May 13, 2004"You can't manage what you can't measure."
I believe it is useful for sellers of stock photography to have some idea of market size and trends as they attempt to plan for the future. Unfortunately, there are very few hard facts available. In this story I have two goals. First, I want to explore the available facts and add my interpretations of what they mean. Others may have different interpretations and may arrive at a different overall numbers for industry size. At least this analysis may provide a starting point.
My second goal is to encourage my readers to seriously consider ways of developing data that will enable all sellers to have a better understanding of what is happening in key segments of the stock photo industry, and make it possible to identify trends and spot changes in a more timely manner. There is probably no other billion dollar industry in the world where sellers have less access to useful data that would help them spot trends.
I estimate the worldwide revenue from the licensing of stock photos to end users was about $1.5 billion in 2003.
This figure includes: Still Photo and Illustration sales only where the images were produced on speculation and later the usage was either licensed or supplied as part of a subscription arrangement. It includes all royalty free
imagery. It includes wire service photo revenue and other non-assignment revenue for editorial use of still images.
The figure does not include: Motion or stock film footage. It does not include anything produced as a direct assignment for the end using client. It does not include the total revenue from pictures books, postcards, posters or other products, except that portion of such products that can be reasonably assigned to the value of the image. Probably $50 to $60 million of the total revenue of Getty Images and Corbis fall into these non-stock photo categories and thus would not be included in my $1.5 billion figure.
It is important to note that in early 2003 Getty and Corbis were saying that the industry was about a $2 billion industry. I think this is an inflated estimate. It should also be noted that even with their resources Getty and Corbis are
forced to make almost as many guesses as I have because actual sales details of all the small private companies that make up a large segment of the stock photo industry are no more available to them than they are to me.
It is important to remember that what we're trying to determine is revenue from the images licensed to end users. This will not be the sum total of the revenue reported on all stock agency balance sheets because in many cases part of this revenue would be counted twice. If company "A" represents a picture that belongs to company "B" and they license rights to use that picture for $500, the entire $500 will be reported on "A's" balance sheet. But $200 to $300 of that may be paid to company "B" and will show up on "B's" balance sheet. Furthermore, "B" may pay $150 to the photographer who took the picture and the photographer reports that as income. Thus, if we totaled what everyone received this might look like a $950 sale when it was really only for $500.
Given the way companies report revenue it is virtually impossible to accurately tell how much resulted from direct sales to customers and how much came from a sub-agent or distributor that made the primary sale and retained a percentage before submitting the remaining amount to the producing agency. In the PACA 2003 survey one question attempted to get at this number and it was determined that 17% of the revenue came from sub-agents or distributors. From observation of what is taking place in the industry, I believe the overall amount of distributor sales is much more than 17% for the industry worldwide. I also believe the percentage is rising as more and more sales are made by portals and distributors.
This is critical information that anyone attempting to plan for the future. Sellers can not help but make assumptions about the percentage of images being licensed through direct sales relative to those being licensed through portals
and distributors as they determine how to spend their resources. Detailed statistics would be useful in making such decisions.
There are two major trade associations that occasionally produce surveys. They are PACA (Picture Archive Council of America) [www.stockindustry.org] and CEPIC (Coordination of European Picture Agencies Press Stock Heritage)
[www.cepic.org]. PACA produced surveys in 2000 and 2003 and the latest CEPIC survey was in 2000 based on 1999 revenue. The results from these surveys provided me with an important starting point for arriving at my number. I did an extensive analysis of the results of the first PACA survey and the CEPIC survey in Story 410 that readers may want to review.
At the time of publication of these surveys concerns were expressed that not enough people had responded and that it was dangerous to draw too many conclusions from the available data. Nevertheless, the surveys provide the best
data available and it seems such data is worth considering when decisions must be made, rather than basing such decisions on total guess work and hope.
My assumptions are based on the findings of these surveys, plus photographer's surveys that I have done annually and regular conversations with agents, photographers and other industry leaders.
Given the problems with the U.S. and world economies in 2001 and 2002, I believe there was little or no growth in the overall stock photo market from 2000 through 2002. Some companies may have experienced growth, but I believe that was almost entirely the result of taking market share from other companies. However, in 2003 the industry did begin to see some real growth.
Getty had about 13% growth in 2003 and Corbis had 20%, but much of the Corbis growth was attributed to new lines of business that generated revenue from things other than stock photos sales. Overall, I believe there was probably about an 8% growth in the industry in 2003 over 2002. Some middle level companies experienced growth even greater than Getty and Corbis, but many others had losing years, and that is why I place overall growth at no more than 8%.
Here's the way I think the $1.5 billion in sales breaks down.
About $200 million should be assigned to the wire services (AP, Reuters, AFP, Kyodo, etc.). Getty represents AFP so part of the AFP revenue comes from Getty. Corbis signed an agreement with Reuters earlier this year that involves promoting some of Reuters production to the commercial market.
Another $200 million is for sales in Japan. About $160 million of this is for images that are uniquely Japanese. These are images that can only be produced by people with a thorough understanding of the Japanese culture and are only salable in the Japanese market. Thus, probably no more than $40 million of that market is available to sellers from the rest of the world. Getty is making a major effort to grab a significant share of that market, but Japanese sources believe 2003 Getty revenue was between $5 and $8 million annually and they think Getty will have a difficult time growing that significantly.
Thus if we subtract the two above the rest of the companies in the industry generated approximately $1.14 billion in still photo and illustration sales in 2003.
Getty and Corbis are the two top revenue generating companies --Getty with $523.2 million in 2003 and Corbis with $140 million. Remember, not all of that is for still stock images. Probably $50 to $60 million of the total revenue of
Getty Images and Corbis falls into these non-stock photo categories and has already been discounted in the $1.14 billion figure.
I believe the top ten companies in the world are: Getty, Corbis, Amana (Photonica & Iconica), Zefa, Digital Vision, Creatas (PictureQuest & Dynamic Graphics), Hachette, AGE, Masterfile, Jupiterimages, and I think they have a
combined total stock photo sales direct to customers of about $765 million. Remember that several of these companies sell images for each other, and they also license rights to images produced by many of the small image suppliers.
Thus, after we remove the revenue generated by the 10 largest companies there is about $375 million left for everyone else worldwide. At least three of my top ten are in the $10 to $20 million range of gross revenue and it is possible that if I had more accurate figures on a few other agencies I would discover that one or two of them should be elevated above those on my top ten list. Nevertheless, the amount this would change the total revenue calculations would be insignificant.
I should also note that other companies sell Getty produced images - particularly those of PhotoDisc -- and probably $25 million of Getty's revenue comes from images sold by other companies. I believe that at least $75 million of Getty's revenue comes from images produced by other companies (3rd Party Suppliers) and Getty probably pays about 40% of that revenue back to the producing company.
On my web site I have a list of 29 other companies that I believe generate revenue in excess of $5 million annually and 39 with revenue between $1 and $5 million. (See Story 564 .) At first glance it might seem that these companies
alone might generate a substantial portion of the $375 million, but much of this revenue may be double counted as one company on the list makes sales for another company on the list. On top of this there are hundreds of companies worldwide with revenues of less than $1 million, but for many of these the revenues are less than $300,000 and in many cases a lot less. Then there are the individual photographers making occasional stock photo sales directly to customers. This may all add up to more than $375 million, but I don't think so.
Royalty Free Revenue
I believe total Royalty Free sales worldwide are between $300 and $325 million, about half sold through the Getty Images website. I've identified between 60 and 70 producers, but most of them make the majority of their sales through a few major portals, not direct to customers. Some of these portals represent 600,000 to 700,000 RF images from virtually all the serious providers.
Getty's RF revenue rose 27% in 2003 compared with 2002, but I believe most of that rise was due to sales of 3rd Party images that they just started adding to the site in the middle of 2002. While their PhotoDisc brand is still the best seller in the industry, I don't think there has been a substantial increase in the number of PhotoDisc images licensed in the last two years. There have been revenue increases, but they are due to price increases not increased licensing of RF images. This would tend to indicate that the overall market for Royalty Free images is plateauing and the ratio of RF revenue to RM revenue may be stabilizing. When we look at that ratio I think we should relate the $300 million to $1.14 billion, not the $1.5 billion and thus RF represents about 26% of total revenue.
Subscription Royalty Free seems to be on the rise, but it is still a very small share of the total market. Leaders in this area of the market are Liquidlibrary.com, AbleStock.com and Photos.com (a JupiterImages company).
One of the other important issues to examine is how the market divides between editorial and corporate/advertising. According to the PACA survey about 28% of U.S. agency revenue comes from editorial uses, but according to CEPIC
about 63% of all revenue comes from editorial uses. These figures do not take into account wire service sales, or most of the Japanese use except for those U.S. and European companies that make some sales in Japan.
There is no question that more images are sold for Editorial use in Europe than in the U.S. There is probably less editorial use in the U.S. because there are fewer publications and more of the imagery used in the U.S. is produced either by staff or on assignment.
Taking all these factors into account, in a general way, I believe that about half or the $1.14 billion worldwide is for editorial use, and half is for commercial/corporate/advertising use with possibly a little more than half on the commercial side.
Thus, if my $1.14 billion is correct, total editorial would be about $570 million not counting the wire services. Again, going back to the PACA and CEPIC surveys their findings from those responding indicated that about 47% of the
editorial revenue from Europe came from book publishing while 54% of U.S. editorial revenue came from book publishing. For convenience I am rounding that to 50% (again it doesn't include the wire service revenue).
Thus, my best guess is that editorial revenue for newspapers and magazines worldwide, not counting the wire services, would be somewhere in the range of $285 million.
Getty's News/Sports/Entertainment/Archival division generated about $54 million in revenue in 2003. This does not include sales of images from their "Creative" archive to editorial customers and I have no way of estimating what that might have been.
At the Getty Analyst Day in December 2003 there was discussion about Getty's 2004 plans to increase penetration into the editorial segment of the market. It was estimated that they had a 10% market share at that time. They also
admitted, according to analysts, that they had no good idea as to the relative size of the newspaper/magazine and the publishing (books) segments of this editorial market.
One interesting observation after reviewing this analysis, and Getty's 2003 sales (Story 613 ), is that Getty and Corbis have a commanding position in the Corporate/Advertising segment of the market, but a much smaller percentage of
the Editorial market. Thus, other image suppliers with a focus on the Editorial side of the market may have a better chance of either increasing, or at least holding on to, their share of the market, than if their aim was toward the
Corporate/Advertising segment of the market.
It seems to me that everyone in the industry would benefit if most of the larger suppliers and a significant percentage of the smaller ones would agree to report certain basic figures to a centralized data collecting organization on a quarterly basis. Individual company figures would remain confidential, but summary data would be made available to any company that answered all the survey questions. Recognizing that there would not be 100% participation, a list of the names of the participating companies would also be made available so recipients of the data could make a judgment as to how representative of the total industry the summary data might be.
The minimum basic data that I believe each company should supply should be in two separate categories - Sales made directly to end users by the Company and sales by Distributors of images supplied by the Company .
The figures needed would be:
Actual RM revenue received
Number Images licensed for above revenue
Number RM images delivered online
Actual RF revenue received
Number of single Images licensed as part of above RF revenue
Number of single RF images delivered online
Number CD's (online or hard copies) sold as part of the above RF revenue
Subscription Revenue received
Motion Revenue received (either RF or RM)
Revenue from North America
Revenue from South America
Revenue from Europe
Revenue from Middle East and Africa
Revenue from Asia/Pacific
With these few simple metrics a very accurate picture of the industry could be developed. Most of the key trends could be tracked allowing all participants to know where they stand in relation to the industry as whole and enabling them to appropriately respond to new developments in a timely manner.