After reading Industry Slowdown Greatly Exaggerated a photographer wrote, "I respectfully think you are wrong-Wrong-WRONG. Maybe units will remain flat or gain but $$$$?"
Let's revisit the point. As mentioned in the story, "there are at least four additional reasons why we are likely to see a further decline in overall industry revenue." I'll briefly expand my argument. Overall industry revenue will go down; however, given the $70 million to $100 million that micropayment is adding to total industry revenue by bringing new buyers into the market, there hasn't been much falloff in dollars yet.
Getty and Corbis are big and facing problems. They will get smaller. If they lose 5% or 10% of their business, they are hurting, but micropayment, particularly for Getty, could make up that much in total industry revenue. At most, Corbis and Getty represent 55% of industry revenue. Many of the smaller companies that make up the other 45% are seeing some growth. These companies have found ways to service niches that Corbis and Getty don't service well.
Downward Faster for Photographers
Due to huge oversupply, photographers are being hurt much worse than Getty, Corbis and the other stock agencies. And it will continue to get worse for photographers because their average return per image will go down, down, down. But, keep that downward trend in photographer income in proper perspective. At the present time, it is not because customers are spending significantly less money. The pie is just being divided among a lot more suppliers.
The reason for the drop in photographer revenue becomes clear when we compare Getty's growth in revenue with the increase in number of images on the Creative section of its site. In the three years between November 2003 and November 2006, Getty's annual revenue increased 47%. During the same time period, the number of images on its site increased 330%. Thus, on average, a photographer needs to have seven times the number of images on the Getty site at the end of 2006 as he had in November 2003, just to stay even. The odds of any single image selling have declined significantly.
The same readers suggested that "microstock is a joke IN $$$$. And a major portion of the sales they are generating are cannibalized from higher priced lines."
Some of the total problem can be attributed to micropayment cannibalization, but up to now, that is insignificant, compared to what it is likely to become. Since Q3 2006, Getty may have lost roughly 36,000 RF sales. In the same time period, iStockphoto licensed rights to almost 11 million downloads. If we assume that an iStock image was licensed to replace every image where Getty lost a sale, the total would still be significantly less than 1% of all the iStock images licensed.
On the other hand, given the huge disparity in price between microstock and traditional RM and RF, if 2% or 3% of the sales made by micropayment companies end up being to traditional buyers, it foreshadows huge problems for the traditional market.