237 GETTY'S CUSTOMER FACING STRUCTURE
July 28, 1999
Getty Images, Inc. has announced an internal re-organization to focus on
e-commerce solutions for distinct customer segments of the market. It will
arrange its seven distinct brands into four customer-facing divisions that will
address the needs of the Company's four key markets:
Editorial & Press Businesses,
Business User Market,
This move is the first step in Getty Images' evolution from a group of separate
companies to a fully-integrated company with four customer focused divisions
comprised of market leading brands. One of the challenges will be to structure
the online databases of their various supplying units so all brands can be
searched simultaneously. Currently each company brand has a unique database
structure with those of PhotoDisc and TSI being closest to integration.
The re-organization is also intended to accelerate the integration of the
companies and collections that Getty Images has acquired since its inception in
March 1995. The goal of this new structure is to enable Getty Images to better
tailor solutions to meet the unique needs of each market segment.
In an effort to identify other market segments that Getty is not currently
servicing, they have hired Roger Ressmeyer on an open ended contract to analyze
the potentials and create plans to acquire and develop specialist collection in
areas not fully serviced by the company's existing divisions. All sources of
leading imagery will be considered, including licensing and acquiring material
from new photographers and agencies, and/or producing fresh photography with the
company's large complement of world class photographers. Roger will report
directly to Mark Getty and Nick Evans-Lombe.
In the new structure hub sites will be created for each of the customer
segments. The first for the creative professional market is expected to begin
later in 1999. These hub sites will form the basis for the third phase of the
strategy, the launch of market-specific, vertical hub sites that will expand the
Getty Images product and service offering beyond imagery to complementary
products and services tailored and targeted for each customer group.
"This logical segmentation of our market leading brands provides us with a more
cost-effective and responsive corporate structure that is more closely aligned
with how our customers work," said Jonathan Klein, co-founder and Chief
Executive Officer of Getty Images. "We expect this to lead to stronger
relationships with customers and greater flexibility with internal resources.
This new structure will also allow us to accelerate our efforts to use the web
broaden our market and further increase our market share while catering to the
specific needs of our customers."
Things To Consider
From the photographers point of view there are several things to consider.
Many photographers produce images that will be of interest to several
markets. Getty's current system of editing slots each photographer into a certain style
of work based on an agency "brand". The various Getty agencies are doing a
very poor job of editing submissions with
an eye to ALL the potential market segments Getty services.
In particular, TSI which used to be very strong in selling
to the book publishing market has basically stopped accepting images of the type
used by this market. This is understandable if they have decided that they want
to "brand" TSI as the agency for "Creative Advertising Professionals" and move
it away from the editorial market. But they have not explained this change in
strategy to their photographers who shoot the textbook type of imagery, nor
have they offered these photographers an alternative place to put
They have hired Mr. Ressmeyer to "identify market segments they are not
servicing." But, at the same time they give the appearance of moving away from
certain markets in which they had a strong position. They are chasing potential
suppliers to those markets to other agencies outside the Getty family.
When Getty acquired Liaison, an agency focused on editorial production for hard
news and feature uses, they transferred a number of Liaision photographers who
produced some advertising oriented work that would be of interest to the
"Creatived Professionals" to TSI editors.
Initially, a few images made it into the TSI catalogs, but now many of these
photographers are finding that the bulk of their editorially oriented work is
not even being considered for the files. Many photographers would like to find a way to go
back to Liaison editors because they feel in the long run they would earn
more by licensing rights to the bulk of their production, than by hoping for
a few high end sales to "Creative Professionals."
potential market for many photographer's work is much broader then any of
Getty's particular "brands" images that would sell are being rejected and the creativity
of photographer's is being constrained. Getty has given no evidence of
recognizing, or solving this problem.
It is clear that buyers don't always go to the right brand in their search
for images. Thus they often fail to see the best options. TSI outsells
Liaison to some editorial markets. Buyers call Liaison for sports celebrity
photos and fails to consider AllSport as an option. Buyers may go to Liaison for
editorial illustrations when TSI might have a better selection. Thus, a search
capability that gives users the opportunity to search across all brands is
certainly desirable. [It should be noted that Picture Network International
and The Workbook already have on-line sites that accomplish this goal for many
more brands than Getty is offering.]
Integration may make it more difficult to make distinctions on price.
There may be more pressure to sell high-end images at RF prices. When the
"Creative Professional" comes to a single source for both PhotoDisc and TSI
images it may be hard for the salesman to explain why some images should be
priced several times higher than others. If the client is looking for
restricted rights, that is certainly one distinction. But only a small
percentage of the clients who are paying higher fees to other agencies for RP
images do so because they want restricted uses. Often the higher fees result
from larger usages in both size and circulation.
The PhotoDisc model does not take size and circulation factors into
consideration and the salesman selling images from both sources to the same
client may find it very difficult to justify wide price variations. TSI has
already compressed their pricing structure when it comes to charging more for
larger sizes (See story 218).
Photographers should expect to see TSI pricing
move closer to that of PhotoDisc as the two companies are brought closer together.
If this happens, it does not necessarily mean that all other agencies will be
unable to get high prices for RP uses. Currently, other agencies competiting
with TSI frequently get higher prices for images of a similar look and quality
than TSI is asking. They accomplish this because they do not offer RF images,
and they present a different pricing strategy and focused sales philosophy to
By analogy, ready to wear
clothes do not eliminate the demand for custom designs, and clothes that are
more tailored to the customers needs, although the volume of sales for custom
designs may be lower. The customer who buys clothes at K-Mart expect K-Mart
prices for everything they buy there. When they want Nordstrom quality and
service they go to Nordstrom.
As far as I can see the "Business Use Market" wants exactly the same types
of images as the "Creative Professionals," except that they hope to get them for
a whole lot less money.
There is no justification as to why these uses should cost less in terms of less
production costs, more frequent use or reduced marketing costs. The only
justification is that the buyer wants to pay less.
The big risk for the photographer is that all the "Creative Professionals" will
go to the "Business Use" site to buy their images. It's smart business for the
buyer to try to get the lowest possible price, especially if you can get exactly
the same products at that location. (The K-Mart strategy again.) But will the
producers of the products be able to earn enough to continue to produce?
It may be Getty's hope to solve the pricing difficulties by only allowing low
end users in through the "Business Use" hub, and encouraging "Creative
Professionals" to use a different hub. If that is the strategy, I doubt it
will work. If the user can truly search across all databases by coming in
through any hub, I believe users will quickly discover the lowest priced hub.
With Steve Powell as interim CEO at Liaison, photographers should expect to
see at least two moves in the near future. First, there is likely to be a move
to change the royalty percentage from 50/50 to 60/40 with the 40% going to the
In addition, I expect to see Liaison begin to hire staff photographers to cover
high demand events as AllSport has done so successfully. This will give Liaison
more control over content production and a larger share of the fees collected
for usages. The work they continue to take in from freelancers, if they
continue to accept any at all, will be on marginal stories that the company
deems too speculatives to fund themselves.
Greater integration will make it easier for Getty to offer bulk deals to
high volume customers based on the customer's total buy on an annual basis.
Such deals tend to give customers like Time-Warner, CNN, MSNBC, Disney, General
Motors, MCI, etc. across the board price breaks on an item by item basis. Such
deals are suppose to increase the volume of usage for the agency, but individual
photographers don't necessarily see a corresponding increase in volume. This
will be even more true for individual photographers as a larger percentage of
Getty imagery becomes wholly owned.