For several years Getty Images has had significant control over the stock photography market. During 2006 and 2007 several significant things took place. On January 26 Getty announced their results for 2005. Revenues increased 18 percent over the previous year and things looked pretty good. However they had missed their earnings estimates slightly, and lowered its revenue forecast for 2006. (story) Even Getty was seeing signs that the traditional Creative stills business was slowing. Their stock dropped from around $90 to $80 days after the announcement. In February they bought iStockphoto, making microstock legit. In May 2006 I attended a Getty photographers workshop in NYC. Several photographers were complaining of dropping revenues, particularly in traditional rights managed stock. Getty was encouraging them to shoot Royalty free. Those I met shooting RF were finding it necessary to continue to cut costs and shoot more to keep up. Jonathan Klein admitted they had no problem getting new images, in fact, he already recognized there were too many images in the market. Over the next few months Getty would see both royalty free and rights managed sales drop, even while iStockphoto continued growing.

Another Issue plaguing the industry was and is the decline of print. Royalty free has always been sold based on file size. This is because in traditional image licensing was based in part on how big you would use the image on the page. If you didn’t need a full-page image, you could use a smaller file size. RF had no time or usage restrictions, but limiting the file size would inherently restrict it to less prominent uses. Typically the bigger you print something the more important its use. i.e. cover shots. Bigger file sizes were used in nicer printed pieces etc. This fell apart with web use. You could get by with far less resolution on the web. So it didn’t matter how “prominent” the usage, you only needed the lowest resolution. Instead of paying $500 you could pay $149. Of course the web was/is were all the growth is, so even with the added volume, less is being paid for each image. Microstock worked well for the Internet, and $149 was still considered “highway robbery” to many on the web. You can see were this trend is heading.

Getty felt the need to address the lower end of the market. Getty started dropping prices on their traditional stock offerings. In September 07 they introduced $49 flat pricing for Internet use, causing quite a stir in the industry. Getty had to make some adjustments to the licenses terms in order to appease photographers, but the pricing remained in tact. They also made a few other moves, but a bit more quietly. Near the end of 2007 they decided to open up their doors to even more contributors, including their iStockphoto photographers. Meanwhile their stock price (I’m not talking about their photos) lost more than half its value in a little more than a year. During 2006 and 2007 they were negotiating big discounts to some of their customers. As of this writing I can verify that through their “Premium Access” program some large clients can license an image as low as .68 cents. Granted this is for a very limited use (and time), however it’s still cheaper than iStockphoto.
So Getty finally, as most already know, found a private equity firm to buy the company. The reason? They could not continue to grow at the rate investors expected, even though they were still profitable. Jonathan Klein, Getty CEO said in their 2007 4th qtr financial report we are having success with our “initiatives to stabilize our traditional creative stills business”. Which of course tells us… the creative stills business is not stable! Getty is digging in, and ready to wait it out if necessary.

So were does the industry stand? Is it in for a crash? . Nobody seems to disagree that the industry is in trouble. There are a lot of theories as regards the current state of the industry, some blaming the “microstock” and “crowd sourcing” phenomenon, and others because the industry not embraced the Web 2.0 business model (Wired article). Many see the future of stock photography in microstock, while the now Getty owned microstock leader iStockphoto, is still doing well- does it represent the future of the industry? Will the “traditional creative stills business” crash, with the microstock model the only one standing when the dust clears? Well, cracks are beginning to appear in that model as well. Microstock site Lucky Oliver announced on April 15th it is closing its doors. “The worlds most downloaded microstock photographer” and most successful according to some, Yuri Arcurs, posted in January the following on microstockgroup.com in response to the question “Are things going well in microstock?” his reply:

Here is an honest breakdown from my perspective:
Over the last three months I have produced over 2000 images of the highest quality I have ever made. They are bright, colourful, super sharp and ultra high res, all with new faces - professional models and new locations. It has cost me over 40,000USD to produce these images and three months of 60 hours a week.
Now this is the problem:
I have had no increase in income for the last four months. None. I am actually down with about 5%
Doing this kind of production for microstock is not worth it, and looking at it from an investment point of view, it is time to downscale or find new waters…with higher prices. I am in particular losing revenue on the subscription sites. SS, 123RF and StockXpert.”

So when he starts searching for “new waters with higher prices” will they still be there? Are his costs ways out of line? It breaks down to about $20 per image. I believe this does not include overhead, just production. This figure falls inline with what I’ve been told by veteran traditional stock shooters is typical (this is for producing RF images). Recently I was told by another source that produces stock for all the major agencies, that they estimated their cost at around $65 an image (this figure includes overhead). I can attest to being under pressure from agencies to produce images with the highest production values possible- raising “production” costs in the process- to differentiate our images from microstock. Does this seem ironic to you?

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Filed under: Uncategorized, Corbis, Getty, Jupiter Images, Photography business, stock photography