After years of Shutterstock taking market share from Getty, it seems that the two have achieved a state of relative parity with regard to gross revenue generated from the licensing of still images. Customers no longer seem to be leaving Getty because its prices are too high. In fact, Getty seems to be charging selected customers less per-image than what Shutterstock would charge them. Where AdobeStock fits in is unclear, but for the time being each seems to have a customer base that favors them. There does not seem to be a lot of movement of customers from one to the other.
In addition, there is not much customer growth worldwide so Getty, Shutterstock and probably AdobeStock seem to be in relatively stable positions with regard to the number of images they can license and the annual revenue they can generate.
Over the past decade Getty has dramatically lowered the prices charged most customers in order to prevent Shutterstock from taking more and more of its market share. Given what Getty had to go through to get to the parity it seems to be in today, it may be very difficult for them to raise prices.
On the other hand, Getty is faced with a decline in new submissions from professional image suppliers because for many it is no longer possible to earn a profit from producing, and going through the process of uploading, stock images.
Many hope that somehow Getty will find a way to raise prices.
Late last year, I did an analysis of 2017 sales of some of Getty’s major still image suppliers. While my sample was small, given who these photographers are, I suspect their combined experience is generally representative of the average Getty contributor.
One-third of the sales were for gross license fees under $5.00, 55% were for gross license fees under $10 and 85.15% were for gross fees of less that $50. Contributor royalties tend to be 30% or less of these numbers.
In the chart below The “Average Per-Image Licensed” column shows the average price of all the images in each category. In 2017 Getty’s gross revenue generated by the Creative Collection was about $280 million. (Getty total income for the 12 months ending September 2017 was $836.8 million.)
I estimate they licensed rights to somewhere in the range 4,500,000 Creative images (not counting iStock or Getty’s Editorial collection). I then multiplied the 4,500,000 by “Percent Gross Sales” in each category to determine the approximate number of total images licensed in each price range in order to arrive at the “Estimated Total Image Licensed” column.
| |
Percent of |
Percent of |
Average |
|
Estimate |
| |
Total Sales |
Total Revenue |
Per Image |
|
Total |
| |
of Records |
of Records |
Licenses |
|
Images |
| |
Examined |
Examined |
|
|
Licensed |
| Over $1000 |
1.06% |
32.40% |
$1810.00 |
|
47,700 |
| $500 to $1000 |
1.80% |
16.31% |
$616.00 |
|
81,000 |
| $200 to $500 |
5.60% |
29.61% |
$306.00 |
|
252,000 |
| $100 to $200 |
2.89% |
7.28% |
$131.00 |
|
130,050 |
| $100 to $50 |
4.50% |
5.67% |
$71.00 |
|
202,500 |
| $50 to $20 |
11.41% |
3.53% |
$26.00 |
|
513,450 |
| $20 to $10 |
18.12% |
2.44% |
$13.00 |
|
815,400 |
| $10 to $5 |
21.48% |
1.67% |
$7.40 |
|
966,600 |
| Below $5 |
33.14% |
1.09% |
$2.90 |
|
1,491,300 |
If Getty would start by setting a floor price for each image used in the bottom category below $5.00 that could raise sales in this category by as much as 72%. One-third of the images are licensed below $5.00. Clearly, some percentage people who have been paying $1.00 or less for images will probably go somewhere else, although there may not be many other places for them to get the images they need for such a low price. However, if 40% stopped buying and the remaining 60% paid $5.00 Getty would still end up earning as much as they earned in 2017. While this category represents by far the largest number of sales it only represents 1.5% of revenue.
| |
Estimate |
Average |
Proposed |
New
|
| |
Total |
Per Image |
Price |
Average |
| |
Images |
Licensed |
Increase |
Per Image |
| |
Licensed |
|
|
Licensed |
| over $1000 |
47,700 |
$1810.00 |
$80 |
$1890.00 |
| $500 to $1000 |
81,000 |
$616.00 |
$40 |
$656.00 |
| $200 to $500 |
252,000 |
$306.00 |
$15 |
$321.00 |
| $100 to $200 |
130,050 |
$131.00 |
$10 |
$141.00 |
| $100 to $50 |
202,500 |
$71.00 |
$9 |
$80.00 |
| $50 to $20 |
513,450 |
$26.00 |
$7 |
$33.00 |
| $20 to $10 |
815,400 |
$13.00 |
$5 |
$18.00 |
| $10 to $5 |
966,600 |
$7.40 |
$3 |
$10.40 |
| Below $5 |
1,491,300 |
$2.90 |
$5.00 each |
$5.00 each
|
Then if Getty were to very slightly raised the prices (“Proposed Price Increase”) charged for use of the images in every other categories they could potentially raise their gross revenue by 8%. It is hard to imagine that such small price increases would cause many customers to switch to another source.
The big question for Getty is if they were to negotiate new “Premium Access” deals and raise their prices somewhat, will customers start running to Shutterstock and Adobe to get lower prices, or will those companies raise their prices to match Getty’s? They all need higher prices. Is it possible that the other companies might recognize that the only way to grow revenue is push their ridiculously low prices to a higher level.
If they look at the airline industry example, it seems that every time one raises prices all the others soon follow. There seems to be little risk for everyone in slowly raising airline prices (and reducing convenience). On the other hand, General Mills Inc. recently reported that when they recently raised prices on Progresso soup and Yoplait yogurt sales declined as shoppers went to other brands. Groceries, airlines or do nothing, which strategy will our industry leaders choose?
Also See:
Do We Need Floor Prices?