Shutterstock Considering IPO

Posted on 5/2/2012 by Jim Pickerell | Printable Version | Comments (0)

Four non-disclosed sources have told Reuters that Shutterstock is looking for underwriters for an initial public offering (IPO). A Shutterstock spokesperson refused to comment on the report or to supply financial details about the company.

According to image creators Shutterstock probably licenses usage rights to more images than any other microstock distributor and certainly more than Getty Images and Corbis combined. Recently Shutterstock provided information indicating that they licensed rights to close to 50 million downloads in 2011. Part of the reason for this huge number is that they are primarily a subscription based service. Once customers have purchased a month or a year subscription they tend to download many more images than they actually use because they are not paying on a per-image-downloaded basis.
The Reuters story reports that Shutterstock generated close to $100 million in 2011. In my March analysis of the overall stock photo market I estimated Shutterstock’s share of the market at about $80 million. Shutterstock also owns Bigstock Photos which licenses single image uses at traditional microstock prices.

While their principle business is subscription they also offer single image licenses for $19 and a package price for 5 images of $49. This is certainly a growing segment of their business, but still believed to represent a minor part of overall revenue.

Contributors are paid between $0.25 and $0.38 per download for images licensed through subscriptions and $1.88 to $2.85 for single “Image on Demand” licenses. In the rare instances when a customer needs to print more than 250,000 copies of an image, in aggregate, or use the image as part of a product the customer must purchase an “Enhanced License.” When that happens, the creator will receive a $28.00 fee. All told I estimate that Shutterstock pays out between 15% and 20% of gross revenue each year to creators. A “gross profit margin” of 80% or more is a very attractive incentive for investors.

In early April, Shutterstock appointed four new directors to its board, all of whom came from public companies: Revlon Chief Financial Officer Steven Berns, former Oracle CFO Jeff Epstein, Bankrate CEO Thomas Evans and News Corp's digital media chief Jonathan Miller.
The company also brought on former LivePerson executive Tim Bixby as its chief financial officer last year.

Why Not A Getty or Corbis Acquisition?

Some have suggested that Shutterstock might sell to Getty or Corbis. While Shutterstock is certainly taking business away from these two companies, my guess is that Hellman & Friedman is not interested in paying as much for the company as Shutterstock can get by going public and selling stock to investors who don’t understand the stock photo business. The timing is also good for an IPO. Investors have cash they have been sitting on for a couple years waiting for the market to turn around and now many have confidence this turnaround is about to happen.

There would also be tremendous problems in trying to integrate the iStockphoto philosophy with that of Shutterstock. And, on top of that, I think Hellman & Friedman is more interested in finding a way to get out of the stock photo business rather than expanding its position.

As for Corbis, they too would probably not be willing to pay anywhere near what Shutterstock can get in an IPO. And, if Corbis were to acquire the company they would want to run it, rather than giving the people who have built this company and understand the microstock business a free hand. I doubt that Shutterstock management would fall for this because I think they want to continue to build their company, not just take what they can get for it now and jump into something new.

Copyright © 2012 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, 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:  


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