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EDITORIAL STOCK CHALLENGES
March 1, 2004
2004 is shaping up to be a very interesting year for Editorial stock photography
-- the last frontier in the delivery of stock photography online. Getty Images
has announced that the editorial side of the business will be their major focus in
2004. And it is the only real opportunity left for them -- now that they dominate
the delivery of images to the Corporate/Advertising side of the business.
In a recent independent study of 300 creative professionals at advertising
agencies and corporations, paid for by Getty, it was determined that 77% of
customers go to Gettyimages.com first for their imagery needs.
Let me review Getty's position. In 2003 they generated $435.5 million in revenue
from the Creative side of their site and about $56.65 million from their Editorial
offering that includes News, Sports, Entertainment and Archive images. This is
quite a discrepancy when we look at the actual world market for still stock
images. I believe that if we divide the market into two segments -- Editorial and
Corporate/Advertising -- somewhere between 40% and 50% of the revenue comes from
Editorial usages.
Getty estimates that currently they only have about 10% of the Editorial market,
but staffers have admitted to some investment analysts that they don't know how
large the Editorial market is, or the portion of it that involves image use in
Magazines and Newspapers compared to the portion for Books.
My estimate of the total market for stock and spec-editorial still images
worldwide is between $1.2 and $1.3 billion annually. This includes the $90 to $100
million generated by the photo divisions of the worldís major wire services -- AP,
Reuters, AFP, DPA, Kyodo, etc. -- but does not include assignment fees. Thus, it
is easy to estimate that the Editorial side of the business may be around $560 million
(Getty's $56.65 being about 10% or the total). This demonstrates that there is
much more room for Getty to grow on the editorial side, than on the creative.
Editorial Market
The first thing we need to do in examining the Editorial market is recognize that
there are two distinct segments -- Magazines, Newspapers and TV (MNTV) on one side
and Book Publishing on the other. Based on past industry surveys, I believe that
each of these segments represents about 50% of the Editorial market, or about $280
million each on a global basis. This distinction is important because the types of
images each segment needs are often very different.
Within the MNTV segment there is "spot news" or "hard news" and "features". Getty
does a good job covering major news subjects in News, Sports and Entertainment.
And these images will ultimately move to Hulton Archive if they stand the test of
time. But there are a lot of lesser issues that special interest groups or special
interest publications need that are completely off the radar screen of what one
would consider to be "major news". In some cases these take the form of feature
stories like "families in crisis" or "hybrid cars are good for the
environment "where the subject is covered in greater depth than might be the case
of a news story on "the family" or "hybrid cars".
In other cases all that are needed are single photos, but these photos must
illustrate narrow and specific points that are only relevant to those with a deep
interest in the particular subject matter. That's what "special interest"
publications are all about. The value of such photos is often in how clearly they
illustrate the specific point, not in how unusual or "creative" they may be if we
define "creative" as seeing something we're used to in a totally new and different
way. Often the only people who can edit such photos properly are those who have
an in-depth understanding and knowledge of the specialist subject matter being
covered because it is the subject, not its fine art characteristics, that make the
photo useful and valuable.
Book publishers will use some of the hard news images generated for Newspapers and
Magazines, but the vast majority of what they need tends to fall into special
interest categories. And when books need it, they often need a depth of coverage
in the category. This is the kind of imagery that the guys covering hard news
never get, because it is not tied to the major news stories and it is not what
they do.
Thus, a big part of the magazine industry, as well as book publishers, need images
that don't fall into the categories of "major new stories". The volume of uses of
any specific image related to these special interests tend to be low compared to
the uses of major news and entertainment images, but the number of different
images needed is huge.
Getty's editorial coverage is currently focused toward the high volume, general
interest subjects which in my opinion means that currently a large segment of the
editorial market is not available to them.
On the other hand, given the difficulties of trying to obtain and maintain the
right images on every Special Interest subject, sellers like Getty must ask
themselves, "Will the benefits of serving these Special Interests be worth it,
considering the costs?" And, "Just how big a share of the Editorial Market are
these special interests anyway?"
Growing Editorial
I'm not going to bet against Getty, but I think they will have a much more
difficult time with the Editorial market than they did with Advertising. They have
the marketing muscle. But it seems to me that the critical issue they must address
is obtaining the right content. They have 650,000 images on the Creative section
of their site and 1.6 million Editorial and Archive images. To some this would
seem like an impressive number, but the Editorial imagery is focused on current
news, sports and entertainment personalities. I believe the special interest
publications and the book publishers need a depth of material on a lot of other
subjects not included in those three categories.
Roger Ressmeyer, a former Getty Images VP and the architect of Getty's
Photographer's Choice Program, points out, "Getty Images has accomplished
miraculous things already, and I don't think we give them enough credit. For
example, acquiring and consolidating dozens of businesses is a road that ruins many
ambitious companies. Acquisitions rarely result in the greater efficiencies and
profitability that ís anticipated when purchase plans are dreamed up. But Getty has
succeeded at just about everything they've tried to accomplish, often exceeding
the most optimistic projections."
"For this reason, when Getty Images focuses on gathering editorial feature images,
I'm sure they'll succeed beyond nearly anybody's expectations. They've got a
number of leaders, from Jonathan, Nick Evans-Lombe and the
executive team and on down, with a long history of succeeding with new
initiatives", he continued.
To be fair, Getty has some of what is needed in certain specialist categories on
the Creative section of their site. I'm sure Editorial customers have been buying
these images. I have no idea how many, but certainly total revenue for Getty from
Editorial users is a lot more than the $56 million their 2003 Editorial revenues
would indicate.
But the interesting question is: "Will Getty be able to raise their share of the
Editorial market from 10% to something approaching the 60% to 70% of the total
market as they did with the Commercial and Advertising sector of the market?"
(Remember when they bought Tony Stone Images it had less than a 10% share of the
Advertising market.)
Getty would argue that within their existing file they have some imagery on
everything that is important. That may well be true. But I believe, that while
they do have "some" images, in many, many cases they do not have the depth of
imagery necessary, or the special knowledge necessary to understand what images
these specialist markets will need in the future.
Who's right? Because Getty has decided to aggressively pursue this Editorial
market we'll have the answer in the not too distant future. If they have all the
content they need they'll do just fine because there will be no lack of excellent
marketing. But, if it is a matter of not having the right content no amount of
marketing will make up for it because specialists have very specific needs and
images that deal with the subject in a general way simply won't do.
Single Image Sales
One of Getty's biggest weaknesses with the Editorial section of its automated
e-commerce site is that it has had little or no capability to sell single images
"ala carte" as the Creative section does. Images on the Editorial section are
primarily sold through subscriptions. But the special interest buyers don't need
or want subscriptions. They need to be able to buy a single image when it happens
to fit their specific need.
Getty's small share of the Editorial market may indicate that Special Interest
buyers make up a larger share of editorial that some might expect. Certainly with
Getty's marketing power they should be reaching a large segment of the potential
buyers. If those buyers aren't purchasing many images it may mean that they simply
can't find the specific subject matter they need on the Getty site.
Corbis, on the other hand, has a much broader selection of Editorial imagery on
its site and I believe -- although hard figures are not available -- that a much
larger percentage of Corbis' total revenue comes from Editorial than is the case
with Getty. In fact, my guess is, that of their $140 million in total revenue in
2003 more than $60 million was for Editorial uses. Why do they do so much better
in Editorial sales -- on a proportional basis -- than Getty? I believe it is
because they have greater variety and a deeper selection of the type of images the
editorial market needs.
Corbis has always been more editorially focused than Getty. In its early years it
added a wide range of special interest subjects to its collection. Their editing
was much broader and eclectic than Getty's has ever been. Many of these Editorial
images, accepted on a non-exclusive basis in the early 90's, are earning
significant revenue today. In the last few years, Corbis' editing has tightened up
and moved more in the direction of imagery suitable for advertising, but
photographers with experience with both companies claim that Corbis still accepts
more images from their shoots than is the case with Getty. Getty's editing
philosophy is probably exactly right for the advertising market, but it may not be
right for Editorial users.
I know of photographers who had images with Allstock (a Getty acquired company)
and had virtually all their images returned after the acquisition. Those images
were offered to Corbis and the company accepted many of them. Now those images
are earning significant dollars for Corbis and the photographers -- because the
subject matter is of things that special interest buyers still want to use.
I believe Corbis has a much stronger offering to the Editorial market than Getty
-- particularly for the book publisher and specialist publication buyers -- and I
don't think they are going to give up that advantage easily.
Some would say that if Getty simply makes its current editorial content available
for easy "ala carte" licensing that will solve the problem and Getty will be able
to compete very effectively with Corbis. While that will certainly help, I believe
the range of content will prove to be the bigger problem and one that is not so
easily solved.
It is worth considering the National Geographic images that are currently
available in the "Creative" section of the Getty site. Every one is fully model
and property released so they can be available for advertising. But, given the
way images are shot on editorial assignments the release requirements eliminate
some excellent images produced by Geographic photographers that could be very
marketable in an Editorial (non-advertising) context.
Bill Perry of National Geographic says, "We are very pleased with the results of
our partnership with Getty Images, but we would like to find a way to make a
deeper edit available to editorial buyer. We have great confidence in the power of
Getty's platform and believe Getty's goal of expanding its sales to editorial
users will bear fruit."
Geographic photographers shoot hundreds of rolls of film and produce thousands of
images on every story. After rigorous editing by Geographic editors the entire
take may be narrowed down to a very tight edit of 50 to 75 "prime selects" that
illustrate all important aspects of the subject. Given the way Geographic
approaches its subjects, when the job is completed probably nobody has a better
understanding of the subject matter than the photographer and his or her editor.
There is a good chance that various editorial users would be interested in many of
these prime select images. However, once Getty's advertising oriented editors have
completed their selection of the "prime selects" usually only a small portion of
the images make the cut after Getty's additional editing. Perry said, "I
sympathize with their position. They know their market and we are very happy with
the sales they make to advertising users. We are working to expand what has been a
very good relationship."
Getty's editors certainly know the Advertising market and there is no disputing
that they are very good at selecting images for that purpose. But, at this point
in time, they may not know the Editorial market as well as the Geographic editors.
This could be a case -- just like Photographer's Choice -- where someone closer
to the subject might be able to provide a perspective on what buyers want and need
-- and that could generate increased revenue for Getty Images. Customers won't buy images
they can't see.
Obtaining Content
If Getty's current editorial content is not sufficient, one problem they face is
that there aren't any big companies to buy like Stone, The Image Bank, VCG, and
FPG. The remaining sellers in the editorial arena with a focus toward special
interests are for the most part much smaller and there are a lot of them. When
Getty first acquired the companies listed above, all of them had a lot of the
specialist content in their files that the Editorial market was using. But Getty
determined at that time that they didn't want to pursue this segment of the market
because the profit margins weren't as attractive. As a result, they got rid of
most of these specialist images by returning them to the photographers. They also
got rid of most of the people who knew how to edit for this market.
Getty might be able to capture market share be simply bringing many small
suppliers of editorial imagery onto their site as 3rd Parties. But, as we've seen
from the National Geographic illustration, editing the work from an advertising
perspective may not be enough. It may be necessary for Getty to make some radical
changes in some of their existing strategies.
- They may need to separate their editorial features offering from the fully
released advertising offering so the additional editorial material does not dilute
the boutique-like, super collection editing experience advertisers currently
receive on the Getty site. At the same time they may also want to separate it
from their existing subscription based editorial section because that is
effectively focused to a very different user group.
- They may need to be less rigid on releases, and willing to make users
responsible for how they use images. The user must be held responsible for any use
that violates personal or property rights. Corbis has always been willing to mix
model-released and non-released images in the same search results, but Getty has
been unwilling to do this. There are certainly advantages in having good model
releases on every image when the focus is selling to advertising. But, that puts
severe limitations on the kind of imagery that can be accepted, and many images
used for editorial purposes may not need releases.
- They may need to be much looser in the editing and accept the judgment of
experts in photographing the specialty as to what is useful.
- They may need to accept smaller file sizes. The vast majority of users of
Editorial material don't need file sizes anywhere near 50MB and digitally created
files that are considerably smaller have equal or better resolution than a 50MB
scan of a grain-based image.
- They will also have to make some tough decisions as to the best way to
acquire the Editorial feature imagery they need to build their collection. Is it
better to get the images directly from photographers or through 3rd Party
suppliers? Getting the imagery through 3rd Parties will dramatically reduce their
costs, but they may not be able to bring on what they need fast enough, or have
the control they would like. Alternatively, bringing on a host of new
photographers focused on Editorial production adds a whole level of costs and
administrative problems that they have systematically been trying to reduce and
eliminate over the last few years.
While Getty has been adding 3rd Party suppliers, early indications are that they
don't intend to add a lot of depth in any of the thousands of special interests
areas that Editorial users will be requesting. Part of the reason for this is that
they are adding them to an advertising oriented site with a focus on meeting
advertising needs, not editorial. I have talked to several agencies, nationally
and internationally recognized for the coverage they have in their area of
specialty, that have been rejected as 3rd Party suppliers by Getty.
New Channel
One option open to Getty would be to develop a new channel on their web site.
Their "Creative" section is aimed at Advertising and Corporate uses and contains
images that are at least 50MB and fully model released. Their "Editorial" section
is aimed at editorial users who want a subscription service. A new "Publishing"
section (there is probably a better name) could offer images that are more
illustrative and aimed at the needs of the Publishing community. For the most part
these images would not be the kinds of things people in the Advertising community
would want to use -- unless, of course, they are creating ads for special interest
organizations.
This would allow Getty to clearly separate this editorial feature offering from
their advertising section so as not to dilute the super collection editing
experience advertisers receive from the existing "Creative" section of the Getty
site.
However, there is no indication from Getty Images that they are thinking of moving
quickly in this direction. But, the longer Getty delays, the greater the
opportunity for other portals to step in or consolidate a position in the special
interest segment of the market. This is of particular importance to sellers in
Europe because the European market is much more focused toward editorial usages.
Getty would have a tremendous marketing advantage with major publishing users if
they could offer a broad range of specialist material on their site. Then the
publisher could go to one location -- get everything they needed at one price --
and pay for it monthly on one statement. But, if there are certain things these
customers need that Getty doesn't offer then the publisher will be forced to go to
other sources and portals. Once these buyers start using other portals there is a
greater likelihood that they will also find images at these portals on subjects
Getty could have supplied.
Given the uncertainty about Getty's strategy toward broadening their share of the
editorial marketplace it's unclear to this writer whether Getty will effectively
compete in the market for specialist imagery. Because it is sometimes easier to
target and market to specialist users than the mass market, it may be easier for
small suppliers to effectively compete with Getty and Corbis if these companies
don't have the necessary imagery. Thus, there may still be an opportunity for
image suppliers who specialize in Editorial to expand their position in the
market.