed, the fee scale alters depending on the type of usage. Royalty free is usually a fixed price that does not change based on where or how many times the asset is used.

Rights managed tends to be initially favored by many asset owners to resolve pricing dilemmas and internal arguments, but the trade-off is that either you need to build more complicated online pricing calculators or ask users to contact you to discuss a fee (all of which will take up staff time and require someone on-hand who can price the assets based on proposed usage).

Is It Worth Trying To Protect Assets With DRM Technologies?

The short answer to this one is probably not. In general, DRM technology might be effective at identifying infringement, but then you will require attorneys etc to try and claim your fees from them. This is expensive and unless you can do it on an industrial scale (as the bigger libraries are able to), then the cost outweighs what penalty charges you might be able to extract. It could be argued that preventing the initial download of a media file through access controls in your DAM system is worthwhile, but once the file is in the hands of a third party, you have little control over what happens to it.

What you definitely should do, however, is ensure that all your assets contain embedded metadata in a format such as IPTC or XMP (both the originals and any proxies). If you do later discover infringement by a more prominent user where it could be worth pursuing a claim, it's much easier to demonstrate ownership and also that you have asserted your rights. This also makes it harder for the infringer to claim it was an "orphan work" (asset where the owner could not be identified).

Will This Pay For Our DAM Initiative or Just Offset Some of the Cost?

It's important to decide to what extent the system will be self-financing or if it is just going to trim the implementation cost to make your DAM initiative more affordable. To do this you need to have realistic revenue projections and also build in some risk management that defines your options if targets are not achieved.

Revenue generation projects that only aim to reduce the costs of the system without covering it in full stand a greater chance of success, but the next issue to consider is to what extent they are worth bothering with anyway.

To answer this, you need to think about what are the staff costs of the revenue generation related activities like processing orders, following up billing issues or negotiating with buyers, etc? When those costs are offset against the revenue achieved, is there still a margin? This is the 'bottom line' in business terms and often it gets overlooked with only the service costs of the system like support, hosting etc. being included in profit calculations.

What Will The DAM Vendor Do For Us?

End users are often spurred on by vendors to progress with ill-conceived revenue generation projects using their DAM system. This is partly because they are eager to close a sale, but also because their responsibility in this exercise is usually more engineering than business related.

The vendor is the digital equivalent of a shopfitter who decorates and fits everything out as well as installing cash registers if you open a bricks and mortar store. Their problems reduce when the system is signed off and in production, but yours will carry on indefinitely (along with the opportunity to earn revenue -- if you get it right, it must be said).

Conclusion

I have barely scratched the surface of the numerous aspects you need to consider before embarking on using Digital Asset Management solutions to generate revenue for your organization. Perhaps the key point to take away from this article is that the top line (sales) much harder to control than the bottom line (costs) and that can create some unique challenges to resolve for any entrepreneurial activity and this is no different.

DAM systems are a 'no brainer' for productivity improvements, but coupled with the fiercely competitive nature of the stock media industry and the dominance of the established leviathans, using them to generate top line revenue is a much trickier proposition that you need to consider carefully.

Editor's Note: There are other articles by Naresh Sarwan on DAM you might be interested in:

The Decline of the DAM System and The Rise of the DAM Solution