Alamy Launches Limited Use, Considers U.S. Market

Posted on 7/11/2008 by Julia Dudnik Stern | Printable Version | Comments (0)

With an 18% increase in first-quarter revenues over 2007, 9-year-old sales platform Alamy is focusing on the next stage of growth. In addition to seeking out new revenue streams by expanding the traditional image-licensing customer base, in progress with the launch of a series of limited-use image licenses, CEO James West is considering international expansion.

The company's financial performance is often characterized as atypical in a traditionally priced market segment, where many fight to survive. In 2007, Alamy generated $29.3 million in revenues. Though West sees growth slowing down, given general economic conditions, the company remains on track to exceed last year's performance by a healthy margin of several million dollars.

"We are able to target customer groups that have requirements not being met by others, because we accept material that got rejected elsewhere," he explains. Its lack of editing policy beyond quality control, which imposes only technical criteria, will not change as Alamy works to expand.

Low Costs, High Volumes

Last September, Alamy announced its first step to address the growing consumer and online-publishing markets, inviting contributors to opt into its planned novel-use scheme. It is designed not to interfere with existing sales and pricing, while allowing a higher volume of images to be licensed to non-traditional markets at lower per-image costs. Alamy launched the first such program last week.

Limited-use licenses, available to customers worldwide since July 11, begin at $1 and allow small and medium-sized images to be used in blogs, social networks and select education-related materials. It ranges from interactive whiteboards to dissertations.

To protect medium-sized images from being used in print, Alamy has brought back image watermarking and is evaluating image sizes. As a result of contributor feedback, the company also provided photographers with a limited-time opportunity to opt out. West said that additional flexible features are in the works, such as opting in by pseudonym for photographers who feel their traditionally priced portfolios may lose perceived value.

The next planned novel use will address the internal needs of large corporations. The subscription-based scheme is in beta with four U.S. companies.

Contributor reaction has not been entirely favorable. While naysayers are quick to vent on the Alamy blog, several million images are available through the new schemes on an opt-in basis. Diverging views are aptly exemplified by an exchange that references Aesop's The Ant and the Grasshopper. One photographer, who feels that Alamy's new model is too similar to microstock, likens himself to the grasshopper that "won't follow the ants," while a fellow contributor points out that the grasshopper ended up starving.

Old Markets, New Tools

Not all of the company's growth initiatives involve price-cutting. One of West's priorities is to further expand Alamy's traditional creative-stills business. The U.K. editorial market has always been more robust on the editorial end. West feels that Alamy's content lends itself to editorial uses, which account for 76% of revenue. Creative licenses have declines as a percentage of the total, though the revenues they generate have increased in absolute terms.

West sees this as an opportunity to take on the commercial market more aggressively. However, he said Alamy first needs to improve image-annotation tools it provides its contributors.

Earlier in the year, West handed several Alamy managers cameras and assigned them the task of shooting a set number of images and uploading these to the company Web site by the year's end. Those who met the target would get to keep the camera; however, it looks like this is not going to happen. "This exercise taught us a lot about the nature of the challenge facing our contributors," he says. Viewing its online keywording facilities as the biggest obstacle to pursuing new business, Alamy is working on solutions to multiple issues, including how metadata is applied to image sets.

New Revenues, New Costs

The U.K. market comprises 45% of Alamy's business, and 30% comes from the U.S. West sees it as an opportunity to gain market share, perhaps by opening local offices. But this proposition is expensive, and Alamy is an extremely cost-conscious business, particularly since it takes a smaller-than-standard cut of photographer revenues: 35%.

To keep operating costs down, the company's headquarters operates with a relatively staff of 50, while over 120 people work from India.

"A good relationship with our suppliers is key to our business. Sure, we do stuff; we innovate technologically and market, but Alamy success is in the pictures," said West. He added that he tends to think of contributors as shareholders. Being open with corporate plans, giving photographers the opportunity to respond in a public forum, as well as disclosing financial information of a privately held company are ways in which Alamy works to maintain a productive working relationship.

To offset the development and marketing costs of novel use, Alamy is taking is higher commission than on traditional sales. This was disclosed to contributors at the time Alamy asked them to opt in. Now, West plans to open a similar dialogue on the subject of U.S. operations.

Copyright © 2008 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 301-461-7627, e-mail: wvz@fpcubgbf.pbz


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