Investors Oppose Getty's $49 Web Use Price

Posted on 9/12/2007 by Jim Pickerell | Printable Version | Comments (1)

Not only are photographers and agents upset about Getty Images recent move to lower the price for Web use of virtually all of its images to $49, but many in the investment community look at it as a bad idea as well.

Media analysts Jeff Shelton of Natixis Bleichroeder has changed his company's rating from a Buy to a Sell and has set a new target price for the GYI stock at $24.50. (The stock closed yesterday at $30.35.)

Shelton said: "Of particular recent concern to us is Getty's just-introduced Internet-use-only $49 pricing model for almost all of its RM and RF single images. We believe that any existing Internet-use single-image sales will quickly be cannibalized by this move and do not see much success in upselling existing microstock buyers who are comfortable buying photos at $2 apiece. It is also unlikely to attract market share, in our opinion, as other image owners/distributors will be forced to match Getty's pricing."

"We now believe that despite best efforts, the royalty-free market will continue to deteriorate and do so at an accelerating rate, affecting all players and across all geographies," he added. "While we believe that the rights-managed market is more immune to cannibalization, we think there could be some tough times ahead in this area as well."

This move was designed to increase Getty's revenue, but maybe even Getty's CEO Jonathan Klein doesn't believe that will happen. Shelton points out that Klein's new employment contract calls for performance-based stock awards to vest if revenue is at least $806.4 million during the next 12 months. "This represents a 3% decline on a year-over-year reported basis, but after we adjust for F/X and acquisitions, we believe it represents a 10% decline."

Given the universal disagreement with this strategy, the toughest question is: What Klein hopes to achieve with this move?

At the end of 2005, Klein told analysts that approximately 10% of the RM units licensed were for Web use. It was also believed that Internet users would use a lot more RF, given its lower price; thus, the RF use was probably higher. Unfortunately, there is no data available that would enable Getty to make a real determination of RF Internet use. There have been rumors that Getty's percentage of images used on the Web has been growing. But the opposite may be true.

If Getty has seen Internet use of RM fall from say 10% of units licensed to 2% or 3%, then the And if it is losing RM sales in this category, Getty may be losing a lot more RF sales. This could be a major reason for the overall decline in RF images licensed in the last few quarters.

Copyright © 2007 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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