Some in the investment community see a dramatic slowdown in the growth of the imaging market. I disagree. Overall, I think industry revenue is flat. Microstock is growing rapidly, but the revenue generated from these sales is being offset by a loss in traditional revenue.
The reason for the misconception is that investors have looked at Getty's growth in the past and assumed it reflected the industry as a whole.Â It didn't.Â It was a reasonable mistake. Getty's numbers were the principal hard numbers available, but I don't think Getty's revenue trends were or are representative of purchasing trends in the industry.
There are a few important factors to consider relative to Getty's revenue growth and its current slowdown:
*Â It bought market share, but that period in the company's life has ended. There is nothing significant in the stock photo arena left to buy.
* Â Getty grew by raising prices, but with the competitive pressures that now exist, particularly from microstock, that's history.
* Â The technology advantage they once had no longer exists as competitors have caught up in the last few years.
* Â Service is being impacted by staff cuts, while competitors seem to be ramping up on sales and service.
There are at least four additional reasons why we are likely to see a further decline in overall industry revenue.
* Â The still photo industry is based on selling images for use in print, a medium that is enduring a worldwide decline. Thus, the market for still images for both editorial and advertising purposes will decrease.
* Migration to the Internet. Will the print market simply move to the Web? First, a still image used on the Internet generates much less revenue than print use. For the same number of images used, the revenue will be much lower. Second, the Internet is a video medium, and demand is going to switch from still images to video.
* Video demands are changing. Yes, Getty already has a video division, but needs now differ. The kind of video the stock industry produces today is designed to be short six second or less inserts into a larger ad or story.Â The increased demand is not going to be for the same type of ads we currently see on TV, but for "short form" videos that tell a specific story and are shot from scratch. It will be rare for any of these video producers to use stock clips. Many former stock customers will be able to produce what they need themselves. If they want something shot, it will be as an assignment, not stock. The end products will be so specifically targeted that buyers will have little need for generic stock, and the resulting footage will have no long term "stock" value.
*Â The dramatic oversupply of imagery keeps growing at a faster pace and at lower price points. Lower priced products will replace many of those currently being licensed at today's prices.
Getty Images is making moves to position the company to produce short-form videos, particularly on the editorial side of their business. But the commercial side of short-form video is a different business from stock photography. The production of stock photos is driven by the image supplier, who then makes the images available in catalogs (Getty's online site) for customer consideration.
The production of short-form videos will be driven by the buyer, with unique and specific needs. Buyers are likely to find it is more practical and cost-effective to contract directly with video suppliers rather than work through a middle man. Transitioning from one business model to the other will be disruptive and likely to result in short term declines in revenue until the new business kicks in.
In still-image stock photography, some small companies are consolidating or going out of business. But there are companies in the $500,000 to approximately $1 million range that are seeing improved situations. They now have less competition at their level or have carved out a distinct niche for their company.