Growing Revenue At Shutterstock?

Posted on 11/15/2019 by Jim Pickerell | Printable Version | Comments (0)

I was asked recently what I thought Shutterstock could do to grow revenue. My answer was not much.

I don’t think it will be possible to grow the downloads very much. I believe they have already reached all the customers who are willing to pay money for the images they use. There may be an increase in the number of images being used on the Internet, but the vast majority of them are either free images or stolen. All the people willing to pay anything are already customers of one of the 3 or 4 major suppliers.

In 2018 the total number of Shutterstock download grew by about 4.4% compared to 2017. In 2019 the total downloads are on track to grow about 3.6%. Meanwhile Shutterstock has grown their collection by more than 100% from 130 million images to 297 million. More images is not the answer.

Each customer has about about the same need for images this year as last year. Some may need a few more, but not a significant number. If you’re finding a lot of new customers your not going to grow sales and finding new customers is not happening.

Shutterstock has focused for several years on growing the number of Enterprise customers. These customers pay higher gross annual fees, but they also get additional services. The average Enterprise customer pays Shutterstock about $6,300 a year. But, we know there are a few big companies that pay them hundred’s of thousands and they have said in past that at least one customer pays them over $1 million. Thus, a significant number of the smaller Enterprise customers are paying them much less than $6,300 and some probably closer to $3,000. And Shutterstock needs extra staff to service the Enterprise customers.

Smaller customers can download up to 9,000 images a year for about $2,400 without being Enterprise. There probably aren’t any E-commerce customers left who need that more than 9,000 images, or other special services. Shutterstock has reached the maximum on Enterprise.

Raising Prices

They might consider raising prices slightly, but the argument against this is that it might give their major competitors – Getty Images, iStock, AdobeStock -- a chance to undercut them and steal their customers. Getty is already greatly undercutting Shutterstock prices for some customers, but it doesn’t seem to be doing that much to improve Getty’s revenue picture.

A better option would be to create a separate collection of high demand images and charge a slightly higher price in the same way as iStock has done with its Exclusive collection. I think these images could still be non-exclusive to Shutterstock and it wouldn’t result in many customers going to other agencies where they could find the same images cheaper.

The worry is that nearly all Shutterstock images are also available non-exclusively on other sites, and if they can be purchased for lower prices on these sites then Shutterstock will lose sales. Customers could find the image they want to use on Shutterstock and then go to another site, do a visual search to find the same image and purchase it there at a lower price.

With iStock the exclusive images are 3 times the price of the non-exclusive images. If the Shutterstock higher priced collection was only two or three times the price of the non-exclusive images I believe most customers would not waste the time to try to find the same image on a different site just to save a couple dollars. After all the average price of a Shutterstock image is only $3.40.   

In my opinion very few customers are buying iStock images because they are exclusive and can’t be found anywhere else. I think customers go to that collection because overall it has higher quality images and it’s size is more manageable and thus easier to search than the total iStock collection, or certainly the Shutterstock collection.

Shutterstock’s collection of over 300 million images is way too large. The vast majority of those images have never been used and will never be seen by anyone, let alone used, because no one bothers to look at all the images returned in most searches. I think less than 10% of the images in the collection are ever used even once.

Shutterstock should use the information they have about images that sell and search terms used most frequently to build a collection that includes only images that have been used at least once by a real customer. This would dramatically reduce the size of their main collection and make the “used” collection much easier to search. Most customers are not looking for new images that have never been used by anyone. They are just looking for the “best image that illustrates what they are trying to say,” regardless of who else might have used it.

If including every image that has been used once in this separate database still makes the collection too large, they might want to only use images that have been downloaded by others at least 5 or 10 times. The idea is to make this higher priced database small with a manageable number of quality images that they know others have found useful.

We know that most customers don’t like to review more than 500 images before changing their search options. Thus, the ideal size would be a database that returns no more than 500 of the most in demand images with every search. If a search returns 600 or 800 that’s not so bad, but if it returns 10,000 or 100,000 like many Shutterstock searches do, and among the first ones shown are new images that aren’t very good or likely to be of interest to anyone, that can quickly turn off customers and push them to do different searches, or go somewhere else.

The image that would really be the one that would fulfill the customer’s need will often be an older image that is buried somewhere below the first 500 delivered in the search return. Customers will never know that image is in the collection.

It a customer wants an image that has just been uploaded to the collection, or one that no one else has ever used, then that customer can go to the cheap collection that includes all the never used images and maybe get lucky.

While I think this might be the only strategy that offers much of a chance for Shutterstock to grow revenue, I don’t think they are at all likely to adopt it. Their marketing strategy has always been that “all images are equal.” No image, no matter how much the demand, should be priced higher than any other. Images are just commodities.

They do have their Offset collection which is much higher priced than their regular collection, operated totally separate from the main collection, and hasn’t generated much in the way of revenue because the prices are so much higher.

They should be aware that a few years ago Getty was saying that the Exclusive iStock collection was generating 75% of iStock’s revenue. In terms of number of images licensed that means they were licensing about the same number of Exclusive images as Non-Exclusive despite the higher price for Exclusive.

Copyright © 2019 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz


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