Thursday, September 6, 2007

UPDATED: GYI - The Downward Full Court Press Continues

Here's a little "flying at 33,000 feet" perspective on asset aquisition, moved a bit into laymen's terms.

When you are a company like Getty Images, which has previously stated (pre-iStockphoto aquisition) that your rights-managed royalty-free library was generating an average image license of roughly $190 an image, that's a metric you use as you look at other libraries. If then, you consider that for every 100 images you have in your library, 1 will sell per year, (and that's a rough guestimation, to be sure, but, it's functional for this example), you then determine that a library with, say, 1,000,000 images will generate 1.9 million in revenue, per year, generally speaking. You then must factor in the aging of the asset (i.e. a photo of a cell phone user has a lifespan of about 3-4 years because the models/sizes change), to the end of the "current" life of the photo. The photo then has a value as a "historical" image for the remainder of the life of the copyright. These are complicated metrics to be sure, and you definately then hire an actuary to take a multitude of factors in as you properly value a company. Don't worry though, the company you're considering buying has actuaries of their own, doing the same thing. I'd find it facinating to be in a room with competing actuaries as they debated the nuances of a companies' valuation.

I would, however, suspect that the acutaries did not take into consideration that the acquiring company would canibalize it's own assets by cutting uses to $49. I just don't comprehend that thought process. Essentially, at whatever volume you were previously licensing imagery for in that category, you are slashing the average valuation, and expecting to make it up in volume.

Businessweek has taken note, weighing in on Getty two days ago in their article Moving Pictures.

(Commentary & Analysis after the Jump)
A few cautionary notes -

The article notes that "stock has become big business in a remarkably short time. But that status seems precarious—and Getty and its photographers are straining to adapt." Getty is, in fact straining to adapt as the percentage of images sold out of 100 (as noted above) diminishes. When you have 15 images of, say, an American Flag flying during a winter storm, and , after an aquisition of another company, you now have 22, your "images licensed per 100" figure diminishes. Further, photographers are struggling to adapt because the revenue they relied upon is being slashed (more on that below), and photographers' willingness to continue to be creative is diminishing.

The article highlights this point, suggesting "It's no wonder that photographers and stock buyers gripe that Getty grabs profits where it can, leaving everyone else a skinny slice...(p)hotographers have felt Getty's influence in the way they work and in how much money they take home. "There are a lot of strong-arm tactics involved in getting lower fees from photographers...(t)he industry standard cut for photographers used to be 50 percent," citing one producer of photography, "It's now 20 to 40 percent. People sign with market leaders like Getty to make it up in volume." For rights-managed images, the average commission at Getty is now closer to 33 percent, according to the company's latest annual report.

Fortunately, I am still recieving 50% from my agency relationship. Examples abound in the article, with Jim Pickerell mentioning one photographer's experience in particular. Jim is then cited in the article - "Jim Pickerell, publisher of the trade magazine Selling Stock, adds, 'The collections will likely grow larger and larger, so the odds of any images being licensed have become less and less.'", which just reinforces my point above, and I am certain that Jim and I are not alone in this observation.

Betsy Reid, Executive Director of the Stock Artists Alliance is quoted as saying "We see seasoned photographers leaving stock because of reduced opportunity, but also because of reduced enthusiasm. They're unlikely to be replaced by a new generation of pros, nor will their level of imagery be replicated by amateurs," which is so true. In order to have creative contributions, you must incentivize the creators, which was the original basis for copyright in the US - the notion that, in order to incentivize people to produce creative works, you must - for a limited time - give them a monopoly on the uses and fees charged to others to use, those images. This revenue is needed to sustain them as they do more. As photographers see their artistic creations devalued and used by corporate America everywhere, and, in the end, they are getting 33%-50% of the $49 stock sale, that's about $20-odd dollars or so, and that level of revenue is not going to sustain them as they try to create more.

The article goes on to say "While Getty appears to be unshakable, its future may well be at the mercy of such changes in the business." Indeed. It will be at the mercy of creatively fatigued photographers - the ones that are the top creative producers of the recent past, and the allowance of the commoditization of their own imagery. Last year, JDK said "If someone's going to cannibalize your business, better it be one of your other businesses,", and that's not a functional concept when what is canibalizing your business that investors own and trade, is worth less than pennies on the dollar. It's one thing to say this when you're allowing Jeep Liberty sales to eat into Jeep Cherokee sales, as the Liberty is less expensive to produce and sell, but this just does not work when it comes to imagery! When you earn $0.80 gross (before the backend costs to bill for that and house the content), and you used to generate $95 gross (that'd be 50% of the $190 average), that's going to require you to make over 1,000 additional image sales - per image - just to break even. The article suggests, as it regards Getty and iStockphoto "It's still a potentially dire situation for both agencies." Yes, it is.

Don't believe them (or me)? The articles' closing sentiments include a quote by Washington DC's Design Army co-owner, cited at the beginning of the article: "Design Army's Pum Lefebure notes that she prefers the steep discounts offered by iStockphoto and others: "If we want an image of sky or grass, I'd rather spend $10 than $350." That's from the buyer's mouth, based upon experiences over time. That's a 97% reduction in costs for them. I just can't see, with losses like that for the creatives who produce the content, and the valuation of the company, that anywhere close to that can be achieved by making it up in volume.

Getty touted the news, suggesting it was revolutionary in their PR newswire announcement. It says, in part, "The new product enables customers producing content for the rapidly expanding online market to use award-winning imagery from the broadest and highest quality collection in the world in their online media and advertising." Now, maybe it's just be, but shouldn't "award-winning imagery" that is from the "highest quality collection" carry a premium? Shouldn't photographers who produce that caliber of imagery be rewarded at net-fees to them of more than $20-$25 a piece? The announcement goes on, "Getty Images' new web-resolution product enables customers to access the entire breadth and depth of its collections -- even the premium collections -- for their online media and advertising campaigns...Royalty-free imagery may be licensed online today with rights-ready and rights-managed online licensing in the coming weeks." So, this isn't just their old stock images, or ones that aren't selling well. This is the whole archive.

What do others think of this concept? Simon Stanmore, on his blog,
Commercial Photography Commentary - News, views & techniques for advertising & corporate communications photography
, notes in this entry, titled $49 = 1-10 year, Worldwide, Commercial, License to Use, "Ultimately all RM licenses may be devalued across-the-board by this development, especially when you consider the steady shift away from print toward digital media for advertising." Simon echoes the sentiments noted above:
"There may be another repercussion: A negative reaction from Getty’s mission critical suppliers – Photographers... A list price of $49 for a 1 year Worldwide RM commercial license may just be the straw that breaks their bleeding backs.

Either vocally or silently many of the once committed, still talented photographers who selected Getty to be their distribution partner may move on to where they feel their imagery is respected and profession better understood. And being predominantly creative individuals that entered the profession for the good of their souls over their pockets, they may well be willing to resign themselves to a short-term financial hit in doing so.
How is this going to flesh out? Well, a review of the timeline is in place. Revenue is booked by GYI either at the time of the image's license/sale, or when they recieve the payment. Assuming the latter is the case (i.e. the longer timeframe), GYI's quarterly call was at the beginning of August. Their third quarter announcement will be sometime around the end of October. You do the math - it'll take a week or two to have the lion's share of the images they want to make available at $49, and they'll see a spike the first few weeks in that income, collected within 30 days means that they will be able to report increases in volume, and attribute any diminished gross revenue to this new model, and extend out the bad news that is their true state of valuation/stability one more quarter. The statements will be something like "we look to have a modest-growth fourth quarter as new clients come online as a result of our newest pricing model. We are already seeing increased interest we expect will continue into the next quarter, and the future. We are excited about the growth opportunities and potential this new client base will bring.". If the analysts are paying attention when he says that, hopefully there will be some challenge about the overall valuation of the company based upon these new metrics, and the insights that Businessweek, Pickerell, Reid - and clients like Design Army, bring to the fore.

UPDATE: Several astute readers have corrected me, and provided an update. I referred to the $190 average price for "rights managed" libraries, and, that figure was more closely aligned with RF libraries - a big difference. In GYI's 2005 10K Statement, Section #15, it lists:
APPROXIMATE AVERAGE PRICE PER IMAGE BY PORTFOLIO - rights managed image price in 2005 was $570, royalty free was $200.
Sadly, this makes the drop for RM from $570, on average, to now $49, even more drastic.

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.


Anonymous said...

But just to play devil's advocate here, aren't the photographers, who are in control of their own images, partly responsible? After all, without photographers agreeing to provide the content through Getty, the gorilla would become a mere shell of itself. We're all gonna have to learn to deal with 'what the market will bear', which seems to be more of an economic force than photographers learning to value image licenses based on use. I wonder if this is more the result of fear and not saying no, giving in to buyers and agencies, or losing more money in the now causing us to amputate our own future?

I've chosen not to submit to Getty.

Michael Czeiszperger said...

What's missing in this analysis is mention of other royalty free stock agencies other than iStockPhoto. From a quick review of a couple of photography magazines I can find at least a half-dozen. There's a lot more going on in the industry than just Getty and iStockPhoto. Were iStockPhoto to shut down tomorrow there would still be lots of other competitors with the same or similar business models.

The interesting thing is that its almost a certainty that these other competitors aren't actually making money, they're being funded by venture money in the hopes they'll be purchased by a larger stock agency. If the traditional stock agencies can hang on until the venture money runs out, the amount of competition will decrease, and the venture folks will move out and try to cannibalize some other industry.

Anonymous said...

I'd have to say Betsy Reid's quote hits the nail on the head. I would be among those potential new generation photographers. Having read many posts here and elsewhere, I see no inventive to enter the market. It's obvious you cannot make any money at stock now, and the lack of respect shown is galling. I--and probably many others like me--plan on just continuing to shoot for myself & the heck with stock.

Anonymous said...

I've been with Getty since the beginning of their roll-up of other companies. (I was with Tony Stone Images)

At first, when everything was Rights-Managed, income went up - significantly.

Then, the world changed with the addition of royalty-free to the mix and Getty continued to purchase competitors. They started editing super-tight and rejecting shoots. Many photographers, including myself, decided to submit work to other agencies. (I am also with Workbookstock and Alamy)

Workbookstock is now a part of Jupiter Images and I am starting to see significant sales. (including two $10,000 rights-managed sales.) My sales through Alamy are slower. One friend is with Alamy and is making exceptional money with his specialized collection.

My monthly Getty sales have dropped and I continue to submit images through the Photographers Choice program. What is interesting to me, is my submissions and choices are doing better financially than selects made by Getty editors. But they are also older images and do not come up in searches as often.

There is money in stock, it is not the first focus of my career and business. If I was starting out today, I would push a young photographer toward Digital Railroad or Photo Shelter plus Alamy or a similar agency.

It is near impossible to get into Getty these days. They are the gorilla of the industry. Clients like them. They like the ease of use for the web site and the collection. That is the reality.

Smart art buyers and picture editors like the other sources - if they know how to use it. I have a PhotoShelter site set-up - it is very easy to use - and I still get questions from potential clients on how to download and image.

The key is to fiqure out how to make Google and the search engines work for you - plus - create images that truly matter and can be used to promote a feeling or concept.

bryan_luckyoliver said...

"The interesting thing is that its almost a certainty that these other competitors aren't actually making money, they're being funded by venture money in the hopes they'll be purchased by a larger stock agency."

Michael, we're still a small player in space, but our momentum is growing strong. We took no venture capital money and in a year we're just about cash-flow positive. We're going to be investing more to get to the next level, but a sound strategy doesn't need excessive capital.

I'll be speaking more about this at PACA. We're driving the midstock model- it feels a lot better moving up to $49 than going down to $49 :).

Bryan Zmijewski
Chief Instigator

Ryan McGehee said...
This comment has been removed by the author.
Anonymous said...

情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣用品,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,情趣,美國aneros,rudeboy,英國rudeboy,英國Rocksoff,德國Fun Factory,Fun Factory,英國甜筒造型按摩座,甜筒造型按摩座,英國Rock Chic ,瑞典 Lelo ,英國Emotional Bliss,英國 E.B,荷蘭 Natural Contours,荷蘭 N C,美國 OhMiBod,美國 OMB,Naughti Nano ,音樂按摩棒,ipod按摩棒,美國 The Screaming O,美國TSO,美國TOPCO,美國Doc Johnson,美國CA Exotic,美國CEN,美國Nasstoy,美國Tonguejoy,英國Je Joue,美國Pipe Dream,美國California Exotic,美國NassToys,美國Vibropod,美國Penthouse,仿真按摩棒,矽膠按摩棒,猛男倒模,真人倒模,仿真倒模,PJUR,Zestra,適趣液,穿戴套具,日本NPG,雙頭龍,FANCARNAL,日本NIPPORI,日本GEL,日本Aqua Style,美國WET,費洛蒙,費洛蒙香水,仿真名器,av女優,打炮,做愛,性愛,口交,吹喇叭,肛交,魔女訓練大師,無線跳蛋,有線跳蛋,震動棒,震動保險套,震動套,TOY-情趣用品,情趣用品網,情趣購物網,成人用品網,情趣用品討論,成人購物網,鎖精套,鎖精環,持久環,持久套,拉珠,逼真按摩棒,名器,超名器,逼真老二,電動自慰,自慰,打手槍,仿真女郎,SM道具,SM,性感內褲,仿真按摩棒,pornograph,hunter系列,h動畫,成人動畫,成人卡通,情色動畫,情色卡通,色情動畫,色情卡通,無修正,禁斷,人妻,極悪調教,姦淫,近親相姦,顏射,盜攝,偷拍,本土自拍,素人自拍,公園露出,街道露出,野外露出,誘姦,迷姦,輪姦,凌辱,痴漢,痴女,素人娘,中出,巨乳,調教,潮吹,av,a片,成人影片,成人影音,線上影片,成人光碟,成人無碼,成人dvd,情色影音,情色影片,情色dvd,情色光碟,航空版,薄碼,色情dvd,色情影音,色情光碟,線上A片,免費A片,A片下載,成人電影,色情電影,TOKYO HOT,SKY ANGEL,一本道,SOD,S1,ALICE JAPAN,皇冠系列,老虎系列,東京熱,亞熱,武士系列,新潮館,情趣用品,約定金生,約定金生,情趣,情趣商品,約定金生,情趣網站,跳蛋, 約定金生,按摩棒,充氣娃娃,約定金生,自慰套,G點,性感內衣,約定金生,情趣內衣,約定金生,角色扮演,生日禮物,生日精品,約定金生,自慰,打手槍,約定金生,潮吹,高潮,後庭,約定金生,情色論譠,影片下載,約定金生,遊戲下載,手機鈴聲,約定金生,音樂下載, 約定金生,約定金生,開獎號碼,統一發票號碼,夜市,統一發票對獎,保險套, 約定金生,約定金生,做愛,約定金生,減肥,美容,瘦身,約定金生,當舖,軟體下載,汽車,機車, 約定金生,手機,來電答鈴, 約定金生,週年慶,美食,約定金生,徵信社,網頁設計,網站設計, 約定金生,室內設計, 約定金生,靈異照片,約定金生,同志,約定金生,聊天室,運動彩券,大樂透,約定金生,威力彩,搬家公司,除蟲,偷拍,自拍, 約定金生,無名破解,av女優, 約定金生,小說,約定金生,民宿,大樂透開獎號碼,大樂透中獎號碼,威力彩開獎號碼,約定金生,討論區,痴漢,懷孕, 約定金生,約定金生,美女交友,約定金生,交友,日本av,日本,機票, 約定金生,香水,股市, 約定金生,股市行情, 股市分析,租房子,成人影片,約定金生,免費影片,醫學美容, 約定金生,免費算命,算命,約定金生,姓名配對,姓名學,約定金生,姓名學免費,遊戲, 約定金生,好玩遊戲,好玩遊戲區,約定金生,線上遊戲,新遊戲,漫畫,約定金生,線上漫畫,動畫,成人圖片, 約定金生,桌布,桌布下載,電視節目表, 約定金生,線上電視,約定金生,線上a片,約定金生,線上掃毒,線上翻譯,購物車,約定金生,身分證製造機,身分證產生器,手機,二手車,中古車, 約定金生,約定金生,法拍屋,約定金生,歌詞,音樂,音樂網,火車,房屋,情趣用品,約定金生,情趣,情趣商品,情趣網站,跳蛋,約定金生,按摩棒,充氣娃娃,自慰套, 約定金生, G點,性感內衣,約定金生,情趣內衣,約定金生,角色扮演,生日禮物,精品,禮品,約定金生,自慰,打手槍,潮吹,高潮,約定金生,後庭,情色論譠,約定金生,影片下載,約定金生,遊戲下載,手機鈴聲,音樂下載,開獎號碼,統一發票,夜市,保險套,做愛,約定金生,減肥,美容,瘦身,當舖,約定金生,軟體下載,約定金生,汽車,機車,手機,來電答鈴,約定金生,週年慶,美食,徵信社,網頁設計,網站設計,室內設計,靈異照片, 約定金生,同志,聊天室,約定金生,運動彩券,,大樂透,約定金生,威力彩,搬家公司,除蟲,偷拍,自拍, 約定金生,無名破解, av女優,小說,民宿,約定金生,大樂透開獎號碼,大樂透中獎號碼,威力彩開獎號碼,討論區,痴漢, 約定金生,懷孕,約定金生,美女交友,約定金生,交友,日本av ,日本,機票, 約定金生,香水,股市, 約定金生,股市行情,股市分析,租房子,約定金生,成人影片,免費影片,醫學美容,免費算命,算命, 約定金生,姓名配對,姓名學, 約定金生,姓名學免費,遊戲,約定金生,好玩遊戲,約定金生,好玩遊戲區,線上遊戲,新遊戲,漫畫,線上漫畫,動畫,成人圖片,桌布,約定金生,桌布下載,電視節目表,線上電視, 約定金生,線上a片,線上a片,線上翻譯, 約定金生,購物車,身分證製造機,約定金生,身分證產生器,手機,二手車,中古車,法拍屋,歌詞,音樂,音樂網, 約定金生,借錢,房屋,街頭籃球,找工作,旅行社,約定金生,六合彩,整型,水噹噹,貸款,貸款,信用貸款,宜蘭民宿,花蓮民宿,未婚聯誼,網路購物,珠海,下川島,常平,珠海,澳門機票,香港機票,婚友,婚友社,未婚聯誼,交友,婚友,婚友社,單身聯誼,未婚聯誼,未婚聯誼,婚友社,婚友,婚友社,單身聯誼,婚友,未婚聯誼,婚友社,未婚聯誼,單身聯誼,單身聯誼,婚友,單身聯誼,未婚聯誼,婚友,交友,交友,婚友社,婚友社,婚友社,大陸新娘,大陸新娘,大陸新娘,越南新娘,越南新娘,外籍新娘,外籍新娘,台中坐月子中心,搬家公司,搬家,搬家,搬家公司,線上客服,網頁設計,線上客服,網頁設計,網頁設計,土地貸款,免費資源,電腦教學,wordpress,人工植牙,關鍵字,關鍵字,seo,seo,網路排名,自然排序,網路排名軟體,

Anonymous said...

看房子,買房子,建商自售,自售,台北新成屋,台北豪宅,新成屋,豪宅,美髮儀器,美髮,儀器,髮型,EMBA,MBA,學位,EMBA,專業認證,認證課程,博士學位,DBA,PHD,在職進修,碩士學位,推廣教育,DBA,進修課程,碩士學位,網路廣告,關鍵字廣告,關鍵字,課程介紹,學分班,文憑,牛樟芝,段木,牛樟菇,日式料理, 台北居酒屋,日本料理,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,台北結婚,場地,住宿,訂房,HOTEL,飯店,造型系列,學位,SEO,婚宴,捷運,學區,美髮,儀器,髮型,看房子,買房子,建商自售,自售,房子,捷運,學區,台北新成屋,台北豪宅,新成屋,豪宅,學位,碩士學位,進修,在職進修, 課程,教育,學位,證照,mba,文憑,學分班,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,台北住宿,國內訂房,台北HOTEL,台北婚宴,飯店優惠,住宿,訂房,HOTEL,飯店,婚宴,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北結婚,場地,結婚,場地,推車飲茶,港式點心,尾牙春酒,台北結婚,婚宴場地,結婚,婚宴場地,推車飲茶,港式點心,尾牙春酒,台北結婚,場地,居酒屋,燒烤,美髮,儀器,髮型,美髮,儀器,髮型,美髮,儀器,髮型,美髮,儀器,髮型,小套房,小套房,進修,在職進修,留學,證照,MBA,EMBA,留學,MBA,EMBA,留學,進修,在職進修,牛樟芝,段木,牛樟菇,關鍵字排名,網路行銷,PMP,在職專班,研究所在職專班,碩士在職專班,PMP,證照,在職專班,研究所在職專班,碩士在職專班,SEO,廣告,關鍵字,關鍵字排名,網路行銷,網頁設計,網站設計,網站排名,搜尋引擎,網路廣告,SEO,廣告,關鍵字,關鍵字排名,網路行銷,網頁設計,網站設計,網站排名,搜尋引擎,網路廣告,SEO,廣告,關鍵字,關鍵字排名,網路行銷,網頁設計,網站設計,網站排名,搜尋引擎,網路廣告,SEO,廣告,關鍵字,關鍵字排名,網路行銷,網頁設計,網站設計,網站排名,搜尋引擎,網路廣告,EMBA,MBA,PMP,在職進修,專案管理,出國留學,EMBA,MBA,PMP,在職進修,專案管理,出國留學,EMBA,MBA,PMP,在職進修,專案管理,出國留學,婚宴,婚宴,婚宴,婚宴,漢高資訊,漢高資訊,比利時,比利時聯合商學院,宜蘭民宿,台東民宿,澎湖民宿,墾丁民宿,花蓮民宿,SEO,找工作,汽車旅館,阿里山,日月潭,阿里山民宿,東森購物,momo購物台,pc home購物,購物漢高資訊,漢高資訊,在職進修,漢高資訊,在職進修,民宿,民宿,整形,造型,室內設計,室內設計,漢高資訊,在職進修,漢高資訊,在職進修,民宿,美容,室內設計,在職進修,羅志祥,周杰倫,五月天,民宿,民宿,整形,整形,室內設計,室內設計,比利時聯合商學院,在職進修,比利時聯合商學院,在職進修,漢高資訊,找工作,找工作,找工作,找工作,找工作,蔡依林,林志玲

Newer Post Older Post