I hear all to often that "microstock creates new markets". Ok, so let's take that statement at face value, and agree with it, but break it down to see what monster has actually been "created."
Dictionary.com defines market in several ways, the most applicable to this statement is "a body of existing or potential buyers for specific goods or services."
To say "microstock creates new markets" makes it appear is if this is a good thing. However, not all markets are good, or even legal. "easy access to Pseudoephedrine creates new meth markets", or "the decline in police patrols created new open air drug markets." The cash-for-clunkers program grew the market for new cars. Yet, that program not only damaged the used car market for buyers who could never afford a new car and now have fewer used cars to choose from (thus raising the prices of those still available) but also spiked the new car market in the early part of the year at the expense of later-in-the-year sales, according to some reports.
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Microstock didn't come into the market to serve high school children who need school report images, or even the mom-and-pop corner store. They came in like a drunk bull in a china shop with careless regard for the devastation on the existing market. Jonathan Klein, co-founder of Getty Images, on justifying the acquisition of iStockphoto, suggested all the new markets they could go into. Yet, iStockphoto is going to kill off the golden egg goose that was Getty Images. Sources suggest iStockphoto will be spun off in 2010 and go public.
Microstock has taught image buyers that most photography is worth pennies on the dollar of what it used to be worth. Yet, time and time again, normally responsible buyers get burned by the use of microstock and create confusion when the same image they chose is one that the competition is using (or has already used.)
Every time an entrpreneur turns around with some hair-brained idea, they have usually surmised "there's a market for X", and then proceed to demonstrate how they can actually serve that market. Yet, the reality is that the market must be sustainable. The dot-com boom era is a wasteland of non-sustainable markets where billions were lost. The money in the gold rush was not in the actual gold, but the suppliers of the tools and equipment that the miners used. The money in microstock is not in the images, but in aggregating the content of people who don't care about getting paid, and then taking a fraction of a dollar for the image license. The profits in microstock are like end products where the pollution dumped into fragile eco-systems as a part of the process is simply disregarded. Today, countries like China who don't give a hoot about their environment or worker satisfaction are polluting the skies and streams with the post-manufacturing waste, and living wages are not paid to workers there either. As a result, US manufacturing can't compete, and irreversible damage has been done. In the same vein of thinking, microstock photographers have little to no regard for the damage they are doing to the photographic environment, causing immensely talented photographers to close up shop. A few pennies for a book cover or national magazine cover is just enough for a latte, and beyond that, the digital-camera-toting enthusiast couldn't care less.
Stop saying "microstock creates markets" and instead try "microstock markets are devastating existing profitble markets." 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.
You can always spot the least liked person just off stage at every presentation of lottery winnings. They are the people who are not outwardly smiling, likely wearing a dark suit, and carrying a briefcase of some sort. This is the IRS agent, cooly waiting to advise you of the taxes you now owe, and you owe them now. (IRS regulations here). Your 25% or so goes straight to the tax man. So, that $100k oversized check? Actually not cashable. The real check will be just $75k, since the lottery payor has to withhold those winnings. Why? Because many lottery winners squander all their winnings, and then when it came time to pay the taxes, they had no money.
For some time, I have been trying to get into the heads of microstock photographers that they are running a business, whether they think they are, or not. No more 1040EZ forms, you must report that money you got when it was reported and you got a 1099. A rude awakening comes for the microstock photographer who sold 2,000 five-dollar-downloads, and collected their 20%, or $2,000. You'd think that was a sweet deal, until you had to pay half of it to the government, leaving you with $1,000. But, well, it seems that maybe more than a few micro-stockers are not paying their taxes properly, perhaps? Foreigners, who have been getting the full payments are - gosh, the shock! - not paying taxes on the income?
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According to the IRS website (here), "U.S. source income paid to foreign individuals amounts to $140 billion each year. Most types of U.S. source income paid to a foreign person are subject to a withholding tax of 30%." Here's the big kicker - "The person making the payment is considered to be the withholding agent. You are a withholding agent if you are a U.S.or foreign person that has control of any item of income of a foreign person that is subject to withholding....As a withholding agent, the payer is personally liable for any tax required to be withheld, independent of the tax liability of the foreign person to whom the payment is made."
YIKES!
This is likely to mean that if there are several thousand micro-stockers who are foreigners and have recieved payments and - (again) gosh the shock! - not paid their taxes, the microstock company could be liable for that tax. Uh oh. The IRS stipulates "The penalty for not filing Forms 1042-S and1042 when due (including extensions) is usually 5% of the unpaid tax for each month or part of a month the return is late, but not more than 25% of the unpaid tax. Additional penalties apply for failure to provide complete and correct information or if you fail to provide a complete and correct statement to each recipient. The maximum penalty is $100,000 per year."
I guess maybe a few microstock agencies will be looking at a few $100k bills for the past few years, perhaps?
According to Microstock Diaries (here), "Shutterstock have announced that they’ll be withholding 30% tax for non-US contributors in order to comply with US tax laws."
Microstock Diaries characterizes contributor reactions by saying "Affected contributors are understandably upset." Then they outline several of the complaints (followed by our answers):
Q: taxes haven’t been withheld before, so why are Shutterstock starting now?
PBN&F Answer: Because it's the law, and they were not in compliance with the law, which will cost them a lot of money.
Q: other agencies don’t do this, so why is Shutterstock doing it?
PBN&F Answer: Because other agencies are making the same mistake, and just like everyone is now charging for a paper airline ticket, and checked baggage, the rest of the microstock agencies will fall in line.
Q: why do I have to pay tax to the US government when I have nothing do to with them?
PBN&F Answer: Because your assets earned money on US soil, among other reasons.
Q: why do I have to give personal information to the US government?
PBN&F Answer: Because a US company is paying you money, among other reasons.
Q: can’t Shutterstock pay for this themselves and not penalize foreign contributors?
PBN&F Answer: Because this is the tax on YOUR portion of the income, that YOU owe! Shutterstock will be paying their own taxes on their profits as well. You are not being penalized - you are paying what you owe, fair and square.
Microstock diaries then takes a slight (albeit deserving) swipe at the contributors, when they say "The demonstrated gaps in understanding of international business in these complaints extended to misdirecting blame and anger toward Shutterstock." And here, they are right. Shutterstock is not doing anything wrong here - in point-of-fact, they WERE doing something wrong in not withholding, and now they are getting in compliance.
Many members are apparently deleting their portfolios from Shutterstock. Good. A few thousand less images there means fewer $30 Time Magazine covers.
Microstock Diaries characterizes contributors thusly - "Most microstock contributors are in business so they’re used to doing things like filling out forms and paying taxes. However, a not-so-small number of contributors, it seems, are not so comfortable with this change."
I believe that if you look at the number of microstock contributors who actually earn a full-time living off of microstock versus those that just get their kicks from seeing their images in print and whose income cannot support them full-time, you would find that the vast majority of them are running their businesses very poorly - essentially at a net loss.
Oh, and one more thing - you can run your business at a loss, but not forever.
An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).
If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity.
Welcome to the real world my fellow photographers.
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What's remarkable is just how two-faced microstock photographers can be. The refrain that is laughable on it's face and just plain insulting when contemplated even for a minute, is the notion that microstock photographers don't do it for the money, they make pictures so they can see their work in print, and maybe their name as a photo credit, but now they're complaining because prices are getting too low. (as if $0.20 net per image isn't already too low!)
Idiots.
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Torrens' article is insightful, and talks about petitions being signed by some microstockers to opt out of the models that microstock agencies have turned to - subscription models, because they wanted to differentiate themselves. What used to be $1 per image, can now be silly prices like $150/month for "all you can eat" use, meaning those earning $0.20 per image are now maybe earning a few pennies.
And I am supposed to feel bad about it? Not likely.
Torrens makes the point that silly petitions won't make a difference, and he's right.
In the end, differentiating yourself as a photographer from the rest of the pack is going to win you more clients, more repeat business, and insulate you from the "everyday photographer" and their downward spiral.
Torrens does make one flawed argument, with bad numbers:
If you're in the business of selling photos, you'll be equally happy with an agency that sells 50 photos for $100 as one which sells 300 photos for $100.
However, if you're in the business of improving the industry for the benefit of your fellow photographer, that's very noble of you. You'll likely drop the second agency as they're not paying you as much per sale - they're not paying 'fair' prices. But will this help your cause? Not likely. One of the other 29,999 microstock contributors will get your sales.
The problem here, is that where images are priced at either $2, or $0.33 per image, it's not about the $100, it's about the fact that the license that both models promote is an extensive rights package for next to nothing per image. I'd much rather license one image for $100 than even 20 for $5 because I know that, over time, I will earn more per image because the person who licensed one once will need to come back again for a license to extend or expand the license.
That discrepancy aside, I enjoyed his piece. In fact, I enjoyed even more hearing whiners complaining about prices getting too low. Next they will be called pennystock, because you'll be first able to get an all rights package for $0.05, then $0.01. Next up will be agencies thinking that if they can get images "placed" in certain places, they will pay for that opportunity.
What then, about side deals? Consider you have great pictures of people using bicycles. It would be really easy for someone from say, Schwinn, or Huffy, to locate all their bicycles in an agency, and then offer a placement deal to the agency where by, whenever those images get used, the bicycle manufacturer pays the agency a placement fee. In turn, the agency offers to incentivize possible clients to use the photos, so any search for bike/bicycle returns these images to the top, offering them for, say $0.01 when the standard price is $1. The fee the microstocker gets is 1/20th of a penny, because they are only entitled to their percentage of the license. The fee that the bicycle manufacturer pays the agency is not a part of what the photographer gets.
Movie companies have done this forever, with proactive product placements. How likely is it that there are, say, coke cans in photos? Coke could cut a deal to get those images placed higher up, and thus, placed more. This could be done with logos on shirts for Nike, Adidas, and so forth - any branding opportunity could benefit the agency and not the photographer, and the photographer not only would not be entitled to a piece of the deal, but they would never know about it!
Enjoy continuing to be taken advantage of microstockers. Don't bother to read your contracts, they're non-negotiable, and however they read, those who own the servers where your images reside will do everything they can to preclude you from profiting from your efforts.
Happy Shooting! 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.
Let's get the upside out of the way here - SpiderPic is a great solution for the photo buyer, in the short term. SpiderPic is an aggregator that brings together search results across microstock sites, showing you your results, and in examples like at right, where there are identical images - which place has the best price. Paul Melcher, in his piece - A Microstock Price War? - has a good analysis of this service, and was where I first learned about it.
I have not delved deep into the ownership of SpiderPic, but what I have learned is that their revenue is from referrals to each of the microstock sites, where they take a piece of each transaction. Melcher is right - this will create a price war. Further, guess what - the loser will be - that's right - the photographer.
But how stupid can these photographers really be?
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If you are one of the many photographers who are selling the exact same image in different portals, at difference rates, for the same exact usage, then you need to re-think your common sense - not to mention your business sense.
Do I blame SpiderPic for facilitating this? Yes, and no. First, they are just making it easier to do what someone previously had to do manually, and so, for that service, they get a piece. However, as creative budgets get slashed by these low prices, budgets will make it all but impossible to create fresh content for assignments, and that's bad long term.
Now all the microstock photographers can pile on here in the comments, with sentiments like "I just want to see my photo in print, who cares about the money..." and "...for some of us it's not about the money it's about the fame..." and other equally idiotic sentiments. go ahead and subsidize multi-national corporations and mega-corporation quarterly reports with your EOS Rebel or D90 photos. Some day, you'll tire of all the work and the market will be so flooded you'll lose interest. Go ahead - I'll wait.....that's right, patience is a virtue, and while I have more than I need of it, clearly one "virtue" of these microstockers is that they couldn't care less about the profession of photography as a sustainable endeavor. SpiderPic's results demonstrates just one more manifestation of that.
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Q:Why is a monkey smarter than 98% of all microstock photographers?
A:Because the monkey can feed herself by taking photos.
Sadly, this isn't a joke, it's the truth. Paul Melcher, over on his "Thoughts of a Bohemian" blog (here), shares the news that a 33 year old Orangutan earns a raisin for every photo taken.
Let's see - why don't we do the math: reports from some photographers suggest a ratio low ratio of images "snapped" to images "accepted", and it's not unreasonable to believe that 100 or more images are taken at a shoot. So, you shoot, say, a gross of 500 images and get, say, 10 accepted. Your monkey competitor has earned 500 raisins. That's about equivalent to 9 15 oz boxes of Sun-Maid raisins. A 15 oz box of Sun-Maid raisins sells for $2.50 at Safeway.com. So, after 500 photos, the monkey has earned $37.50 in raisins. In order for a microstocker to have $37.50 to spend on food (i.e. a personal item), they have to have earned $75 in taxable income because between federal, state, and self-employment/social-security taxes on their microstock income, they are paying 50% taxes on their profits, and we all know that microstockers argue that it doesn't cost them a thing to make photos, so whatever they earn is profit, right?
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How long does it take for those 10 accepted photos to make $75? Quite awhile, when the average per-sale figure is about $2, according to Jim Pickerell, in this article.
The numbers could be even worse. According to the iStock Contributors site here, the TOP contributor, Yuri Arcurs, in 4 years only has 5,006 files uploaded, which equates to 104 images a month, on average, that are accepted. the site lists Arcurs as having 136 new files in the last 30 days. In his profile here, it is suggested he shoots "hundreds of 39mp files per day...", so assuming he shoots 5 days a week, and let's say 200 images a day, that's 1,000 a week, 4,000 a month, and he's only getting 136 accepted - and he's the TOP guy? That's a 3.5% shoot-to-acceptance ratio.
So yes, this generalization of math and microstock income provides the rough estimation that even a monkey is smarter than almost all microstock photographers.
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Those who actually have brain-cells functioning realize that the production of quality images - consistently and over the long term - is best left to the professionals. Surely, the Infinite monkey theorem applies to microstock - and that non-starter that is being referred to as mid-stock. Yes, NotSo-LuckyOliver tried to parlay the "we're not microstock" approach into something.
What did their investors want?
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Why, a big cash payout, of course! Investors like to see large dollars as a return on their investment. When they see their one potential big buyer going private, and a wait-and-see attitude on the other players in the market, that burn-rate must have gotten scorchingly hot, and they decided to cut their losses.
I just can't see my way clear to feel sorry for the people who are losing their jobs, or losing their image outlet. They are just one player in a segment of the industry that has been doing damage to the profession of photography. It's a nice idea - (nearly) free images for all, but like communism, the economic viability of both is doomed from the beginning.
As they fall, photographers will respond - "see, I told you so..." Those that remain will utter that, at-least. Those that have left the profession will only shake their heads, wishing the microstock demise would have come sooner so that they could have remained photographers.
"We spent the last year looking for the funds to grow LuckyOliver because, without the addition of significant capital, the return on investment for LuckyOliver and its contributors would not be satisfactory. After reviewing the options, the investment team decided that it was in the best interest of all stakeholders to shut the company down."
Let's re-phrase that, shall we? Try clearing out the nice-speak and saying:
"the investment team didn't see it as smart to pump more money into a failing business model, so they decided to cut their losses, and hobble home licking their wounded pocketbooks."
Even Bryan notes that he was pursing "...a passion that often went beyond reason."
I am not convinced that there will always be a robust microstock industry. How many redundant servers can continue to run with a significant staff to take orders and collect $1 here, and $4 there? I expect that iStockphoto will, in some shadow of it's former self, remain. Jupiter will likely collapse under it's own weight - and the fickle demands of shareholders who no longer see this industry as meeting the growth that they want for their own return on investment. Further, the novelty will wear off for many of the amateurs, and the demands for releases and indemnifications of Corporate America by judgement proof individuals, followed by the lawsuits that inevitably will quash this field, will just poison the well.
One of the primary problems from a cost standpoint is the cost of maintaining customer call centers. Corporate America has wrongly outsourced that to India, and many are reeling from that stupid move. These costs, both needed to service contributors as well as the paying customers, along with IT upgrades will be what makes these models worse than risky.
We photographers, those still standing in the aftermath, will be left to pick up the pieces. And we will.
Those UnLucky "Olivers" are headed elsewhere already, as noted here. From iStockphoto, to fotolia, Crestock, to all the rest of the soon-to-be gone shops. Let the dominoes continue to fall!
To those doing this industry harm, I shall applaud as you fail. If you are contributing images to these organizations, I can say that what goes around comes around, and, to be sure, karma's a bitch. 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.
I have great respect for my colleague Jim Pickerell. So much so that almost about a decade ago, I hired him as an expert witness. Yet, I'm going to have to disagree with his example of a microstock success - Erik Reis: Microstock Success Story, over on Black Star Rising.
I responded, in parts:
"microstock photographer Erik Reis is happy with his results." You cannot equate this individual's being "happy" with their results, as someone who's an example of a success story. Just as people can be successful and not happy, so to, can people - especially hobbyists - be happy and not successful.
Jim then writes about Reis, that he "acknowledges that only about 10 percent are good sellers." Ok, so, out of 1,338, only 133 are good sellers. That's not so good for a year's work. Even worse for two year's work. My advise to Reis - don't quit your day job.
Then Jim goes on to reveal "As is the case with the majority of the more than 70,000 microstock photographers, he has chosen to put the same images on many different sites."...Every stock agency (including Getty and Corbis) specifically preclude you by contract from placing the same images with them, because it's been proven to be bad for the agencies, and, as noted by clients - it's been proven to upset clients when they find the same images in searches at many different places.
The one shining point is the insight that iStockPhoto is not a satisfactory revenue producer, and that other smaller sites are better for them.
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Nothing had happened to the photographs. The archive still holds over 150 million images. Staff photographers still covered the World Cup and the White House. Editorial revenue actually grew 9.2% in the second quarter, the only segment that did. The pictures were fine.
What failed was a capital structure assembled over eighteen years by three private equity owners and one blank-check merger. Roughly $1.5 billion of debt sits on a business that earns about $300 million a year before interest. The company elected a 30-day grace period on 1 September rather than pay bondholders, and a court has entered judgment against it for a warrant dispute the plaintiffs valued at $92 million.
Here's how that happened, and what it cost the people who supplied the pictures. The two stories are the same story. Every dollar of dividend paid to a sponsor and every dollar of interest paid to a lender came out of the same revenue pool that photographers were paid from, and over thirty years the photographer's share of that pool fell from roughly half to fifteen percent, and even less, per image.
The thesis in one line: Getty Images did not fail because stock photography stopped working. It failed because four consecutive owners treated a cash-generating picture library as a financing vehicle, and the people holding the cameras funded the difference.
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Before Getty: the fifty-fifty era
For most of the twentieth century a stock photographer and an agency split the license fee down the middle.
Two features of that arrangement mattered more than the percentage, and both of them are now gone.
The first is that photographers controlled all rights to their images and the agency was an agent. Not a marketplace, not a platform — an agent, with a fiduciary flavor to the relationship even where the contract did not say so. The second is that price and use were linked. When a client's use grew, the photographer's income grew with it.
Royalty-free solved a real problem. Designers with small budgets could not afford rights-managed, and did not want to phone an agency to negotiate a brochure. But it also severed the link between a client's use and a photographer's income, permanently. That severance is the single most consequential event in this entire history, and it happened in 1991, before Getty existed.
The cost justification disappeared. The rate cut stayed.
Meanwhile in London, Mark Getty and Jonathan Klein were running the opposite play. Getty Investments was founded on 14 March 1995, and Getty Communications grew by acquiring archives — Tony Stone, Hulton — collections of irreplaceable images whose value rested on exclusivity. Scarcity was the asset.
In September 1997 the two companies agreed to combine.
1996–1998: the public company is born in the teens
Getty Communications listed on NASDAQ in 1996 as American Depositary Shares, and the stock spent its first two years in the teens.
Allsport is the seed of the editorial business that still exists today — the staff photographers at the Olympics and the World Cup descend directly from it. It is also the only part of Getty that ever operated on the opposite logic from everything else: owned copyright, salaried shooters, no royalty outflow. Hold that thought until the end.
1998–2005: the run to $94.37
Getty spent seven years buying the industry, moved to the NYSE under the ticker GYI, and peaked at a closing price of $94.37 in November 2005.
At the time, Photo Business News was made this structural version of that point in June 2007, before the stock broke: When Your Agent Is Not Your Friend.
That is what a roll-up does. It is not a conspiracy and it is not even a decision — it is the arithmetic of a market with one large buyer. The photographer's leverage in a rate negotiation is the existence of a competing agency, and Getty was systematically purchasing those.
By 2005 the stock was priced at roughly forty-five times earnings on a company whose product was about to be commoditized by people uploading pictures from home.
2006: buying the thing that was killing you
In 2006 Getty bought iStockphoto for $50 million. It is the most consequential fifty million dollars ever spent in this industry, and it was spent on accelerating the collapse of Getty's own pricing.
Getty's strategic reasoning was defensible: microstock was coming regardless, better to own the disruptor than be disrupted by it. The reasoning was also a trap. Getty now had a premium business whose margins depended on high prices and a microstock business whose growth depended on low ones, and it owned both. Every quarter, the cheap one grew faster.
Twenty-nine percent, in the year before private equity arrived. That is the last clean, company-disclosed, audited-context figure we have for what Getty's microstock contributors actually received as a share of revenue. Everything after it goes one direction.
It is also worth noting what 29% was already a fall from the traditional agency split was 50%. So by 2007, before a single leveraged buyout, royalty-free and microstock had already cut the photographer's share of revenue roughly in half — and the price per license had fallen by an order of magnitude underneath that. The compounding of those two effects is the whole squeeze, and private equity did not invent it.
Private equity industrialized it.
2005–2008: the first collapse and the $34 exit
The stock fell 77% in twenty-six months and was then taken private at a 55% premium to the bottom.
A 14.7% net margin. A net cash position. No leverage problem of any kind.
That is the last time Getty Images looked like that.
2008–2012: Hellman & Friedman, and the dividend machine starts
H&F owned Getty for four years, took roughly $880 million out of it in dividends funded largely by debt, and sold it to Carlyle for $3.3 billion. It is the most profitable chapter in this story for anyone, and it is the chapter that installed the machinery that eventually broke the company.
Understand what a dividend recapitalization is, in plain terms. The company borrows money it does not need for operations and hands the cash to its owner. The owner's return is realized immediately. The debt stays on the company. The interest on that debt is paid, forever after, out of operating cash flow.
In a picture library, operating cash flow is license fees. License fees are the same pool photographers are paid from.
This is the precise mechanism by which a buyout fund's return and a photographer's royalty rate became competing claims on one pot of money. Nobody had to sit in a room and decide to cut rates in order to service debt. The pressure is structural and continuous, and it shows up as a permanent, quiet headwind on every compensation decision for the next fourteen years.
In August 2012, H&F sold to Carlyle. The reported enterprise value was $3.3 billion, against the $2.4 billion H&F had paid four years earlier — on top of the dividends already taken out.
Hellman & Friedman won this deal decisively, and they won it by leaving.
2012–2018: Carlyle loses, and photographers pay for it
By 2015 Getty completed a distressed debt exchange — the technical marker of a leveraged buyout in trouble. Carlyle's equity was underwater and everybody involved knew it.
It's important to be careful not to claim a causal chain nobody has documented — no filing says "we cut royalties to service the term loan." But the timing is what it is. A company with $2.6 billion of acquisition debt, a distressed exchange behind it and a sponsor sitting on a loss cut its lowest-paid suppliers by up to 93%, and it did so in the same period that it also announced it would phase out rights-managed imagery by 2020 in favor of royalty-free — killing off the last licensing model in which a photographer's income scaled with a client's use.
In 2018 Carlyle exited, selling control back to the Getty family with preferred capital from Koch Equity Development, at a valuation well below the $3.3 billion entry. Carlyle lost money on Getty Images. The royalty cuts did not save them.
2021–2022: Unsplash, the SPAC, and $33.93
In 2021 Getty acquired Unsplash — a library of images given away free, where the photographer's royalty is zero by design. Read that next to the 2016 cut and the direction of travel is unambiguous.
Note the two things that are true at once. Some debt genuinely was repaid. And roughly $1.4 billion of accumulated leverage went public along with the company, having been built up over fourteen years by three sponsors whom the new public shareholders had never met.
This is the other $33 in the story. It is not an IPO price. It is the high-water mark of a de-SPAC, reached three weeks after listing and never approached again.
One technical note for anyone pulling historical data: several market-data vendors list GETY's IPO date as September 2020, which is CC Neuberger's own shell IPO. If you are charting this company's history from a screener, you may be looking at a series that splices blank-check trading into Getty's record.
2022–2026: AI, a failed merger, and a halted ticker
Four years after listing, the NYSE has halted the stock at $0.12 and the company has told the market it may not survive.
The operating business held up better than the share price suggests. FY2025 revenue was $981.3 million, up 4.5%, with adjusted EBITDA of $320.9 million. Editorial revenue grew 6.9%. In Q2 2026, Editorial grew 9.2% while Creative fell 2.6%.
What went wrong was everything around the operating business.
The Shutterstock merger failed. Announced in January 2025 and intended to bolster liquidity, it was terminated over regulatory conditions — the UK competition authority required divestiture of Shutterstock's editorial arm, which Getty would not accept. The attempt itself consumed cash.
Liquidity ran out. Getty ended June 2026 with $51.6 million of cash and drew the last $30 million of its revolver in July. Free cash flow for the first half was negative $98.6 million.
And the equity structure was already dead. In February 2026 Getty filed a tender offer to exchange employees' underwater stock options; at the time, the closing price was $0.78 and there were 417,214,604 shares outstanding. Whatever was repriced at $0.78 in March was underwater again by September.
The stock will now move to over-the-counter trading under a ticker ending in Q, if it trades at all. The reverse split that shareholders were to vote on at the 8 October annual meeting is moot.
AI runs underneath all of it, in both directions. Generative image models attack the creative licensing business directly. At the same time Getty has signed AI licensing deals — with Nvidia, OpenAI and Perplexity — and is suing Stability AI over training on its imagery. The company is simultaneously the industry's most exposed victim of AI and one of its more aggressive litigants against it.
The percentage is only half of the squeeze. The other half is that the number it was a percentage of fell off a cliff at the same time.
Stack the two effects and the arithmetic is roughly this: a license that paid a photographer $250 in 1995 pays somewhere between two cents and a few dollars in 2026. Not a percentage decline. Three orders of magnitude.
The volume was supposed to compensate. For a small number of high-volume producers it did. For most, it did not, and the minimum payment threshold — earnings below roughly $50 are carried forward rather than paid — means a long tail of contributors have balances that have never once cleared the bar. Those balances are, in effect, an interest-free float that Getty has held for years. We will come back to them.
A note on how to read the chart. The 1985 figure is the traditional agency standard, not a Getty rate — Getty did not exist. The 2007 figure is Getty's own disclosed number for iStockphoto. The 2010, 2011 and 2026 figures are iStock non-exclusive photo rates. Exclusive contributors do better, between 25% and 45%, in exchange for giving up every other outlet.
The ledger: who profited and who lost
One sponsor made a fortune, one lost money, and the people who supplied the product were never in the capital structure at all.
Party
Years
Position
Outcome
Hellman & Friedman
2008–2012
Paid ~$2.4B including assumed debt
Won decisively. Took roughly $880M in debt-funded dividends, then sold at $3.3B
Blum Capital
2007–2008
5% activist stake, pushed for a transaction
Won. Stock rose on the stake, exited at $34.00
Getty family & Koch Equity
2018–2022
Bought from Carlyle below the $3.3B entry
Won on entry, lost on the way back down. Family held 36.7%; now positioned to inject rescue capital
CC Neuberger sponsors
2020–2022
SPAC shell, $600M invested
Won. Sponsor economics realized at closing, regardless of what followed
GYI holders who bought before 2005
1996–2008
Bought in the teens
Won. Cashed out at $34.00
Carlyle Group
2012–2018
$3.3B, $2.6B of it debt
Lost. Distressed debt exchange in 2015, exit below cost
GYI holders who bought the 2005 peak
2005–2008
Bought near $94.37
Lost ~64% at the buyout price
GETY holders since the de-SPAC
2022–2026
$33.93 high
Lost ~99.6%. Trading suspended by the NYSE on 29 September; equity likely cancelled in Chapter 11
Employees holding equity
2022–2026
ESPP, RSUs, options
Lost. Options repriced around $0.78 in early 2026 were underwater again by September
Unsecured bondholders
—
9.75% 2027s, 14% 2028s
Impaired. Trading around 47
Secured lenders
—
Term loans, 11.25% secured notes
Largely protected. Secured notes around 73.75
Warrant plaintiffs
2024–2026
Sought $92M, won judgment
Partially won, may be crammed. Collected $4.15M so far
Contributors and staff photographers
1995–2026
Supplied the product. Held no equity.
Lost throughout, in every ownership era
A few things stand out when you lay it out this way.
The sponsors' outcomes had almost nothing to do with the photographers' outcomes. H&F made its money by refinancing and selling, not by cutting royalties — its win was largely booked before the worst cuts happened. Carlyle made the harshest cuts and still lost. Royalty compression did not save the losing sponsor and was not what made the winning one rich. It was a side effect of the structure, taken because it could be.
Each transition reset everyone except the contributors. New owners, new bankers, new capital structure, fresh start. The rate card never reset upward. It has moved in one direction since 2006.
Nobody in the top eleven rows shot a photograph.
What happens now
Getty will not disappear. It will be handed to its creditors, deleveraged, and carry on licensing pictures.
A business generating roughly $300 million of EBITDA at 27%-plus margins does not liquidate — creditors reorganize it, because the going concern is worth far more than the parts. Expect a prepackaged or prearranged filing, secured lenders reinstated or converted at high recovery, unsecured notes taking most of the new equity, and possibly new money from the majority equity holders, who have formed a "group" including funds connected to Mark Getty.
Read that last clause carefully. The family that presided over three decades of leverage may end up owning a debt-free Getty Images at a fraction of the 2022 price. That is legal, common, and entirely available.
Two corrections to the received picture, from the filings. First, the unsecured debt is almost entirely one instrument: $264.7 million of 14% notes due 2028 and just $5.3 million of 9.75% notes due 2027. There is no 2027 maturity wall to speak of; the fight is over the 2028 paper and the $150 million revolver, which carries a 180-day springing maturity. Second, the warrant litigation is larger than the headline $92 million judgment already paid: a New York state court directed a further $67.8 million judgment on 27 July 2026 and a federal judgment adds $7.8 million, both under appeal. Chapter 11 converts every one of those into a claim to be negotiated rather than a check to be written, which is a large part of why the company is filing.
For contributors with money in the pipeline
This is the part with practical consequences.
Getty's payment cycle runs long by design: licenses granted in January are reported on 20 February and paid on 25 March. Every contributor therefore carries two to three months of earned-but-unpaid royalties at all times. Against the roughly $220 million Getty pays out annually, that implies $35–55 million of contributor money sitting in the pipeline on any given day.
Legally, those are general unsecured claims. They are not held in trust. The agreement is with Getty Images (US) Inc., a contractual payment obligation, ranking alongside the bondholders.
Practically, most contributors will probably be paid, for two reasons:
Critical vendor motion. Contributors are the textbook critical vendor — the business has no product without content supply, and contributors can walk because they hold the copyrights. Judges routinely grant these.
Contract assumption. Contributor agreements are executory contracts. Getty will assume the great majority, because the content is the business — and assumption requires curing all monetary defaults, meaning paying the back royalties in full.
Two groups are genuinely exposed.
Contributors below the payment threshold. Balances under roughly $50 are carried forward rather than paid, and thousands of accounts have balances that have accrued for years without ever clearing it. In bankruptcy those become unsecured claims too small to file and below any administration threshold. Nobody litigates a $31 claim. This is where real photographers lose real money with no recourse, and it is a direct consequence of a threshold policy that already functioned as a float.
The practical move: watch the docket for the claims bar date and file a proof of claim even if a critical vendor motion appears to cover you. It costs nothing and preserves the position.
The library
The wholly-owned archive — over 150 million images, plus everything shot by staff photographers since 1995, for which Getty pays no third-party royalties — is fully encumbered collateral and transfers to the reorganized company.
But note a distinction in Getty's own language: it owns some archives and exclusively represents others. Those are different legal animals. And independent contributors retain copyright ownership of their content — contributors' copyrights are not Getty's to sell. What Getty holds is a distribution license. A buyer in any sale acquires the owned library plus whatever contracts get assumed, not the underlying copyrights of several hundred thousand contributors.
What to take from this
The lesson is structural, not moral, and it is more useful that way.
Nobody at Getty woke up wanting to pay photographers two cents. What happened is that a business whose only real input is other people's work was repeatedly bought with borrowed money, and in that structure the supplier's rate is the most compressible line on the page. Customers notice a price increase. Lenders enforce covenants. Employees quit. Non-exclusive contributors, spread across a hundred countries with no contract term protecting the rate and no collective body, notice nothing until the email arrives two days before Christmas.
The vulnerability was never the percentage. It was the absence of anything that made the percentage hard to change.
Three things follow from that.
Ownership structure predicts rates better than company size or intentions. Stocksy pays 50% because photographers own it. Getty pays 15% because, at various points, Hellman & Friedman, Carlyle, Koch and a bond syndicate owned it. Same industry, same technology, same AI pressure, same decade. The difference is the cap table.
Exclusivity is a term of trade you are selling, and it has been systematically underpriced. Getty's exclusive rates run 25–45% against 15% non-exclusive. Consider what the company gets: a guaranteed supply it can promise enterprise clients, and the removal of your images from every competitor. That is worth a great deal to a licensor and it is priced at a spread of twenty to thirty points on a small base.
And there is one thing the reorganization might actually make possible. A Getty paying $150 million less a year in interest has, for the first time since 2008, genuine room to raise contributor rates and honor the AI revenue-sharing commitment. Whether creditor-owners would choose to is a real question, and I would bet against it absent organized pressure. But the money would exist, which it has not since Hellman & Friedman signed the first dividend recap.
The claims process is also the one moment in this company's thirty-year history when contributors have structural leverage rather than moral standing. A critical vendor motion requires the estate to argue, in writing, to a federal judge, that contributors are essential and can walk away. A coordinated bloc filing proofs of claim — including on the unfulfilled AI compensation pledge — would be the first time contributors appeared in this story as a party rather than as a cost line.
That window opens the day Getty files and closes at the claims bar date.
I would not expect it to be used. It is worth knowing it exists.
As of 30 September 2026. Not legal or investment advice. Contributors with meaningful balances in the pipeline should get a bankruptcy attorney's read on their specific agreement version, and in full disclosure, AI was used to research some historical portions of this article, and for visuals.
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.
It's nice to see that the venerable old BBC can write an article about how Shutterstock/et al are changing the landscape, and revealing the damage it's doing to photographers like Shannon Fagan, which is reporting that "his livelihood is under attack thanks to a proliferation of websites dedicated to amateur and semi-pro stock photography called "microstock".
Their ilk (the microstock sites) defend their model, suggesting "...'We're targeting a different market,' says Stephen Kapsinow from Stockxpert, another stock photography website." IF that were the case - the notion that the images would be used just for school reports, or even a mom-and-pop startup who's never even thought of licensing images, it might be more palatable. However, that's not altogether the case. Designers are procuring images for commercial and corporate clients with a budget and billing those budgeted fees of hundreds of dollars, and instead, paying pennies on the dollar.
And what do the iStalkers have to say?
(Continued after the Jump)
Over in their forums, here, some are suggesting the article "...it's well-balanced and informative...", but that's a minority opinion. Instead, they take offense at snippets of the article which report that " quality is no longer a priority", and "amateur snappers do not have to be very skilled." It stands to reason that the "Infinite monkey theorem" here might just well apply. When an organization of 80,000+ photographers worldwide are snapping thousands of photos a year, this comes strikingly close to the theorem's parameters.
They then try to align themselves with Ghandi, citing him - "First they ignore you. Then they make fun of you. Then they fight you, Then you win." The problem is, as another iStocker suggested, "Oceans of mediocrity wouldn't matter at all if the search results were sorted in such a way that the cream rose to the top..." and this may well be the problem - photo buyers will want a controlled, filtered, and sorted solution, like PhotoShelter's Collection, or through Digital Railroad's Marketplace.
The article reports "Shutterstock.com was set up after founder Jon Oringer became frustrated with his lack of opportunities as a semi-pro photographer....'I went looking for a place to sell them. The top agencies didn't return my phone calls.'" So, I guess, if you can't be them, screw them? If he'd have set up an agency with market pricing, no one would have blinked. Sound familiar?
The founder of iStockphoto, during an interview with DesignSessions, is noted that he "...started his design career in 1994, as a clerk in the mail room of Image Club Graphics, a Calgary company credited with being the first to put RF images on CD-ROMs. After a piece of software essentially eliminated his job..." he then moved to and fro, and then "...During these years, Bruce sharpened his skills as a photographer...He calls iStockphoto a "true example of success born from failure." After deciding he was not going to make it in the traditional stock photography business, Bruce created a free Web site to share his images...and iStockphoto was born."
Could it be that these "frustrated" and "born from failure" photographers are living out their retribution? 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.
More than one person was kind enough to alert me to an interesting article about microstock and Corbis and their soon to be new CEO. In today’s New York Times article by Katie Hafner, A Photo Trove, a Mounting Challenge, there are a few interesting excerpts:
What Corbis did not foresee was the rise of so-called microstock agencies like Fotolia and iStockPhoto. These sites take advantage of the phenomenon known as crowdsourcing, or turning to the online masses for free or low-cost submissions.
True. Corbis was somewhat blindsided by this, but it was Getty who’s acquisition of iStockPhoto gave the model credence. You can slap a dress and some lipstick on a sow, but a pig’s a pig, regardless of the shade of lip gloss.
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Paul Melcher's blog - Thoughts of a Bohemian -Jupiter is Not Responding, talks about the decline in the Royalty-Free market:
Without significant numbers, it is hard to figure out why Jupiter is having such a hard time. Guess is that they are suffering from the same effect as Getty Images : a declining rights manage market, a suffering traditional RF demand, and a microstock division not covering for the losses.
And that got me to thinking that it might be time to dust-off an old perspective that needs to be re-visited.
(Continued after the Jump)
Simply put - if you need a photograph of a man waving a flag with fireworks behind him, and I sell it to you for one time, or a limited rights package, when you need it again, you'll pay me again - and likely pass that expense on to the client. If, instead, I sell it to you once, for an unlimted amount of time and uses, I only get paid that once (and often a fraction of the charge of the first time) and you can use it forever - still likely to pass the "standard rights-managed charge" to the client - obstensively for "access to your image library" (of RF images.)
What flunkie accountant didn't see that this well would eventually run dry? Lots of up-front one-time CD sales for $249 with 100 images, organized by theme - all you can eat/use. There's no back-end resales of those images to that client - ever.
In the quest for Wall Street appeasement, Getty rolled-up many smaller companies, and slashed and burned their way through the industry. Jupiter Images (Nasdaq: JUPM) has watched a similar fate appear. Meckler points to the chart below (a 68% decline in 6 months, and heck, a year ago it was $8.14, now it's down to $1.20), and it sure looks like Getty's chart:
Should we be surprised? Nope.
Fortunately, things can begin anew, without the Gettys and Jupiters of the world (in their current form), once they're gone. The images of people using cell phones will become dated, so too people with cars, hairstyles, clothing styles, and other things that make a photo look old. When was the last time a stock image of a CRT television was used? In a few short years, the image to show was a flat-screen TV, and with the 2009 shift to digital by the broadcasters, CRT televisions are done and gone for - so to images that include them. A Motorola flip-phone? So 90's!
August 7th, when much of New York is vacationing in the Hamptons, Jupiter will have their 2Q financial results (MarketWatch reports here), and Meckler suggests they're reveal there a slashing of upwards of 100 employees. When you run into once of these employees, remind them that the historical excuse for why they were attempting to devalue the business by selling microstock/Royalty-Free - "I was just doing my job", or "I was just following orders", just doesn't excuse their behavior.
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A colleague forwarded to me Lee Torrens' post - 
I have great respect for my colleague Jim Pickerell. So much so that almost about a decade ago, I hired him as an expert witness. Yet, I'm going to have to disagree with his example of a microstock success - 
More than one person was kind enough to alert me to an interesting article about microstock and Corbis and their soon to be new CEO. In today’s New York Times article by Katie Hafner, 
