Has Microstock Penetrated the Professional Market?

Posted on 11/7/2007 by Julia Dudnik Stern | Printable Version | Comments (1)

The potentially cannibalizing effect of microstock on traditional licensing is an issue that comes up often, and the panel discussions at last month's PhotoPlus Expo and the annual conference of the Picture Archive Council of America were no exception.

Despite several years of rapid growth in the numbers and revenues of microstock businesses, those considered most successful in the traditional space continue to maintain that microstock has not affected them. At PhotoPlus, this view was expressed by stock veteran Jack Hollingsworth, a photographer and owner of a 15-person production house represented nearly everywhere high-end stock is sold. "We are not [affected by microstock]. We are still making over $1 million a year," Hollingsworth replied to the very first question posed by his audience.

At the PACA conference's press panel, attended by Selling Stock, a similar current dominated the discussion. All audience members, some 50 people, said they generated more revenues this year than the year before. Microstock did not appear to be a threat.

Such views are also supported by comments from many high-end image buyers, including the recently profiled Richard Davia of the Boston design firm Continuum. Buyers like Davia continue to view microstock as "too stocky," as well as technically and conceptually inferior to traditional offerings.

Additional support for the theory of microstock's lack of effect on the traditional space comes from micro-payment businesses themselves. Most of these contend that an overwhelming majority of their revenue comes from new buyers. During his PACA conference presentation, Lucky Oliver founder Bryan Zmijewski pointed out that eight out of 10 people don't know what the words "stock photo" mean. According to his figures, 1 billion users will produce something online this year, and this open market is precisely the market he is after: the do-it-yourself users who need legal, specific images to complete their projects. Other micro-payment providers, including Getty Images' CEO Jonathan Klein in recent remarks on the Getty-owned iStockphoto, similarly describe their customers as people who never purchased stock imagery before.

It's important, however, to remember that such evidence can be counter-balanced. Though nobody has yet provided any reliable statistics of cannibalization, some hard evidence of it already exists.

For example, among the 400 respondents to the Piper Jaffray survey of professional image buyers, a whopping 54% use iStockphoto. Many use it often or all the time, and company spokesperson Kara Udziela says a recent survey of Canadian buyers demonstrates similar leadership trends. Though less popular, Shutterstock and Fotolia are also used by 18% and 15% of Piper Jaffray's buyers, respectively.

A more qualitative example comes from the PACA press panel, where an audience was shown a recent invitation to a Domino's Pizza new product launch event. The project used two royalty-free images. The cover photo was traditionally sourced from Getty Images at close to $400, but the supporting imagery came from Fotolia, turning what would have been a $250 to $500 sale for a traditional retailer into a $15 micro sale.

Stock prices of the two publicly traded industry leaders, Getty Images and Jupitermedia, have been on the decline for over a year, which offers another supporting perspective for the effect of microstock. It is not a coincidence than poor stock performance has coincided with what Jupitermedia CEO Alan Meckler often refers to as a "microstock revolution."

Moreover, what of smaller agencies like Folio and Ibid that have closed, citing declining business conditions? What of the subscriber letters Selling Stock receives, predicting the end of the traditional stock-image business and asking for alternate marketing suggestions? While personal issues, the economy at large and a host of other factors have contributed to fiercer competition, microstock also played a part.

Even if the Piper Jaffray survey is not representative of the industry at large in terms of actual percentages, anecdotal accounts such as the Domino's invitation are aplenty. Many are of smaller firms or smaller projects, but combined, they have helped the general public make microstock a significant industry force. It is now indisputable that micro-priced imagery has penetrated the core professional market. The only remaining issues are the degree of such penetration, what changes it will cause going forward and what opportunities remain for traditional stock businesses. Selling Stock will explore these topics in future articles.


Copyright © 2007 Julia Dudnik Stern. 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 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Comments

  • Jean-pierre Lescourret Posted Nov 8, 2007
    It reminds me the reaction of the executives of the big stock agencies 15 years ago when the first RF images were launched in
    the marketplace . "Never it would affect the traditional business because their quality would never meet the need of the clients ".
    15 years after we see the reality of this prediction .

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