Getty Images’s Blue Light Special

Not so surprisingly, Getty has announced that it’s putting itself on the block for a sale. Barbara Coffey, an influential analyst at Kaufman Brothers, is quoted in the NYT article:

“Getty Images continues to be a company in transition, adjusting from being the leading player in an oligopolistic market to being one of many players in a highly competitive market.”

It’s difficult to be a public company, where the motivation for running the business is hitting quarterly numbers. A public company is incentivized to create short-term gains, and creating longer term innovation is often difficult to operationalize because of the short-term pressures. Privatization has the promise of making them more agile and better operated — a definite need given the competition that they face.

Georges van Hoegaerden, a venture consultant, wrote in his personal blog:

“…the imaging markets consists of demi-cartels that produce ‘premium’ supply that does not meet the requirements of an ever growing and changing market of buyers. No longer is the size of the buyer’s market dictated by agencies nor is the new seller’s market defined by the old definition of pro-photographers. As a result sell side content does not find enough buyers and the only way to make money is to make sellers believe that if their work is good enough, it will sell…..nice promise. Out of desperation most photographers post their images on multiple websites to get maximum visibility, a true testament of inefficient market.”

He goes on to say:

“We don’t need another Amazon.com of the photography business but a real free-market in which YOU the photographer and buyer make decisions on what transactions you want to engage in. ”

I don’t completely agree with him because currently, the people with picture buying budgets have a fairly rigid method of buying (and his analogy with the music industry is only partially correct because historically the problem was distribution of physical media). They don’t want to deal with individual suppliers, they are used to extremely friendly terms, and often times, they request an invoice after usage. Such is the state of the industry.

Finally, Jon C. Ogg from 24/7 Wall St. writes that “Vast portions of the company’s business will fall prey to mass collaboration, and anyone with about $20,000 can build a similar wiki-model stock photo and copyright video and audio business.”

Ogg’s point is made. The Internet gives us the opportunity to build a storefront with relative ease, but he too casually dismisses the issues of building the critical mass needed for a self-sustaining business. The success of the business is still predicated on its ability to gain market share, and an Internet with 10,000 stock photo sites doesn’t “win.” The proof? His example of picturesandbox.com has failed to rise as the next great stock photo site on the web.

We can all agree on the need for a significant shift in the industry, and we believe it’s going to be the PhotoShelter Collection. Why? It’s an open, but edited platform where the majority of profits are directed towards the content creators. And on the buyer side, we can offer a wider range of content from a significantly larger base of photographers with the ease of purchase that buyers are accustomed to (i.e. they aren’t dealing with an individual photographer for a $100 image sale).

That said, Getty Images is filled with incredibly sharp people, and it will be interesting to see how a potential sale and privatization affects the landscape.

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Allen Murabayashi is the Chairman and co-founder of PhotoShelter.

There are 6 comments for this article
  1. Augustine Fou at 5:21 pm

    Hi Allen Thanks for the mention. 🙂 The reason I stopped building PictureSandbox as a stock agency for public photos (e.g. Flickr) is that licensing is still a very foreign concept to most users, other than professional photographers — for example, the debacle where someone accidentally stuck a Creative Commons license on an image to which he had no rights nor model releases, and an advertiser used the image properly under Creative Commons terms but still got sued. That said, PictureSandbox is now (merely) a meta search engine that searches across microstock collections as well as photo sharing sites like Flickr, but does not do licensing. I believe PhotoShelter is the way to go… (and is doing a kick-ass job already) of providing useful tools and services to photographers of all skill levels. And with the right “dose” of structure and licenses it will facilitate the “new generation” of the stock photo industry; in fact it will BE the model of the new state of the industry. Cheers, Augustine

  2. Allen Murabayashi at 5:26 pm

    Augustine, Good to hear from you. I totally agree with your base premise. It’s really hard to get non-professional buyers to understand licensing, which is one of the reasons that we thought providing an alternative to the buying segment that 1) has budget of real dollars, and 2) understands concepts like rights-managed is a better way to build a business. That isn’t to say that there isn’t room for the microstocks, but that isn’t the part on the quality/value chain that is broken right now.

  3. Bryan Zmijewski at 10:00 pm

    Hehe, may I join the conversation guys? I think you’re right Allen. There is room for microstocks and macrostocks- however these two models are destined to be niche markets that serve specific purposes and buyers. Midstock is where the industry is headed. A free market system where low cost images drive the sales of higher priced images. Low priced sales cannot be sustained from individuals that are looking for growth- there has to be room for more margins. The gap in pricing between models is too great. Midstock is not a price point- it’s the average pricing of images (somewhere in between current pricing schemes). Selling stock is now about retailing.

  4. Georges van Hoegaerden at 7:58 pm

    Allen, thanks for your comments on my blog, here is an addition to it (which has been posted today) that further clarifies my post. Just FYI, I was the CEO of a photo editing company and an amateur photographer, which sounds much better than a venture consultant. Let me know if you have additional comments: Imaging sales market broken from the top Wednesday – January 23, 2008 Filed in: Strategy | Venture Capital I have received quite a few comments on my previous post (like this) on the imaging marketplace and I am making an attempt to clarify my condensed writing. The market of selling photographs is fundamentally different than that of selling music, books or other goods. Rather than selling “premium” supply as defined by the number of people that buy the same product, the value of a photograph is defined by how little it sells (just like art). Fundamentally a photography superstore (like Getty Images, Corbis, Jupiter Images and even Digital Railroad) that sell the same image the way Amazon sells books yields the wrong value to the buyer. A buyer doesn’t want the photograph he is about to purchase see appear in deep circulation, yet a reader of a book makes a buying decision based on popular opinion (Oprah, iTunes) and purchases it too. Selling images (and art) requires an inverted superstore that derives its value from the massive distinctive images it sells. Coincidentally the imaging marketplace has changed dramatically from a monolithic market (between agency and pro-photographer) to a Long Tail of supply and demand (between anyone and anyone). A fantastic opportunity lies ahead to create a new marketplace for photography that caters to new and high growth audiences. Don’t get discouraged by the puffer fish of the imaging industry, that portray they own the market. They don’t.

  5. Constantin Moisei at 10:59 am

    Nice read Allen! I tend to agree with you 100% Anyone can build a stock site, I did…, cost me nothing – well time away from other activities. I was so pissed that the istock was paying pennies for my images so I built mine 2-3 years ago. Does it work ? Not really. I think I need more volume and more traffic. I think RM model is the way to go and I like the fact the PhotoShelter has both models in place. I’m looking forward to hear that PhotoShelter will win the battle over the Getty, they are still big but collections over here are different. Maybe, like a friend of mine said, they are going to be bought by Bill Gates’ Corbis and in this way Snap Village will exit the beta status. That being said, I’m all smiles 🙂

  6. Darrell Young at 10:45 am

    Excellent article, Allen! In my opinion, the rise of the microstocks was caused by large photo agencies having little interest in unknown photographers. Photographers with new digital cameras wanted to share and sell their images, but the “big guys” were uninterested. They went elsewhere to microstocks, free sites, and image sharing sites. Quite a few have discovered Photoshelter. That’s good! In my own experience Getty is one of the worst in dealing with “new” photographers, either ignoring requests for portfolio review, or offering a photographer the ability to list single images after paying Getty $50 USD per image. Let’s see now, that’s $5000 USD to list 100 images! Seems rather greedy to me, personally. Some have said that Getty speaks to a different market than other agencies, with pictures all over the newspapers and printed media on a daily basis. That may be so, but having examined Getty’s stock in great detail, I find that the majority of it is not much different from all the other imaging I see on the internet. Sure there are special high-end images that took lots of money, equipment, and special knowledge to create. However, the majority is just regular old stock, and came, in many cases, from purchasing smaller stock agencies books. They are not particularly special, in my eyes, and maybe even a little stale in some areas. I think it is quite ironic that Getty purchased iStockPhoto and then got into trouble not soon afterward. First they started lowering prices in certain areas, and made a lot of their submitters angry, then they put themselves up for sale. Some of their key staff is now joining agencies like Photoshelter. Could it be that Getty sullied their own nest with microstock ownership, putting tremendous downward pressure on their own stock pricing, and the industry in general? Several of the other major stock agencies also bought or created microstock agencies, in lockstep with Getty’s example. The whole industry is now being affected by heavy downward pricing pressure. Thanks, Getty. Bad decisions have many consequences. When you combine Getty’s current problems with the state of the economy, and the difficulty in raising the large sums of money to buy big companies, it could be a while before Getty finds a buyer, unless they are willing to sell for much less money. I think they will survive, but maybe in a leaner form than they now have. Getty, if you want to remain a leader long-term, please take a close look at your current competition. It is formidable! I am just happy that Photoshelter (PSC) came along at just the right time, and has established some new standards for the stock business. Now, newer submitters have the ability to license their images under the Rights Managed (RM) method, instead of microstock’s $1 Royalty Free (RF) system. RF still works at PSC, but the minimum price is $50 USD, which is significantly more profitable to photographers. PSC is a paradigm shift of major proportions. Finally, any good photographer has a place to actually make some money when licensing their images to others. Finally, there is an agency with fairly transparent statistics, regular “needs’ requests, responsiveness to the requests and questions of their image submitters, and a willingness to use leading edge technology in marketing, like the new embeddable widget tool. Many of us out here in the photographic world want to salute you Photoshelter. We want to see you succeed in a big way! Darrell Young http://www.YoungImaging.com

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