High-Level Thoughts On Stock Industry

Posted on 12/2/2016 by Jim Pickerell | Printable Version | Comments (3)

An investment portfolio manager recently asked me to spend five minutes giving my “high-level thoughts on the (stock photo) industry outlook, competitive dynamics and emerging trends.” I couldn’t do it in anywhere near five minutes. Here are my high-level thoughts.

Over Supply

There is huge oversupply. For the most part that is driving the price down.

Flat Demand

Some argue that with the Internet there will always be huge, increasing demand for images. However, to the degree that there is increasing demand, a huge percentage of the uses are not paid uses of stock. Factors to be considered:
    1 -Traditionally, a significant percent of stock revenue generated has been for uses of images in print. Print uses are declining, dramatically, not only in number of images used, but in prices paid per use. When images are used on the Internet they replace much higher paid print uses.

    2 -Many Internet users create the images they need themselves.

    3 - A huge percentage of the images used on the Internet are simply “appropriated” from other web sites with no pay going to anyone.

    4 - There is growth in video use on the Internet, but again most of it is video created by the potential customer, not stock clips. There is not much indication that the revenue generated is actually growing.

    5 - Investors need to be very careful in how they view subscription uses. Subscription customers can download huge numbers of images for a flat fee, with no additional cost for additional images. Consequently, these customers tend to download lots of images for reference purposes and never actually use them in a finished product. Nobody knows how many of the subscription downloads are actually used. This can create a deceptive idea of real demand.

Customer Needs

Most customers have limited time to search for images. The huge growth in supply had tended to make searching harder, not easier. Most customers do not have time to review more than 500 images from any given search before they change the search parameters or go elsewhere. The fact that a search returns 10,000 or 100,000 images is irrelevant.

Collections uses to be curated to bring the best images to the top. That doesn’t necessarily happen anymore, particularly since so many images have been downloaded via subscriptions.
(A subscription tends to count the same as a higher priced single image download.) Now, curation is based on “Data Analysis,” but it is not clear that this regularly brings the best images to the top of the search return, or satisfies the needs of the customers.

Increasingly, customers are complaining about the time required to do searches.

Three Major Players

There are 3 major players - Getty Images, Shutterstock and Adobe Stock (formerly Fotolia).

There are four major categories of imagery – Creative, Microstock (addressing the same segment of the market as Creative, but at a lower price), Editorial and Footage.

In 2006 Getty’s gross creative revenue was $634 million.  In that year Corbis revenue was $251 million. Getty acquired Corbis this year.

I estimate that in 2010 Getty’s iStock division (microstock) generated about $350 million in gross sales.

In 2016 the combined Getty/Corbis Creative revenue will be about $280 million. Microstock (iStock and Thinkstock) will probably generate around $220 million.

In 2011 Shutterstock’s gross revenue was about $120 million. In 2016 their revenue is estimated to be about $505 million.

In the last 6 years Shutterstock has taken huge market share from Getty, Corbis and other small players in the industry, mostly due to dramatically lower pricing. During this period Getty has steadily lowered its prices. Finally, in 2016, Getty has its prices pretty much on a par with Shutterstock’s. Consequently, I expect growth for Shutterstock to be much more difficult in the years ahead since Getty customers can now get the images they need just as cheap (or cheaper) from Getty as by going to Shutterstock.

Adobe Stock
I estimate Adobe Stock’s revenue to be in the range of $125 to $150 million in 2016. For a $5 billion company this revenue can be treated as a loss leader. The availability of inexpensive, easy to find, and work with, stock photos and illustrations are an important feature in generating subscription revenue for their software. The software revenue represents 97% of their business. As a result, Adobe doesn’t need to make a profit from the licensing stock images.

Adobe Stock has a very competitive collection of imagery and is offering it at a very competitive price. They are more than willing to under price their competition in order to take market share.

Editorial Market
Getty is dominant in the Editorial market with about $225 million in gross revenue. Shutterstock is trying to position itself to take share in this market, but I don’t expect it to have much success. Given the general state of the print editorial business, worldwide, there is much less demand for editorial imagery than there was five or ten years ago. In addition, the prices customers are willing to pay are much lower.

There are also significantly higher costs in operating an Editorial business than a Creative one.

The big issue is that sellers cannot rely entirely on creators producing the needed imagery at their own expenses. A certain percentage of the imagery must be produced by staff or contract photographers who are guaranteed payments to cover certain events, regardless of the revenue the resulting images generate. Getty has this imagery. Shutterstock does not and doesn’t seem to be interested in making commitments to photographer, or exclusive deals with major sports franchises.

There is a growth in demand for footage, mostly for Internet use. But prices are being discounted. It is unclear that the increased use of clips will result in significant revenue growth for the industry. (For more information on the footage industry see here.)

Smaller Players
Virtually all of the other smaller distributors in the industry are struggling. Some are being gobbled up by the big three. Others simply go out of business. Acquisitions almost never result in the revenue of the acquiring company being equal to the revenue of two companies when they were operating separately.

Who Is Creating The Product?

These middle-man sellers have no cost of product creation, but no control over what is created. The producer covers all the costs of production and then places the product with the middleman. The middleman sells what he can, at whatever price he can get, and pays the creator a small percentage of what is received. If the creator doesn’t earn enough to cover costs the creator goes out of business. (See here and here and here.)

Increasingly, all the supply is coming from part-time amateurs. While some part-timers produce great images, there is a big question as to whether in the long term they will supply the entire variety of subject matter needed by customers. Part-timers tend to photograph things that are fun and easy to produce. They don’t worry about cost, or time invested. If they eventually receive a few pennies and affirmation that someone liked their work that’s all they expect. However, this can get old quickly and the part-timers tend to drop out and move on to other less demanding things of greater interest.

A certain percentage of what some customers need is high production value images that are difficult and costly to produce. These include images that use paid professional models, special props, sets and situations that are arranged rather than just shot candidly. Natural, grab shots don’t supply all the needs.

To the best of my knowledge no one has done any analysis of the percentage of total revenue that comes from high production value images produced by those trying to earn a living from stock image production. I don’t believe the major suppliers have any idea what they will lose, if they lose all the professionals working in the field.

What’s Happening To Professionals Seeking To Earn Their Living

Photographers trying to earn a living taking pictures are leaving the business in droves. The annual revenue of many experienced photographers has declined 80% to 90% since 2007. Costs of producing new images have not declined. If anything, the photographer must work longer and harder to earn much less money. Thus, an increasing number of photographers have been forced to find other ways to earn their living. (See here)
The images already in the collections may satisfy the needs of customers for a while. No one knows for how long. However, many of the more needed images are getting buried under newer, less desirable  images with the same keywords. Thus, most customers are unable to find a lot of the best images.

(Also See: Image Supply: Are There Problems?

Curated Collections Needed

To better satisfy the needs of customers better curated collections are needed. Human curation costs money, thus the majors try to avoid it. The majors want to use Big Data to bring the best images to the top of the search-return-order.  In many cases that is not working very well.

Where the majors have curated small segments of their collections, they have tended to not include much of the imagery that is in greatest demand by customers. The want to make this high demand imagery available to ALL customers. To do that they must keep the prices low. This generates increased downloads, but not increased revenue. (See here) When customers can get these images at rock bottom prices why pay more?


To grow revenue, the majors will need to find ways to raise prices on at least a curated segment of their collections.

Shutterstock has made a big deal about Enterprise sales but very little is known about how these sales work. We know that these customers receive extra services, but the fees they pay for the images they actually use may be very close to the subscription, image-on-demand and footage prices everyone else pays. Their Offset prices (the curated collection) are way to high for most users and consequently they make very few sales.

Stocksy has developed a pricing strategy that I think could do a lot to increase the revenue generated by the most in demand images of the major’s collections. But none of the majors are giving any indications that they might adopt such a strategy.

Consequently, I expect revenue overall to further decline.

Emerging Trends

There are no seriously emerging trends that show promise for revenue growth.

Other Resources

Stock Photography: Future Growth Potential

Survey Results: Global Stock Image Revenue

Stock Photo Market Size

Microstock Market Size

What Investors Want To Know About Stock Photography

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.  


  • Nitin Sacheti Posted Dec 2, 2016
    Thanks for the really interesting industry overview! How do you think about the enterprise customer segment? I.E. large media companies buying very expensive subscriptions with indemnification? It seems like this is where Shutterstock has been growing revenue and Adobe Stock hasn't announced pricing yet. Do you think they will undercut Shutterstock here? Thank you!

  • Mitch L Kezar Posted Dec 4, 2016
    Jim, good article, as usual. Spot on. It's what we see here, in a nutshell.
    Mitch Kezar/WindigoImages

  • Richard Gardette Posted Dec 6, 2016
    One former video art director gone from GI to SS (not for long, he felt like being at Amazon) told me "SS has killed GI"; I think he is right, but it seems that it involves in fact the whole stock business. A cancer doesn't differentiate it's targets.

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