In his recent year-end conference call to investors, Getty Images CEO, Jonathan Klein said, "I can categorically state that the success of [the $49 web use product] has exceeded our expectations. We are finding thousands of new customers for Getty Images."
Klein says the degree of cannibalization was less than thought and in fact, in the RM and RR area, it has been "negligible. We are re-capturing sales at the lower file sizes for RF and photographers are very comfortable with the product. "One of the best measures of its success is that we have already recovered the volumes at the lowest resolutions in RF that prior to the launch of this product were down as much as 50% [in some markets]. Run rates for low resolution and super low resolution file sizes in RF are back where they were at the beginning of 2007," he adds.
But total revenue for single image RF is down about $2 million in Q4 compared to Q3 and $6 million compared to Q2. Thus, if volumes are increasing for the lower priced uses the falling revenue would indicate that there is a significant fall off in volumes of higher priced uses. There is explosive growth in online usage in the stock photo industry, which is why the $49 offer (39 pounds or 49 euros) is enabling Getty to find new customers.
"Half of the people who are buying the $49 product are brand new customers," he said. "In the rights-managed and rights-ready part of it, the number of $49 licenses is going up. Yet at the same time, the Web usage, the old Web usage for rights-managed, which is at $500 or so per image, is also going up in volume. So the plan for that was to capture those volumes across the board and to find a new customer acquisition tool by using (the $49) product."
Klein continued, "In addition we are adding thousands of RM and RR licenses for this product, but with close to no cannibalization in the existing web usages in the RM and RR licensing model. We are seeing significant revenues from these new customers across all of our other products and services." It should be noted, however, that while overall volumes of RM and RR were up 10% in Q4 compared to Q3, average prices were down 10% and the gross increase in revenue generated from this segment of the business was only up about $100,000.