Many in the photo industry are (rightly) up in arms over Getty's self-destructive behavior, plummeting what from what amounts to a $900 image license of their RM imagery (when you add up all the commercial uses and 10 year term) down to $49, or what amounts to a 95% discount fire sale price on all their images, 500kb or less.
Why did they do this? What could possibly cause them to seemingly slash their own throat?
When Getty acquired iStockphoto, JDK famously said "If someone’s going to cannibalize your business, better it be one of your other businesses,”. Now, JDK has taken things one step further, authorizing a 95% firesale, which is tantamount to eating one's own, or self-destruction. You pick one, either way, it's going to get fugly.
However, the question remains - why? Why take such drastic measures? When GYI aquired iStockphoto, some assumed that they would move the best images, and also the best selling images, from RF to RM, as well as introducing the RF producers into a whole new world of revenue from their images, vis-a-vis higher dollars. Yet, that idea, which would have been a wise move, never materialized.
While industry leaders are circling the wagons and calling on Getty to revisit their pricing structure, (and with the genie out of the bottle, it's unlikely it'll be undone), Getty is keeping their reasons close to the vest.
Their publically stated reason is that designers have been budgeting $50 a photo for web use, and there may be some cases where this is the case, to be sure. Yet, there are rumors out there that this price-slashing is a preemptive move to reposition themselves prior to a major announcement of a new competitor to Getty. One that will make iStockphoto's licensing fees look expensive by comparison, let alone the RM collections of Getty Images. Certainly, Getty's nearest competitors, Corbis, and Jupiter Media are operating in a business-as-usual mode, however, something is amiss. We have made inquiries to determine the validity of the rumors. When we have either official confirmation, or unofficial yet substantiated confirmation from our sources, we'll have more to report at that time.
Let's look, however, at what the rumor isn't. It's almost certainly not a positioning for aquisition. Were that the case, a wholesale drop in pricing of the content would drastically diminish the valuation of the company, just prior to any potential acquisition. Heck, it does that to net revenues regardless of the reason.
For now, we'll remain watching and waiting.
Full Disclosure: I do not hold, and have not in the past held, GYI stock, nor those of any of it's competitors, nor do I have any plans to engage in any investment activity as it regards GYI, or it's competitors. While I've been critical of them in the past, I've not disclosed these facts, and I feel it's important to make that point clear.
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