279 GETTY DISCONNECT
January 26, 2000
Getty is having trouble getting the story they tell investors to match what they
In October when Getty was trying to sell 6 million shares of stock they were
telling investors that the world wide market for stock photography was between
$4 and $5 billion annually. (At that time I was saying it was a $1.25 billion
annual market. I still stick with that number.)
In order to attract investor interest, Getty has to convince them that there is
great potential for growth in the stock photo business and not a mature market
that has little upside potential.
Investors would have been unlikely to bid up the price of the stock so
dramatically, if they realized that the various Getty brands already controlled
almost one-quarter of total sales in the market
and that this company is experiencing little real growth in sales on a quarter
to quarter basis if you discount their growth through acquisition.
At the Morgan Stanley Dean Witter Internet Conference in early January MSDW made
the following statement about Getty's potential.
"Commissioned phototgraphy is another new area for Getty. The company had not
participated in this $3.5 billion market in the past, only the $1.5 billion
non-commissioned photography market (or stock photography). With gettyone.com,
professional photographers can pay a subscription fee to have their images
posted on the site. Getty's 300--350,000 registered users can access these
photos (which are posted at no cost to Getty), or commission full professional
photo shoots (at Getty's expense, but generates high returns). The vertical
portal allows Gettty to participate in a large market where it previously had no
presence." (MSDW is Getty's lead investment banker. They certainly checked
these numbers and these statements with Getty before presenting them.)
Note that the stock photo side of the business has suddenly dropped to $1.5
billion. Now they are going to try to grow their business by converting those
photo users who have traditionally obtained their images by commissioning
assignments into stock photo customers.
On Friday, January 21st Tony Stone Images (recently re-named "Stone") had a
session in New York with 80 to 100 of their top photographers to explain the
"evolution of the brand," and to deal with other photographer concerns.
Third Way To Source Photography
Stone's extensive market research has revealed that the high end buyers who rely
on assignments to acquire their photography, view stock as "worthless" and a
"shopping bag full of rejects". According to the findings, creatives feel that
all stock has a distinctive look and that it is not an option for a high end ad
In order to get the attention of these high end creatives, Stone has determined
that it needs to re-brand itself and create a third way to source photography.
They call this "generated" photography. It will be distinguished as separate
from assignments and stock.
On the production side "generated" photographs will further raise the creative
bar. The images will be extensively art directed after careful research into
the latest market trends.
Getty has had a team going through magazines looking for images that were
produced on assignment, but could have been stock. This information will be
provided to Stone photographers who agree to work closely with the Stone art
directors to produce, at the photographer's expense, the kinds of images the
market research says will be needed.
All images will be generated in advance of any specific client need and made
available for licensing later on, just like stock.
[ Aside: One photographer who attended the New York meeting and has done a lot
of work for Coca Cola over the years, suggested to some of his friends that
sometimes very high priced market research can be fatally flawed. Remember
It was not explained how "Stone" would be marketed except to say that a major
marketing campaign will be launched in February.
If the primary promotion vehicle is "Gettyone," which the MSDW statement
implies, art directors may get the impression that "generated" images are more,
rather than less, stocky. One of the complaints about "Gettyone" is that the
inclusion of PhotoDisc, EyeWire, Hulton Getty, etc. with TSI images has made the
total offering look more low end, rather than high end, in terms of visual
impact. If the creatives Getty is trying to reach consider stock a "shopping
bag full of rejects," the Gettyone site is not going to change their minds.
Stone made it clear to the photographers that they do not intend to represent
photographers for assignment work -- something that had been speculated by a
number of photographers after the MSDW announcement.
Since that is not Getty's intention, much of the MSDW statement makes no sense.
Nothing was said about "commissioning full professional photo shoots (at Getty's
expense)." It was indicated that if an art director wanted to commission a
particular Stone photographer for a specific shoot Stone would probably provide
the photographer's phone number, but that they do not want to get in the
business of marketing for assignment work.
In addition nothing was said to the photographers about "professional
photographers paying subscription fees to have their images posted on" Gettyone.
Maybe Getty hasn't figured out how, or when they will do this. Or maybe they
have totally changed their mind in the two weeks since the MSDW Internet
Conference. One thing is definitely clear -- they are telling their
photographers one thing and the investors something else.
We also need to look at the $3.5 billion figure for the assignment market and
not let that stand unchallenged. This number is much more difficult to pin down
than stock sales because so much of the work is done by thousands of sole
proprietors who are not represented in any way by organizations that collect
data on their income.
My guess is that the actual figure may be much smaller. One thing is certain.
A huge percentage of the assignment business is for product related shots and
fashion. No stock or generated images will ever be satisfactory for the
creatives doing this type of work because they need the product in the shot.
Thus, even if Getty were wildly successful in capturing 100% of the market for
generated images, it would represent only a small fraction of $3.5 billion
They also have to compete with all those assignment photographers who are very
creative and have built solid personal relationships with the creatives making
In their presentation to photographers, Getty representatives quickly
acknowledged that the realistic size of the assignment market they can
potentially address is no where near $3.5 billion, but, according to those
present, the speakers seemed to have no idea how large that market they were
going after might be.
The speakers did point out that the existing stock photo market has reached a
point of saturation. The only way to expand is to find photo users who have,
for one reason or another, up to now, not been using stock -- i.e. those who
commission assignments. And thus, the reason for this new initiative.
Hurdles To Overcome
The Stone brand has several hurdles to overcome.
First, the URL www.stone.com is owned by a graphic design firm and Getty
is in negotiations now to try to buy the rights to that name.
It was left unclear as to what images from the current site will be
resident on the new Stone site. They indicated that approximately 40% of the
images on the TSI site are "conventional" images, 40% are a step beyond
conventional using current techniques and trends and 20% are avant garde or
cutting edge. When the assignment creatives are looking for is the 20% avant
garde and some of the best of those that exhibit current techniques and trends.
If they move all images on the current TSI site to the Stone brand they
will include those conventional images that the creatives perceive as
traditional stock. This would seem to doom the re-launch to failure.
If they edit the current TSI file they are faced with the question of how
to market the remaining "traditional stock" segment, which, the the 40% is
correct, generates $40 million in income per year. They may also be faced with
a photographer rebellion from those whose images were not selected.
It is clear that Stone has not been accepting new conventional "stock looking"
images to update its file for quite some time, even though they acknowledge that
40% of their market is for this type of imagery. One question is how long sales
in this area can be maintained without updating the imagery. Nevertheless,
Stone is telling their photographers who produce such images to take them
[ Aside: All other stock agencies are quietly cheering Stone's decision to
head in this new direction as they grab some of the best producers of those
conventional images. Remember 40% of sales.]
The biggest intangible is the motivation of the creatives. I believe most of
them want to create something that is totally their concept, rather than buying
the creative ideas of someone else. As long as they have the budget, and the
time, they will always go for a controlled assignment.
According to John Hallberg, President of Stone, the number of wholly owned
images in the Stone collection is less than 2%. However, there is some
commissioning of work where the photographer is paid a day rate, expenses and
receives a minimal royalty of 10% or less. This category of imagery may make up
8% of the file. It was unclear what percentage of sales this category of
imagery represents. Individual photographers retain copyright to these images.
Hallberg also said the average license fee in North America in 1999 was $518.
He prefaced his statement with "I know you won't believe this," and many
photographers were shaking their heads agreeing that they didn't believe it
based on the numbers their sales reports reflect.
Photographers need to begin to push for a median sales figure, not the average.
A few very high sales figures that possibly benefit only a few photographer
could greatly skewer the "average". What photographers really want to know is
what their return is likely to be if they are not lucky enough to hit some of
those big ticket sales. Maybe at the next meeting in Los Angeles in the middle
of February, Hallberg will be able to provide a "median" figure as well as an
Another figure the photographers should be asking for is the percentage of gross
income where the fee for the individual image sale was $3000 or higher. (These
would be the type of high end uses that top creatives are buying.)
One of the major complaints from TSI photographers in the past year, or so, is
that when they make their best efforts to produce exactly what the TSI art
directors say they want, the images are still rejected. This happens after the
photographers has spent thousands of dollars and much time on the production.
These complaints come, not from photographers who are out doing things on their
own, but from those who have been listening to the TSI art directors.
Now the bar has been raised. There is no guarantee that the Stone art directors
will be any better at planning shots than they have been in the past.
One dilemma is that there is a single view of what is a good image. The view of
Andy Saunders. While his track record of picking images that will sell is
certainly excellent one wonders if there aren't a few other editors -- and
buyers -- in the world with different points of view.
In a creative industry like photography isn't it possible that lots of different
approaches and points of view will sell, and shouldn't a company that controls
one-quarter of the market be trying to fill the needs of all those buyers rather
than limiting its offerings.
More Positive Attitude
According to several reports many photographers came away from this meeting
feeling more positive and energized than they had since the new contract was
released more than a year ago. "They (TSI) seemed more willing to listen to us
and to explain their plans than has been the case for some time," one said.
However, some of those who have been around for many years cautioned, "We've had
these kind of pep rallies before when Tony was running the show, but things have
usually reverted quickly to the way they were before."