Will Getty Integrate iStockphoto Into The Getty Images Site?

Searching for a buyer for Getty Images or deciding whether to launch an IPO may be the least of CEO Jonathan Klein’s worries these days. He’s got to be looking at Shutterstock and Fotolia and anticipating that they will use a good part of their new found wealth to build their premium collections. When that happens, will these brands cut further into the Getty Images franchise?

It is clear that in the last couple years both brands have been taking market share from Getty’s iStockphoto. That does not mean that iStock’s revenue has declined, but the only thing that has kept iStock revenue on the upswing has been price increases and the introduction of higher priced brands. The lowering of royalty share paid to image creators has also contributed to Getty’s profits.

Meanwhile Shutterstock, a company that was founded on the theory that customers would be needing large quantities of images at a controlled monthly cost, has discovered that a significant number of its customers are willing to pay significantly higher prices for one, or a few images because in the long run it is cheaper to buy just what they need when they need it rather than subscribe to a service when their needs vary greatly month to month. Forty-one percent of Shutterstock’s revenue came from single image sales in 2011 and that percentage seems to be growing.



This does not mean that one strategy is better than the other for all customers. Some customers need volume at a low price and others will be looking for just a few images.
In the future the winner will be the company that can find the best way to address all customers and price their products in a way that works for each.

Shutterstock and Fotolia need to expand their offerings in a way that gives a better choice to those customers who can afford to pay more. Getty has all the elements but they are not integrated. Recently, I talked to a senior executive of a company that purchases lots of stock images for use in online and small trade publication advertising. While he wasn’t quite sure which distributors the company had used, he remembered vividly that they spent $1,000 for a picture of a golf club. At that point the edict came down from on high that they had to find a cheaper source for stock photography.



If the $1,000 picture came from Getty Images, the art directors who were told to pay less for pictures probably didn’t go back to Getty and ask where they could buy pictures for less. Instead they probably just started searching for cheaper sources. They may have stumbled onto iStockphoto, or they may have settled on one of the other brands. But Getty would have missed the opportunity to hang onto a customer looking for images at price points lower than can normally be found on the Getty Images site. Since a significant number of the customers purchasing images fall into this low price category it is potentially a big problem for Getty.

Shutterstock and Fotolia (along with iStockphoto) are recognized as being brands that offer plenty of images at low prices. Yet the fact that they have a few images that cost quite a bit more – in Fotolia’s case sometimes 10 to 20 times the price of their Standard images -- doesn’t seem to be a turnoff to the customers as long as they can easily find a good selection at prices they can afford.



While many of Shutterstock and Fotolia’s customers can’t justify paying very much for the images they need, occasionally they will need something special that is only available at a higher price. Or in a search of all collections they might see an image, at a slightly higher price than they normally pay, that so perfectly fits their needs that they will be willing to pay a little more for it. The trick is to make all options available in one place and market that one site heavily. The images must be organized in a way that makes it easy for each customer to find the best image they can afford.

Decision Time

So should Getty integrate iStockphoto and Getty Images on one platform or keep them separate? Right now Getty has two separate search engines; two separate marketing programs aimed at different clientele and two widely recognized brands. One site should, at the very least, reduce costs to some extent.

One integration possibility would be to bring a large percentage of the RF images from the Creative section of Getty Images onto iStockphoto at several higher price points. They have already put more than 33,000 images from The Agency Collection on iStock. They could greatly expand this initiative by adding the more than 409,000 RF images from Flickr photographers.

However, this does not deal with the basic problem of consolidating everything to one site. In addition, if they are going to end up with just one brand name they would probably want it to be Getty Images, not iStockphoto.

Getty has already dealt with the problem of having two different pricing strategies on the same site.—one for RF and a totally different approach for RM. Traditional customers accept this, but will microstock customers accept the fact that some of the images on their site are priced based on use, even if they seldom buy any of those images?

On Gettyimages.com they already have Creative and Editorial options. They could add a “Microstock” option and include the iStockphoto images. They already have an option for “Subscription” which takes the user to Thinkstock.

The next big question would be how to organize the search returns. Do they default to  everything, or to the higher priced offerings and force the customers to click on Microstock if that’s what they want. A default that shows all images from all collections might turn off the iStockphoto customers because it would deliver too many images they can’t afford. In addition there would be a big risk that customers who have gone to Getty’s Creative site in the past will discover that they can get images that satisfy their needs just as well, if not better, at microstock prices. At that point they may no longer need the more expensive images and that could drive Getty’s overall revenue down, particularly in the short term..

In addition, if Gettyimages.com doesn’t push RM imagery they are likely to have a rebellion from their RM suppliers who hate microstock and regularly complain bitterly  about how it has destroyed their business.

Another issue to be considered is the role of Premium Access pricing. If more than 10 million images priced at microstock levels were available on Gettyimage.com they could simply tell the customers who needed images at those prices to search the microstock collection. They would no longer need to make RM and traditionally priced RF images available at Premium Access levels. While RM sellers don’t like the fact that their images are being licensed at very low Premium Access prices without those sales their revenue would be further reduced. (Getty’s revenue might actually increase because often Premium Access images are licensed for prices that are lower than iStockphoto charges and Getty often pays a higher royalty on the RM images that are licensed in this manner than they pay to the iStockphoto photographers.)

A possible advantage for the microstock photographers is that certain of their best selling images might be put into some of higher priced premium collections thus generating more revenue for everyone.

And finally will Getty allow customers to order returns of traditional images in more than one way as is the case on the microstock sites and specifically order then based on the number of times the images have been licensed?

It is unclear what, if anything, Klein will do, but maintaining the status quo is probably not a choice.