Enterprise Mystery

Posted on 12/15/2016 by Jim Pickerell | Printable Version | Comments (0)

Shutterstock supplies very little information about their Enterprise customers and how Enterprise sales work. Yet it is an extremely important segment of their business and critical to understanding the company’s potential for future growth.

At the end of Q3 2016 Shutterstock had 35,000 Enterprise customers up from 24,000 at the beginning of the year, or about a 46% increase in 9 months. They said that Enterprise sales represent about 30% of their revenue or roughly $151 million of what they expect to gross in 2016. Consequently, the average Enterprise customer spends about $4,300 a year, but Shutterstock has said that a few spend over $100,000 a year. Thus, the median customer probably spends a lot less than $4,000 a year.

How Much Of The 46% Is Real Growth?

I don’t think the additional 11,000 Enterprise customers are really new customers. What I think happens is that Shutterstock identifies the customers who spend the most money with them during the year. Then their sales people contact them and say something like, “What can we do to help you and make it easier for you to do business with Shutterstock?”

Team Subscriptions

Many companies have multiple designers or art directors on their creative teams. Technically, on each subscription account only “one natural person (is allowed) to license, download and use visual content.” Most companies would like for all their employees to be able to download from a single account. For this to happen they must purchase an additional “seat license” or a “team subscription” based on the number of people who will be using the same account. The fee for such accounts is negotiated separately depending on the number of people with access to the account.

When they say they have 35,000 Enterprise accounts we have no way of knowing how many “Team” users may have access to these accounts. Some of the larger businesses like Microsoft, Marvel, Google, BuzzFeed or BBDO may have 25 or more people with access to a single Enterprise account. When Shutterstock says they have 1.6 million customers I think they are counting every individual that has used some Shutterstock content in the past year.

It would be very interesting to know how many of the 1.6 million customers are represented in the 35,000 accounts. I suspect the average number of users per account is between 5 and 10, but that is pure speculation.

I assume each Enterprise account has at least one subscription. Given that 750 images a month can be downloaded by multiple users from each subscription one would think that very few organizations would need more than one subscription.

One would think that now that teams can make more efficient use of each subscription some of the larger Enterprise customers may need to purchase fewer subscriptions than was the case a few years ago.

Monthly Billings

Another advantage for the Enterprise user is that additional services are all rolled into one bill rather than paying as you go. A customer may occasionally need an Extended license so they can print more than 500,000 copies of a particular project. It is unclear whether an Enterprise customer automatically gets a certain number of extended licenses, or if the customer notifies Shutterstock each time they want to use a particular image for that purpose and an extended license fee is added to the monthly bill?

Some customers will need video clips. Each use should be charged separately. It would be very interesting to know the percentage of total video clip downloads that are made by Enterprise customers and if that percentage is rising. It would also be interesting to know the percentage of Offset sales made by high end Enterprise customers.


Another service Shutterstock appears to offer is custom research. It is not clear if this is something that is just thrown in whenever a customer asks for it, of if there is some type of charge each time a customer uses the service.

Given the growth of the collection it is easy to see how custom research could be a great time saver for certain customers. Most keyword searches deliver many more images than most customers have time to review. The ability to have a low cost, but experienced, researcher put together a light box of images based on a detailed explanation of the project where the image will be used could be a great time saver for many customers. An in-house researcher at Shutterstock might also have access to image use data that is not immediately available to the general public and this could help in quickly locating appropriate images.

Image creators would also be interested in having an understanding of how frequently such a research service is used, whether use is increasing and whether such research tends to surface older images that might not be found by those customers who are dependent on the primary search algorithm?

Subscription Customers

As the number of Enterprise customers grow is Shutterstock seeing a decline in the number of subscription customers because user that use to have two or three accounts are able to consolidate all their activity into a single account? From a creator’s point of view, it may make no difference because they are still being paid per image downloaded and the multiple people using one account are still probably downloading the same number of images each always has.

Shutterstock used to say that about 40% of their revenue came from subscription customers. Given that the average subscription costing about $2,200 a year that would mean that Shutterstock licenses about 91,000 subscriptions annually. If 35,000 of them go to Enterprise customers that means that there may be 56,000 who so far haven’t spent enough annually to qualify for Enterprise, but may actually spend more than $2,200 per year. If this theory is correct then Shutterstock will continue to try to convert many of this 56,000 to Enterprise, but it may not cause these customers to spend that much more money annually than they have been spending, and it seems likely to increase the cost of servicing them.

If we assume that there an average of 5 users of each Enterprise license we’ve accounted for 231,000 of the customers and they generate about $247 million of Shutterstock’s revenue. The other $256 million comes mostly from single image and video clip purchasers with a certain percentage coming from Editorial use and Extended licenses. The other 1,369,000 customers generate roughly $256 million or an average of $187 per-user, per-year.

A better understanding of Enterprise sales, the number of customers involved, the percentage of revenue coming from video clips, as well as the percentage of revenue coming from extended licenses and other services would make it much easier to understand the potential for Shutterstock’s future growth.

Copyright © 2016 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

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  


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