Editorials
Editorial: iStockphoto acquired by Getty Images
Yesterday, we reported on Getty Images’ acquisition of iStockphoto. This surprising development deserves closer consideration of what it might mean for Getty and what it might mean for the stock photo industry in general.For Getty, entry into the micro-stock business presents the risk of cannibalization of its higher price business by its lower priced business as this new product attracts customers away from its mature product. Getty reports that 80% of its revenue comes from licensing its Creative imagery; about 43% from RM licensing and 37% from RF licensing. iStockphoto, which provides low-priced RF imagery, puts that 37% most at risk. How will the company balance the interests of the product managers responsible for theses opposing products?
Jupiter Images CEO, Alan Meckler claims the move shows that Getty now sees what he has seen all along – that most of the growth in the stock image industry over the next decade will come from the low-budget segment of the market. If that growth prediction proves accurate, which company holds the better position to take advantage of it? I give Jupiter the upper hand. Jupiter also finds itself promoting competing business models; both high-end RM and RF brands and low-priced subscription and micro-stock brands. Though the two companies have reached the same conundrum, however, they have arrived at it from opposite directions. Jupiter started out in the low-end subscription business and then began acquiring high-end image producers. Getty, on the other hand, started out at the high end and, with the acquisition of iStockphoto has made its first foray into the low end. In addition, we suspect Jupiter has a more balanced revenue mix than Getty’s 80/20 in favor of it’s high-end business. As such, Jupiter may look to draw low-end clients up to its high-end products, but doesn’t bear as much risk as Getty in having it’s high-end clients migrate in the opposite direction.
Exactly how Getty positions iStockphoto vis-à-vis the rest of its brands remains to be seen. Some have suggested it will use iStockphoto to find a middle ground somewhere between high-end RF pricing and the rock-bottom low-end micro-stock pricing. No matter what they do, the move implies that the downward spiral of stock image pricing will continue. The question for anyone in the stock photo business, photographers as well as stock photo company managers, becomes will the volume of buyers materialize in high enough numbers to off-set the lower prices? Obviously, Jupiter is betting that these buyers will materialize. By this latest acquisition, Getty seems to agree.
(Editor’s Note: To give credit where credit is due, Index Stock Imagery CEO Bahar Gidwani predicted this very trend of lower-prices and higher volume fifteen years ago, when he entered the stock photo industry in 1991, supporting the notion that the only thing worse than being behind the times is being ahead of the times.)
Related Story: The Evolution of the stock photo industry.
Posted in: Editorials, Stock Photo Companies
Comments(6)
post a comment »Gary Crabbe, February 11, 2006 [#]
“High-End RF”? What’s that? Like Jumbo Shrimp?
I’ve written in repsonse to this sale:
“Does Getty Images + iStockphoto = iRobot?”
Did the big Getty turn against us working photographers by gobbling up iStockphotos? Now even the “low-balling” RF shooters who ripped the value rug out from under the traditional RM market have been “low-balled”. This could only happen by the largest microsite being gobbled up by the largest supplier of visual content, and brought into the fold, or should we say chewed up and swallowed whole. Won’t it be a case of grand cosmic irony if the “traditional RF” suppliers start crying about the threat to the value of their work?
Worse, is that this really isn’t a surprise to many of us, that our original fears of devaluation in the market have come true across the board. Getty just put the stamp of legitimacy on this whole downward spiral.
Pino Granata, February 12, 2006 [#]
Now it’s really boring! Every other day we read that Getty has bought an agency, Jupiter another one and Corbis one more. Very boring and frustrating. My friend Chris Ferrone with the american point of view and faith, claims that this is the “market” and because it’s the market there’s nothing that we,common mortals, can do about this.I wonder if what is good for the market is also good for me and other thousands of people who used to make a living, very good one, with this business. I would dare to say that is not good not only for us , but also for the clients that are forced to use all the pictures in the websites of these giants of the stock pictures. But I would like to hear the opinion of the others dealers who have been thrown out from the business.But there is something that ,maybe, the market believer, my friend Chris, can explain to me. And this is the question: After Getty made public the figures of the third term of the year , the title lost around 10 %. Maybe Getty made the last acqusition to reinforce the value of the title? Could it be?
Brian Yarvin, February 13, 2006 [#]
Didn’t Corbis predict that the whole industry would be micropayment back in 1994 or 1995?
Chris Ferrone, February 13, 2006 [#]
My thanks to Pino for his honest remarks. Please allow me to respond:
I would hardly call my opinion the “American” point of view. I suspect many of my fellow US citizens disagree so let’s just say it’s my point of view. In addition, the word “faith” lends more emotional fervor to my approach than I think is fair. I base my views of the industry on a pragmatic acceptance of the forces governing a free and open market. I would prefer to see the prices of stock photographs remain high so photographers and stock photo company managers could all make a healthy living from the business. Unfortunately, the simple market forces of supply and demand dictate otherwise. While these supply and demand dynamics are determined by mortals as a group, I agree, individual mortals can ‘t easily change those forces.
I welcome anyone (including the “thousands” Pino mentions who used to make a living from stock photography and now find they no longer can) to make their feelings known. In my opinion, however, complaining about market trends is like complaining about the weather. I understand Pino’s frustration with the way the business has changed, but I don’t understand what he realistically proposes we might do about it.
As for Getty’s share price and the possibility that they made their last acquisition to help bolster it, I don’t think Getty makes any move without considering its effect on the share price.
Pino Granata, February 14, 2006 [#]
Chris Ferrone asks me to do some proposals about how to change the status quo. It’s not very easy to answer to his request, but I can certainly express my point of view and doing this I want to underpoint that I don’t have any bad feeling against Getty, Corbis , Jupiter and so on. Now I’ve been in this business for forty years just because I love photography and it’s just for this reason that I hate to see selling pictures for 1 or 2 dollars. Let’s be honest I don’t think anybody likes to see his art to sell for that kind of price. What I see at this point is that agencies and photographers who don’t like to see their pictures on sale, must go separate ways from the Gettys, the Corbis and so on. Photography is art not potatoes and this must be clear. I propose a new association which reunites everybody who doesn’t accept to see his pictures sold for nothing and let’s start talking about how to operate in a different way where photography is photography produced by photographers as artists.
Rohn Engh, March 04, 2006 [#]
The equation hasn’t changed all that much. In the 80’s, the market for stock photos was small, commercial stock photographers were selling RM photos for $1,000 while editorial photographers were selling and re-selling the same picture 20 times for $50. In the 90’s, commercial stock photographers were selling RM photos for $2,000 (inflation) while editorial photographers were selling and re-selling the same picture 20 times for $100. Today, a stock photographer can get $3,000 (inflation) for an exquisite picture through RM, or the same talented photographer (either commercial or editorial) can get $3,000 for the same photo by selling it 3,000 times through micro payment. It still stands: the better photographers (whether commercial or editorial, semi-pro or pro) will end up at the top, in the end, riding the wave of an increasing market size, cost of living increases, and the infusion of the micro payments phenomenon. –Rohn Engh