Will Getty Images $49 Web Use product grow revenue for the company?
Nick Evans-Lombe, executive vice president of imagery, products and services at Getty Images says, "We created a brand new product, at a compelling price point, for an entirely new market, and customers are responding. The Web-resolution product is in its early days, but demand is already very strong. Through this product, we are bringing new customers into our business who are then licensing more broadly across other collections and other usages."
It is understandable that the company doesn't want to provide specific numbers, but without more detail, it is not at all clear that increased use of this product will offset other losses. Despite the new customers the product is attracting, the total number of creative images licensed in Q3 was down 15,000 units, compared to Q2 2007. The number of units licensed in Q3 2007 was 40,000 to 50,000 less than the same quarter in 2006. The vast majority of this loss was in RF images licensed.
Are these new customers simply replacing old customers at a lower price point? Will there be enough new customers to offset the loss of the old? Q3 2007 may be an unfair comparison because the new product was only being offered for a month. But gross revenue for RM and RF was down $9,880,000 when compared to the previous quarter.
Getty spokespeople certainly emphasize the "new customer" and are unwilling to provide any explanation as to why the old customers might have left. Paul Banwell, director of photographer relations for Getty Images, said that, "It is about reaching out to people who otherwise wouldn't use, or perhaps are not even aware of, Getty Images. It is about bringing new customers to the table, and it appears to be succeeding in doing that. It is largely reaching out to a new audience."
Banwell told of a friend who had just launched a new business and was looking for images. Assuming the cheapest image she could get from Getty would be $500, she went to iStockphoto." "She could have purchased a cheaper image at Getty, but she wasn't aware of that," he noted. "Her perception of the Getty product was that it was way out of her price range."
He continued, "There may be customers out there that can only use microstock because of budget reasons, but we feel there are a lot of customers that for the quality, the reassurance of the Getty Images brand, and all of the legal, technical and release quality ... they will be very happy to pay the $49 in exchange for those benefits."
One important advantage of the $49 strategy: Getty will now have a better idea of how many of the images they license are being used in a small way on the Web. Up till now, it had no idea which RF licenses were being used online. In addition, because of the size and time restrictions for advertising use, the company may be able to know how frequently more significant Web uses are being made of any image.
At the end of 2005, Klein told analysts that 10% of RM sales were for Web use, and that he had no way to gage the additional RF use. But he suspected a greater percentage of RF was being used on the Web. The company has no way of knowing how RF images are being used; isn't not a question it asks customers. 10% of RM at the time would have been about 14,000 images per quarter.
Sometime after that statement, Getty raised its RM Web use prices. Currently, there is a significant difference between the list prices for Web use and the $49 price, but maybe at the list price points, it was making very few sales. Perhaps units for this type of use had dropped significantly from what they were at the end of 2005. That could be a partial explanation for the falloff in total images licensed.
In any event, Getty is unwilling to discuss the whole issue of lost customers, or acknowledge that the $49 price might also be aimed at trying to get those customers back. If it is trying to get customers back, there is no indication that is successful.