Calling 2008 a challenging year would be an understatement.
The industry entered the year with flat overall revenues and continuous loss of traditional market share to microstock. Facing a global economic crisis at the same time as technology and entrepreneurial thinking were redefining the stock-licensing space caused an agency shakeout well beyond the typical recessionary belt-tightening.
As leaders reaffirmed their positions, the industry reverted to entirely private ownership, with two of three previously public companies exiting the business altogether. Microstock continued to play a larger role in image licensing, with many new launches not easily fitting either macro or micro labels. Similarly pronounced was the continued diversification into media segments other than traditional creative stills.
Similar to image producers and distributors, most traditional image buyers—advertising agencies, magazines and newspapers—have struggled with worsening economic conditions and decreasing budgets; the number of corporate closures in the publishing industry far exceeds stock-agency casualties, even in relative terms. However, buyers’ woes have had a cascading effect on stock use, which tended toward lower-priced transactions. Whether the growing numbers of such transactions have made up for loss of traditional licensing revenue is unclear.
The year also saw a number of exciting launches and encouraging developments, such as the launch of a first-ever image-to-image search engine and continued growth among several established traditional stock agencies. However, the quantity and effects of such developments pale in comparison to the numbers of layoffs, business closures, bankruptcies and frequent reports of declining photographer and agency earnings.
Surge of failures. Last year witnessed a number of businesses and ideas fail for reasons that extend beyond the obvious macroeconomic challenges. Gone are spunky microstock Lucky Oliver, ideology-defining Digital Railroad, and the stock-licensing businesses of creative-industry mainstay Adobe and newcomer PhotoShelter. SuperStock parent a21 initiated bankruptcy and asset-liquidation proceedings. Jupitermedia decided to cut its losses by selling its image business at a fire-sale price. A number of well-known overseas companies, including Bilderberg and Red Cover, publicly struggled with debt.
Consolidation and privatization. Much like the current buyers’ market of the real-estate space, strong businesses are solidifying their positions by purchasing liquidated assets or merging. Masterfile is looking to buy Superstock. If the deal proceeds as conceived, Getty Images—which has maintained its industry-leading position throughout the year—will soon absorb Jupiterimages, enhancing both traditional and microstock product lines. Corbis acquired Veer. This consolidation and alliance-building continues throughout the industry, with smaller-scope deals—such as that between Fotosearch and Can Stock Photo—and external partnerships, most notably between Getty and photo-sharing community Flickr.
At the same time, this is turning into a very private party. Not a single publicly traded company remains after the Hellman & Freedman acquisition of Getty Images, Jupitermedia’s exit from the stock business and a21’s bankruptcy.
Microstock entrenchment. Microstock is no longer the newest thing; it is a permanent—and to a large extent defining—part of the stock-licensing industry. It is also the industry segment of fastest still-image revenue growth.
Continuing a multi-year trend, traditional and microstock revenues remained inversely related in 2008. Though transactional volumes and demand for visual content are at an all-time high, per-image prices have declined. There is also growing debate of whether or not microstock has increased, reduced or only redistributed total still-stock revenues, with arguments falling along party lines.
Despite some rather strong differences of opinion between traditional stock shooters and microstock contributors, the convergence of traditional and microstock royalty-free imagery continues. Microstock images are now available via traditional outlets, such as photos.com, and longtime stock photographers are experimenting with microstock. Newer royalty-free production companies—including Cultura and moodboard—now integrate microstock into broader offerings that also included midstock and traditionally priced collections.
Microstock has also influenced stock-agency culture, which is becoming more transparent, personal and community-based. Stock agencies are increasingly publishing blogs, encouraging and responding to contributor feedback and disclosing valuable sales and trend data.
Diversification. Though traditional response to microstock-related losses has varied, many mid-market agencies endeavored to strengthen distribution networks and rights-managed offerings, with an unusually high number of recent rights-managed collection launches. Some on the highest end of the traditional pricing spectrum further raised prices.
Solo shooters and small production companies are increasingly emphasizing assignment and other types of photography and related services. Similar diversification is also taking place on a much-larger scale: instead of being the leading picture house, Getty Images aims for a spot in the top tier of broader-based media companies. Getty’s offerings currently include media-management tools, a comprehensive array of creative and editorial stills, footage and music, and new consumer-targeted publishing products, such as JAM’D.
In contrast, Corbis is bucking the diversification trend: it sold off its asset-management business and spun off the rights-management division into a separate entity to focus on the core visual products.
New buyer challenge. A lot of time has been devoted to the emergence of vast numbers of non-traditional buyers: non-profit and small businesses, do-it-yourself marketers, presentation mavens, academics, bloggers and social-network users who previously did not purchase images. Thus far, this market’s defining characteristic is its emphasis on lowest price—beyond that, it is a highly segmented pool of potential customers with divergent needs. Early research is only beginning to quantify image use by, for example, bloggers; available information is scarce.
As a group, traditional image producers and distributors have yet to monetize this new market, currently dominated by microstock agencies. Still, a few individual companies have made significant progress. Alamy is testing new license types designed to allow educational uses by students, teachers and academics or internal uses by large companies. Technology companies GumGum and PicApp are testing ad-supported and use-based image licenses for online publications. Getty Images is taking its celebrity and entertainment offering to Web audiences via JAM’D and associated mobile products.
Old buyer woes. The combination of technological advances, new business models and economic challenges have had profound effects on most image-buyer segments. In publishing and advertising, money continues to migrate online. Recession has sent advertising budgets into a nosedive, and struggling newspapers and magazines are lining up to declare bankruptcy. The luckiest of these—a group that may shortly be joined by JPG Magazine—find last-minute buyers or adopt entirely new business models, such as the Seattle Post-Intelligencer, which is considering publishing only online as an alternative to closing.
Flat or declining total revenues. As less and less financial information becomes available, it becomes more difficult to benchmark actual industry revenues or reconcile divergent facts and opinions. While Corbis sees the stock industry losing $100 million in sales between 2007 and 2011, companies including Alamy and iStockphoto continue growth. A wealth of anecdotal information, however, suggests that growth has become exceptional; the pace has slowed down even for the industry-leading Alamy, and most traditional producers and suppliers place their performance during 2008 somewhere between “scraping by” and “significant decline in revenues.”
Technology, legal and business developments, while numerous, have been less remarkable. Many exciting new products remain in beta and unproven in terms of functionality, usefulness and revenue-generating ability.
Standards organizations continued advocating for industry-wide adoption of the same terminology and procedures. This predictably lengthy process has, no doubt, been affected by the stock industry’s tightening budgets; it takes a financial investment to revamp an e-commerce Web site to conform to new standards each time they enter the marketplace.
Among the most notable technological advances are image-search improvements that integrate visual parameters into a process that has been dominated by words. Masterfile, for example, recently revamped its e-commerce search engine. Similar technology is behind new image-to-image search engine TinEye by Canada’s Idée. TinEye and new offerings such as ImageSpan’s image tracker have made monitoring image uses accessible for small agencies and producers.
Last year saw the landmark legal case of Greenberg v. National Geographic Society come to a controversial conclusion. Overall, copyright issues remained top of mind for image producers, particularly on the Internet, where existing legal statutes do not align the general public’s wants and needs. Numerous initiatives worldwide aim to reconcile such wants and needs with the protection afforded to content owners. Orphan works was the critical issue for U.S. and European businesses, with the first proposed U.S. bills stalled in Congress.
Looking forward. Selling Stock will further explore how the key trends and events of 2008 alter the business climate. Subscriber feedback is welcome and encouraged. Use the comments feature or contact the editors by email to highlight particularly important trends and the type of coverage you feel will be most useful in the coming year.