Company Acquires iStockphoto
Getty Images has moved into the micropayment market for stock photography with the purchase of iStockphoto (www.istockphoto.com). for $50 million. Industry sources estimate that iStockphotos gross annual revenue for 2005 was between $5 and $8 million. At $1 per image (iStockphoto's usage fee throughout 2005) that is many more images purchased than the approximate 1.56 million than Getty sold through the Creative section of its site in 2005.
Getty spokesperson Deb Trevino told Photo District News that there are no plans to market the two brands together, or to direct traffic from one site to the other. iStockphoto will continue operating as a separate brand while gaining access to resources that will help build and expand the community's global reach. Bruce Livingstone, who pioneered the micropayment stock photography business model, will remain at the helm of iStockphoto.
iStockphoto began in 2000 as a place where designers could swap images for free. Later it moved to a credit system where they paid $1 per image used. Last month the prices for higher-resolution images were raised to $5 and $10 with extremely large file sizes going for as high as $40. Photographers receive 20% of these fees. (Check out the allowed usages and restrictions at the bottom of this story.)
It has been argued that these price points are necessary to reach certain low end users and that there is little or no crossover between these users and the higher end buyers currently buying RF and RM images. Thus, the theory is that all the revenue generated through these micropayments will be add-on revenue and will not cannibalize in any way the existing market.
(I recall that 15 years ago when PhotoDisc jumped into the photography market offering Royalty Free exactly the same argument was made about RF. It was said that RF would never hurt the market for RM images and was aimed a customer base that could never afford RM. But before long the RF suppliers started improving the quality of their offering and marketing to those RM buyers in an effort to grow their business. And sure enough, the RM buyers started using RF. Eventually the RF prices - which started at about these micropayment rates - were raised, but not before a huge number of buyers had switched to the lower cost product.)
If, in fact, most of the images on iStockphoto are supplied by designers looking to trade with other designers, this site, and ones like it, (see Jupiter's arrangement with Stockxpert.com) could become a major challenge for photographers trying to produce images to sell to designers.
If we assume that there are a finite number of picture buyers, using a relatively finite number of images in any given year, and the number of images that they are able to trade with one another increases, then it seems unlikely that they will need to purchase, at much higher prices, as many stock images produced by photographers as they did in the past.
Photographers often ask, how can the producers of these images possibly afford to sell, or trade images at these low prices? One possible answer is that the cost of producing many of these images (a cost borne by the professional stock photographer) was funded by another design project for which the image was originally created. Thus, once the first design project is completed, the designer who produced the images himself, or did a buyout shoot, has virtually free images. At that point the only additional cost for the designer is the keywording and the time it takes to upload the images. In keywording the designer also has another advantage because daily he is using keywords to find images and has intimate understanding of the kinds of words he uses to find certain types of images.
iStockphoto has also transformed the digital imagery market by encouraging passionate dialogue and education. According to the press release "The acquisition underscores the growing importance of social media."
Given that this is a trend that cannot be stopped, Getty Images now gets a piece of it. They also may be able to identify new occasional customers for their much higher priced product and determine exactly the degree of cross over between their customer base and that of iStockphoto.
"We took a look at where we wanted to go and found Getty Images singularly capable of helping us get there," said Bruce Livingstone, iStockphoto founder, CEO and president. "This new relationship will greatly extend the reach of our contributors, exposing their work to untapped global markets. By joining Getty Images, we see tremendous room for growth and a chance to bring even more photographers and image buyers together. It's a very exciting time."
"We have pioneered most of the important developments in the imagery industry in the last ten years. This time we want to help grow and champion the sort of revolutionary thinking iStockphoto represents as we lead the imagery business to the next stage of growth, serving all markets at every price point," said Jonathan Klein, Getty Images' co-founder and CEO. "Getty Images is committed to supporting iStockphoto as a community of participation and innovation."
According to the Getty Images press release, "the acquisition demonstrates that Getty Images recognizes, supports and embraces the power of the culture of participation that is sweeping the Web and is continuing to implement its stated strategy of serving image buyers at all price points on all platforms and in all markets."
Subject to the restrictions described under Prohibited Uses below, the following are "Permitted Uses" of Content:
advertising and promotional projects, including printed materials, product packaging, presentations, film and video presentations, commercials, catalogues, brochures, promotional greeting cards and promotional postcards (ie. not for resale or license);
entertainment applications, such as books and book covers, magazines, newspapers, editorials, newsletters, and video, broadcast and theatrical presentations;
on-line or electronic publications, including web pages to a maximum of 800 x 600 pixels;
prints, posters (i.e. a hardcopy) and other reproductions for personal use or promotional purposes specified in (i) above, but not for resale, license or other distribution; and
any other uses approved in writing by iStockphoto.
If there is any doubt that a proposed use is a Permitted Use, you should contact iStockphoto's Client Relations for guidance.
The customer may not do anything with the Content that is not expressly permitted in the preceding section or permitted by an Extended License. For greater certainty, the following are "Prohibited Uses" and the customer may not:
use the Content in design template applications intended for resale, whether on-line or not, including, without limitation, website templates, Flash templates, business card templates, electronic greeting card templates, and brochure design templates;
use or display the Content on websites or other venues designed to induce or involving the sale, license or other distribution of "on demand" products, including postcards, mugs, t-shirts, posters and other items (this includes custom designed websites, as well as sites such as www.cafepress.com);
use the Content in any posters (printed on paper, canvas or any other media) or other items for resale, license or other distribution for profit;
use any of the Content as part of a trade-mark, design-mark, trade-name, business name, service mark, or logo;
incorporate the Content in any product that results in a re-distribution or re-use of the Content (such as electronic greeting card web sites, web templates and the like) or is otherwise made available in a manner such that a person can extract or access or reproduce the Content as an electronic file;
use the Content in a fashion that is considered by iStockphoto (acting reasonably) as or under applicable law is considered pornographic, obscene, immoral, infringing, defamatory or libelous in nature, or that would be reasonably likely to bring any person or property reflected in the Content into disrepute;
use or display any Content that features a model or person in a manner that (i) would lead a reasonable person to think that such person uses or personally endorses any business, product, service, cause, association or other endeavour; or (ii) that depicts such person in a potentially sensitive subject matter, including, but not limited to mental and physical health issues, social issues, sexual or implied sexual activity or preferences, substance abuse, crime, physical or mental abuse or ailments, or any other subject matter that would be reasonably likely to be offensive or unflattering to any person reflected in the Content;
to the extent that source code is contained within the Content, reverse engineer, decompile, or disassemble any part of such source code;
remove any notice of copyright, trade-mark or other proprietary right from any place where it is on or embedded in the Content;
sub-license, re-sell, rent, lend, assign, gift or otherwise transfer or distribute the Content or the rights granted under this Agreement;
install and use the Content in more than one location at a time or post a copy of the Content on a network server or web server for use by other users;
use or display the Content in an electronic format that enables it to be downloaded or distributed via mobile devices or shared in any peer-to-peer or similar file sharing arrangement;
use the Content for editorial purposes without including the following credit adjacent to the Content: "©iStockphoto.com/Artist's Member Name]; or
either individually or in combination with others, reproduce the Content, or an element of the Content, in excess of 500,000 times without obtaining an Extended License, in which event you shall be required to pay an additional royalty fee equal to US $0.01 for each reproduction which is in excess of 500,000 reproductions. This additional royalty does not apply to advertisements in magazines, newspapers or websites or to broadcast by television, web-cast or theatrical production.