Tuesday, March 17, 2009

When Do The Musicians Abandon Ship?

The scene from the movie Titanic where the musicians continue to play (info here) as the ship is sinking, is, to me, evidence of the musicians' head-in-the-sand (pardon the soon-to-be-pun) mentality they exhibited.

Just as the water breached the hull, filling decks, trapping passengers unaware, so too, is the sinking hulk of Getty Images doomed to sink into the history books as the largest photo agency in the world, sunk by the iceberg microstock.

The ship that is Getty Images has essentially broken in two. There's the bow of the ship, represented by their Rights Managed Stock, a consolidation of countless other agencies' rights-managed collections. This was the most prominent of the business, yet when the microstock iceberg slashed its' hull, the stern, made up of iStockphoto and JupiterImages, became the dividing point within the company. Now, this ship has ceased forward motion, and life preservers are being handed out to the hundreds of employees who, over the last year or so, have departed.

(Continued after the Jump)

Just as this article notes about Captain Smith, "His legendary skills of leadership seem to have left him, he was curiously indecisive and unusually cautious", so too "Captain Klein" seems to have taken a 'everything will be a-okay' approach, when he wrote yesterday "We must take decisive steps to ensure we emerge from this recession strong and able to best preserve the success of Getty Images" in his missive to the "engine-room" and "crew" of the R.M.S. Getty (in this case, R.M.S. stands for "Rights Managed Stock").

The paying customers are fleeing, or headed to the stern, for a better opportunity to survive. But how will they? Getty's customers have suckled at the teet of free and cheap for so long, that a budget for a piece that used to be $5,000, and would bring in a handsome profit to Getty and the contributing photographer, has, over the past few years, been slashed to costs of $100 or less. It's like the smack dealer who offers free or cheap samples, gets the addict hooked, then raises rates. Whomever is the Robert Ballard of Getty Images will have to salvage the visual riches of Getty's rights managed collections, and let the steerage visuals sell for fractions of a cent, and then Gettys' Ballard will have to figure out how to raise the rates on clients who have built their budgets based upon deflated budgets. Yet, raising rates on a free-and-cheap clientele will likely proove harder than the actual raising of the Titanic.

Just as the radio callsign of the Titanic was MGY, the stock ticker for Getty was GYI. Just as the route for the Titanic, built in the Harland and Wolff shipyard, was the U.K. to New York City, "Captain Klein's" business dealings took him from Hambros Bank Limited in the U.K., to now being in New York. Almost 100 years ago to the day, The Flickr Collection debuts on GettyImages.com on March 11, 2009, construction of the Titanic began on March 31, 1909 (info here). Funded by J.P. Morgan, the founder of the same company that reported "JPMorgan Chase on Wednesday ratcheted up its expectations for losses", back in November (here) as "Captain Klein" tried to suggest they were doing the right thing "We have tried very hard to avoid lay offs during the continued turmoil in the world’s economy. However, it is now clear that we have no alternative." While these comparisons take a humorous tact, they do point to the notion that sometimes when you build it too big, and get a notion in your head of "unsinkable", that troubling mindset could well apply to Captains Smith and Klein with relatively little humor and a great deal of criticism of the course both have charted.

If you are still employed at Getty Images, you are those musicians. You know your ship is sinking. Telling your clients that everything is just swell and not to worry, is like band leader Wallace Hartley striking up the next upbeat ragtime tune as the deck listed 40 degrees to port, and as the IT people continue to stoke the steam-powered engine of the Titanic turned Getty. With the job market bleak, and 8% unemployment figures, I don't blame you for going down with the ship, and collecting every last paycheck before you're deemed redundant, but I do hope you have found your place amongst the last life boat passengers, have your rolodex in place to depart under escort by a rent-a-cop guard. Don't leave any ramen in your desk drawer, you may need it as you wait out the downturn.

If you know your company is going down, don't lie. Lying is what gets people in trouble, as in, false representations to clients. If you learn that your company is closing down in a specific period of time, it is likely unlawful to collect fees for a license that you know extends beyond that date, so be sure to check with your own attorney for the best legal advice on this, but know that lying is what gets people in trouble as people are looking at people to point fingers at, and lay the blame on.

Please post your comments by clicking the link below. If you've got questions, please pose them in our Photo Business Forum Flickr Group Discussion Threads.

13 comments:

Fotografi said...

Is really a little bit early to conclude about Getty... I agree with you that seems that they taking the road to nowhere... We will wait and see try to maximize aour income from other agencies.

Michael Sebastian said...

John, I love your blog and your book; but your ongoing losing struggle with the third-person neuter possessive pronoun is just killing me. :) So I'm gonna he'p a brother out with the one rule you need to know: :)

Put a ring of police tape around the word "it". The ONLY time an apostrophe can come near the word "it" is when you want to say "it is". The possessive form of "it" is ALWAYS "its". "it's" means ONLY "it is"; "its' " is not a word at all.

So if you start to put an apostrophe before, within, or behind "its", say the sentence out loud substituting "it is" for "its"; if the sentence still makes sense, apostrophize away. Otherwise, drop it like a radioactive hoagie sandwich.

Keep up the good blogging fella. We appreciate what you have to say here.

Anonymous said...

Photoshelter.com Please!

Gerrlad Goudcho said...

John, as much as everyone loves you, you will go out of business before Getty. Its not because they have to get rid of a few hundred people that they are finished.
Wishful thinking, they call this in your country.

John Harrington said...

Gerrlad -

I'll wager you a gentlemens bet of $1 that I remain in business longer than Getty Images does. So far, I am at the 20 year mark, with no signs of a decline in revenue.

-- John

Anonymous said...

Getty has been so idiotically mismanaged all along that it is a testament to the strength of the agencies they gobbled up (and the work of the photographers involved) that they haven't gone belly up already. It is a perfect example of what happens when a spoiled rich kid, (in this case Mark Getty), decides to play at working.

Anonymous said...

gerrlad i think you might lose $1 because getty will be out of business if not this year than next. this private equity firm that purchased getty for $2billion are scratching their heads wondering what they got themselves in to. you are fogetting that getty's editorial business relies on newspaper subscriptions and a shrinking editorial market that's worth half of what it was a year ago. so , there will be layoffs in that sector as well. google is a prime suitor for an overvalued server with a million images on it. trust me getty images will soon be google images plus.

Anonymous said...

Watch out John!!

Here comes the avalanche of "stop talking about Getty" posts.

I for one am with you regarding their demise.

How about you and me getting together and clapping wildly when the sheriff chains up the doors; then we can drink some Dom and end the day pissing on their building?

Frits Meyst said...

John, it seems they are not the only ones that suffer, this is what I received yesterday from Alamy:

Dear Alamy contributor,

We have seen some dramatic declines with some of our newspaper customers this quarter, ranging from 30% to 70% down year on year. I would like to share some thoughts with you on how we can reverse this trend.

I have spent the past week visiting photo editors and managing editors at several of the major UK titles to get a better understanding of why this is happening and where they see their businesses going.

All of the people I met with made the following observations:

- Advertising revenues have fallen dramatically this quarter in most cases
- Print sales have been falling and will continue to do so
- Online versions of newspapers have yet to deliver a revenue stream comparable with that of print
- Most titles have been making redundancies in recent months
- Editorial budgets have been cut
- Further editorial cuts are anticipated

Newspapers are going through a painful transition period that is being exacerbated by the recession.
Most of the main titles think they will survive, but it is not yet clear what the right commercial structure for them will be. The only thing that is certain is that difficult choices and further cost reductions lie ahead of them.

Alamy is the only large supplier of imagery not offering a subscription scheme to newspapers and we are being squeezed out of this market by offerings from our largest competitors.
These deals are in addition to, and separate from, newswire subscriptions. In the past we have managed to keep away from these deals because we represent a lot of material that isn't available anywhere else. Unfortunately the recession is forcing a change in behaviour at the picture desks that leaves little opportunity for image providers who don't offer unlimited downloads for a fixed fee.
To put this in context, our largest UK newspaper customer has ordered their picture desk to only download images from agencies they have subscription deals with.

To keep our newspaper revenues alive this year we will have to move quickly to regain the ground lost to our rivals. The good news is that it's not too late to act - most of our customers want us to succeed because they like the speed, simplicity, and choice on Alamy.

Broadly speaking any subscription offering needs to be priced at or below the total expenditure for the previous year for an unlimited number of downloads. Wherever possible we will allocate revenue to contributors based on usage, but in some cases we may have to divide up the revenue based on downloads.
It is hard to judge in advance what impact this will have on the average price per image for this market.
At one end of the scale prices will remain at or slightly below 2008 prices, whereas at the other end prices might fall by up to 50% or perhaps even more. My expectation is that we will see a mixture of both.

We face a stark choice - either we adapt to match the competition, or we accept that UK newspaper revenue will continue to decline sharply over 2009.

Please feel free to email me at my personal email address - mailto:xxxx@alamy.com - if you have any concerns you would like to raise.

Best wishes,

James West

Alamy CEO

Wisit said...

I have to agree because I believe if you change "Getty" to "Macro Stock Industry" you have the same scenario currently being played out across the industry - its broken beyond repair if MS continues as it is.

There must be a move to macro'ing the micro industry. Marco volume is plummeting.

Anonymous said...

John - No offense by this question. Were you ever turned down by Getty? Did you try to join them at one point?

John Harrington said...

Anonymous -

Thanks for asking. Definitively not. This is, nor never has been, personal. This is a criticism of their business models and what I see as their devastation of the business of photography.

- John

Anonymous said...

Thanks. I won't ask any more questions. Good to know.

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