We already know that professional image buyers have slashed spending. This week, stock-industry blogs and coversations were filled with phrases like “40% decline” and “half the revenues of last year.” PhotoShelter says the sky is not falling, but its own survey shows the trend of 40% of buyers are reducing image budgets. With iStockcharts data suggesting that iStockphoto revenues declined by 12% from January to February, many wonder if the microstock market is finally beginning to feel the effects of the global financial crisis.
Just as with traditional stock, the microstock buyer—otherwise known as the general consumer—is spending less. While those that either love or earn money from their endeavors, such as bloggers, may continue to purchase micro imagery, more frivolous purchases of photos for personal uses are going to decline as the general consumer continues to buckle down.
How significant this decline will be depends on what percent of total microstock transactions are pure-pleasure and how much general consumer spending dips overall. The former is a bit of a mystery, but it stands to reason that there are many more practical purchases by do-it-yourself marketers and non-profits than there are teenage girls buying cell-phone wallpapers. The implications of the broader recessionary trend, however, can be considerable.
When trying to forecast microstock’s performance in 2009, it is tempting to look to retail projections for insight into general consumer behavior. The last holiday season had the worst sales in 40 years. According to the International Council of Shopping Centers, 33,000 retail establishments and 148,000 stores closed in 2008, and the organization predicts a loss of another 73,000 retail establishments globally during the first half of 2009. In December, sales of women’s clothing, electronics and luxury products fell by 23% to 35%. Even ecommerce sales were down by 3%, the first drop since 2001 and a sharp contrast to a 19% increase in 2007.
Now that there is no holiday pressure and retirement plans, savings accounts and stock holdings have all taken significant hits, retail spending is dismal—with the exception of discount chains and super centers, which offer the best parallel to microstock. While the budget end of stock photography can decline alongside other consumer businesses, such decline is likely to be much smaller than that of traditional stock businesses. Microstock will continue to take market share as buyers move downstream. This cannibalization was already significant in 2007 and 2008, and its pace will certainly accelerate as promotional budgets shrink. It is safe to predict that whatever image needs can be filled by microstock, will be.
In addition, the healthier the business, the better it fares during tough times. Digital Railroad offers an excellent example of how a change in the financing and venture-capital climate can near-instantly kill a poorly capitalized and badly managed business. In contrast, PhotoShelter appears to have pulled out of stock licensing with its initial photo-archive offering and most of its dignity intact. And though there are those who profess feeling bad for Alan Meckler, who took a multimillion-dollar beating in the stock-image industry over the past several years, the former owner of Jupiterimages emerged with a thriving, debt-free online publishing business.
Compared to these somewhat troubled companies, few businesses are as successful, in any industry, as iStock and a handful of its closest competitors. Their sales and traffic may decline during this year, but this is far from a certainty—and losses of anywhere near the traditionals’ 40% are difficult to fathom. While Alexa shows that iStock’s site traffic is down slightly over the past month, visits to Dreamstime, Fotolia and Shutterstock have all risen over the same time period. Some smaller companies will undoubtedly struggle or shutter, but microstock as an industry will survive the economy’s cyclical conniption alive and well.