I am often skeptical of this "pirates wouldn't pay anyway" argument, like when applied to movie and music downloads, but in this case I agree: the most likely result of preventing unauthorized use of your screen-resolution images is that the would-be pirates will keep searching, and find another less well-protected image that is good enough amongst the billions available online. That seems far more likely than them going through the hassle of paying you for your screen-resolution image.
I am glad you picked up on the subtle difference. With songs and movies, it isn't likely that someone will listen to or watch a similar substitute for what they wanted. I can just imagine a conversation:
Inquiry to a friend: "Did you see (the new) James Bond
last night?" (assuming it came out the previous night)
Response: "Nah, it wasn't available on BitTorrent so I watched the previous one instead."
Thanks to image search tools on the web, such as Google Images, if the result is too small, watermarked heavily, et cetera it is quite easy to simply move along to the next result. In the world of photography there seem to be very few exceptions to this principle (maybe for the top 0.001%, maybe).
For (1), keeping resolution down to "free sample" size seems enough: 1280x800?. For (2) maybe hidden digital signatures and web-searching tools that find your images reused on commercial sites might help, if the abusing site is big enough to be worth going after legally.
Those sound like good strategies to me.
P. S. There is an irony to this worrying about 5MP "retina resolution" compressed JPEG images being good enough that people will not pay for higher quality versions, just after some weeks of worrying that the resolution of the D800 is not good enough due to its AA filter, or that the 5DMkIII has inadequate dynamic range.
Yes, it is quite ironic. But it is similar to the principles expressed in The Innovator's Dilemma
and it relates to the principle behind point 2 in your second paragraph. Because the market is saturated, photographers have two choices:
- Move further up the value chain.
- Lower per-item profit and prices to remain competitive at the same level in the value chain.
I suspect that most people on LuLa plan on taking the first strategy and therefore the equipment they use has become more critical as they attempt to keep or expand their revenue while moving up the value chain by selling higher-end/more specialized items. In a high-end, specialized market it is likely that fewer items will be sold and more work will go into the creation of each item. To keep the same revenue each item must be sold at a higher per-item profit. Even if you do not work in an area that creates new technologies, The Innovator's Dilemma is an excellent book to read. And if you do, it should be mandatory.