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Author Topic: One more sale and the dominoes fall  (Read 14910 times)

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« on: February 04, 2010, 06:56 »
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The recent developments at iStock and the irritations at Fotolia have really highlighted for me the fact that three of the "Big Four" are propping each other up and if any one of them should be bought by Getty the other two will suffer a very severe blow indeed.

This week, Getty cut off StockXpert as a source of funds for non-exclusives. That comes just weeks after handsomely boosting the returns for exclusives.

Even before StockXpert's death, it took the sum total of earnings from all the significant micros to balance out - just maybe - iStock's payments. Now it is even less likely that they do (and you can get onto Thinkstock directly from iS if you want to, so the fact you can get there as an independent doesn't matter).

The remaining big three probably each contribute 30% of the non-Istock earnings. It would only need Istock to buy one of those for the equilibrium to shift decisively. If IS boosted its sales by a further 16% or with customers from another major site, then we would end up with a situation where exclusivity would pay twice as much as independence.

Wouldn't that suck every single major contributor into iStock's fold, leaving the remaining sites trying to groom new talent that might simply desert as soon as it got good enough to hit the 500 download level at iS?

It would just take one more acquisition for iStock to restore the monopoly it foolishly let slip five years ago by being too modest with its initial exclusivity offer.

How much would Getty be willing to pay for complete global domination of the microstock market? Was it really so far from the mark when someone said in another thread that Fotolia was preparing to sell out to Getty?

Does my analysis make sense?



« Reply #1 on: February 04, 2010, 07:04 »
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Sites closing might help istock's rivals as well.  Perhaps when StockXpert closes, a lot of the buyers will go to sites other than istock?  I think a lot of the subs buyers will have a look at shutterstock as an alternative.

Istock putting up prices for exclusives might make more people try the other sites.  January was good for me as a non-exclusive, better than Jan 2009, as long as that continues, I am not concerned.

« Reply #2 on: February 04, 2010, 07:08 »
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IS only accounts for about 25% for me so it's a no-brainer.

« Reply #3 on: February 04, 2010, 07:21 »
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IS only accounts for about 25% for me so it's a no-brainer.

Yeah, I guess I'm thinking of this from the perspective of a "diamond". IS is about 30% for me, too, but I could expect more than a three-fold increase if I went exclusive. Knock out one other site and it would probably be up at 50%, at which point it would become a no-brainer for me in the other direction.


« Reply #4 on: February 04, 2010, 07:41 »
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I haven't any sale on every agencies except SS, for a last 24h...

Something happening!

« Reply #5 on: February 04, 2010, 07:51 »
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I haven't any sale on every agencies except SS, for a last 24h...

Something happening!

It's all right, it's just you  ;D. I've had sales on every one of the "top six" today, even poor old StockXpert.

« Reply #6 on: February 04, 2010, 08:24 »
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Good post BT but in your assessment you seem to be assuming that if Getty, or whoever, buys out one the remaining 'Big 3' then earnings from that site will somehow evaporate into thin air. Surely, even if one site 'disappears', then the buyers will simply buy from somewhere else and it's not guaranteed to be Istock by any means.

What will happen to Stockxpert's buyers and their sales? They're unlikely to have vanished so presumably their sales will magically reappear somewhere else. They might use up any remaining credits at Istock but won't necessarily stay there.

It could also be that at some point in the future Istock could falter and/or one of the other sites achieve dominance. Nothing stays the same forever.

« Reply #7 on: February 04, 2010, 09:09 »
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Yes, it is sure some former StockXpert user will go to other sites not to IS. But most of them will go to IS because it is the one advertised on StockXpert and they will not be disappointed because the quality on IS is high and they will meet a lot of exclusive stuff. Just add to that they can exchange their remaining credits. Getty is going things very very cleverly. Not that I am happy with all of these... but they are good in business. 

And yes, the original post is very good. You analysis makes sense - or at least I completely agree.

« Reply #8 on: February 04, 2010, 09:30 »
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Yes, it is sure some former StockXpert user will go to other sites not to IS. But most of them will go to IS because it is the one advertised on StockXpert and they will not be disappointed because the quality on IS is high and they will meet a lot of exclusive stuff.

Hmm __ but there may also have been a reason why StockXpert's customers weren't buying from IS or elsewhere in the first place (unlikely that they were completely unaware of the other sites).

If I were a significant buyer of images, with a desire to buy the best images for my project but also at the best prices, then I would have accounts with two stock agencies. I'd look first at Istock for the best collection and then, if the image I wanted was non-exclusive, I'd pop over to the other agency to see if I could buy it there cheaper. StockXpert would have been perfect for that.

Having said that with IS having not increased (or actually reduced) non-exclusive prices this year, whilst most of the other agencies have increased, the price differential has closed so the incentive to shop around has reduced substantially.

« Reply #9 on: February 04, 2010, 09:45 »
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I haven't any sale on every agencies except SS, for a last 24h...

Something happening!

Same here. Might just be a glitch in the sale reporting code.

« Reply #10 on: February 04, 2010, 09:53 »
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Good post BT but in your assessment you seem to be assuming that if Getty, or whoever, buys out one the remaining 'Big 3' then earnings from that site will somehow evaporate into thin air. Surely, even if one site 'disappears', then the buyers will simply buy from somewhere else and it's not guaranteed to be Istock by any means.

What will happen to Stockxpert's buyers and their sales? They're unlikely to have vanished so presumably their sales will magically reappear somewhere else. They might use up any remaining credits at Istock but won't necessarily stay there.

It could also be that at some point in the future Istock could falter and/or one of the other sites achieve dominance. Nothing stays the same forever.

Good points, Gostwyck, but iStock would then have the complete records of the purchased site's customer base and would be able to work on transferring those willing to switch, while wooing the rest with special introductory offers etc. etc. The subscription crowd could also be pushed towards the new Thinkstock site, which probably has more variety than most with all the collections it is hosting.

Sure, things could go wrong with Istock (or with what individuals get from it), that's why I'm not already exclusive. But Getty's track record has been of thriving while it routinely gobbles up almost all the opposition. History, at least, says Getty/Istock will be the last agency standing.

« Reply #11 on: February 04, 2010, 10:18 »
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I haven't any sale on every agencies except SS, for a last 24h...

Something happening!

It's all right, it's just you  ;D. I've had sales on every one of the "top six" today, even poor old StockXpert.

Something is happening, and it's something good!  I'm on my way to a BDE... even StockXpert is doing outstanding today... will likely be my best StockXpert day in many months, possibly ever.


lisafx

« Reply #12 on: February 04, 2010, 10:41 »
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First off, Baldrick, LOVE the screen name :D

Although I haven't guessed who you are, it is a safe bet that you are someone who has been around awhile and paying attention to the industry developments.  Your observations are all very astute IMO. 

I would agree that a sale of any of the non-istock top three would change the landscape entirely.  The question is do we respond by jumping on the istock bandwagon or by throwing all our support to the remaining sites and hope they can gain marketshare? 

If Getty really does completely take over it will be bad for all contributors - istock exclusives and independents.  If everyone who's any good is istock exclusive then exclusive sales will be diluted, at least, and worst case scenario is that Getty no longer has any need to appease exclusives and begins cutting back on benefits. 

I hate to sound so pessimistic, but I don't see a good outcome here for contributors ITLR, whether exclusive or not. 

« Reply #13 on: February 04, 2010, 10:43 »
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Hmm __ but there may also have been a reason why StockXpert's customers weren't buying from IS or elsewhere in the first place (unlikely that they were completely unaware of the other sites).
Well... not really. When we met with StockXpert and JUI folks a couple years ago they said that majority of new customers were coming via SXC (i.e. looked for free photos first). So they came via SXC to StockXpert and stayed because StockXpert was just fine for them. If now they are taken by hand and guided to istock - I am quite sure majority will quietly follow.

« Reply #14 on: February 04, 2010, 11:18 »
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If Getty really does completely take over it will be bad for all contributors - istock exclusives and independents.  If everyone who's any good is istock exclusive then exclusive sales will be diluted, at least, and worst case scenario is that Getty no longer has any need to appease exclusives and begins cutting back on benefits. 

I hate to sound so pessimistic, but I don't see a good outcome here for contributors ITLR, whether exclusive or not. 

Yes. Five or six years ago the established RM crowd were squealing like stuck pigs over the way Getty squeezed their commissions as soon as it had finished buying up every notable trad agency in sight.

But if it does happen, supporting the remaining sites could be an expensive option.

On the other hand, while competition seems to have been the key pushing iS to make all its special offers for exclusives, there is a risk that the subscription model is now becoming a drag on earnings/commissions. So supporting Shutterstock could also be self-defeating move.

The most rational behaviour may just be to grab whatever is in your short-term interests, because the long-term is too uncertain.

« Reply #15 on: February 04, 2010, 11:58 »
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I still wonder what Corbis are going to do about Getty?  They are their main rival in the traditional market, so will they take them on in microstock?  If Corbis bought SS, FT or DT, the market would look different again.  Or they could just buy Getty and istock, that would be fun :)  Do competition laws apply here?  I know sometimes a company is stopped from taking over all its rivals and monopolising the market.

« Reply #16 on: February 04, 2010, 12:11 »
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I suggest that Corbis buy FT and kill 'em. That would simplify matters.

« Reply #17 on: February 04, 2010, 12:12 »
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I still wonder what Corbis are going to do about Getty?  They are their main rival in the traditional market, so will they take them on in microstock?  If Corbis bought SS, FT or DT, the market would look different again.  Or they could just buy Getty and istock, that would be fun :)  Do competition laws apply here?  I know sometimes a company is stopped from taking over all its rivals and monopolising the market.

Yes, it's a good point. Corbis must be so regretting that they didn't snap up one of the existing major microstock players when Getty did and they were so much cheaper. Istock, which Getty paid $50M for in 2006, might well be worth closer to $1B now. I doubt that you'd get much change out of $100M even for DT nowadays and both SS & FT far more. I'm pretty sure microstock is eye-wateringly profitable for all the major players __ let's face it, they were profitable enough when images sold for one tenth that they do today. Of course Corbis has dabbled half-heartedly with Snappytown and Veer but they have missed the boat.

« Reply #18 on: February 04, 2010, 12:39 »
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The recent developments at iStock and the irritations at Fotolia have really highlighted for me the fact that three of the "Big Four" are propping each other up and if any one of them should be bought by Getty the other two will suffer a very severe blow indeed.

This week, Getty cut off StockXpert as a source of funds for non-exclusives. That comes just weeks after handsomely boosting the returns for exclusives.

Even before StockXpert's death, it took the sum total of earnings from all the significant micros to balance out - just maybe - iStock's payments. Now it is even less likely that they do (and you can get onto Thinkstock directly from iS if you want to, so the fact you can get there as an independent doesn't matter).

The remaining big three probably each contribute 30% of the non-Istock earnings. It would only need Istock to buy one of those for the equilibrium to shift decisively. If IS boosted its sales by a further 16% or with customers from another major site, then we would end up with a situation where exclusivity would pay twice as much as independence.

Wouldn't that suck every single major contributor into iStock's fold, leaving the remaining sites trying to groom new talent that might simply desert as soon as it got good enough to hit the 500 download level at iS?

It would just take one more acquisition for iStock to restore the monopoly it foolishly let slip five years ago by being too modest with its initial exclusivity offer.

How much would Getty be willing to pay for complete global domination of the microstock market? Was it really so far from the mark when someone said in another thread that Fotolia was preparing to sell out to Getty?

Does my analysis make sense?



Yes, it makes sense. If the last of the so-called "Ten days of Christmas" announcements, back in 2006 (or 2005?) had been a comission raise for exclusives, probably the other sites would have bitten the dust.

« Reply #19 on: February 04, 2010, 12:41 »
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Has Corbis ever produced a profit or is it just a sink-hole for Bill Gates's loose change? It didn't take microstock seriously, even when it was setting up snap village (a name that was obviously designed to encourage serious, professional content providers to join up). And if it's job is just to lose money, is it really competing seriously?

« Reply #20 on: February 04, 2010, 13:28 »
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Has Corbis ever produced a profit or is it just a sink-hole for Bill Gates's loose change? It didn't take microstock seriously, even when it was setting up snap village (a name that was obviously designed to encourage serious, professional content providers to join up). And if it's job is just to lose money, is it really competing seriously?

Are there any other "traditional" agencies and big enough still around?

« Reply #21 on: February 05, 2010, 00:33 »
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First off, Baldrick, LOVE the screen name :D


I love the Black Adder series, so I went to Google to find the reference and thanks to Aunty Beeb was able to.

After two rather limp runs at getting into microstock, I can't see why Corbis would suddenly start having success. Way back when desktop publishing was a novelty, Xerox got dubbed as having the reverse Midas Touch for all the things they almost got right (including some acquisitions of very promising stuff) but managed to kill stone dead with their heavy corporate hand. After seeing a Corbis executive - the one put in charge of Crap Hamlet - interviewed on their push into the microstock business, the sneering, dismissive condescension convinced me they wouldn't make a go of it. Very reminiscent of Xerox's runs at the desktop publishing market.

I agree that having Getty get too comfortable that it can just dictate crap terms to photographers and we'll have no choice but to accept is a big worry as the number of serious competitors to them dwindles. The large, geographically dispersed body of contributors to microstock is both a strength and a weakness for us. Harder for Getty to control but also harder to get contributors together to act on a common goal too.


helix7

« Reply #22 on: February 05, 2010, 00:51 »
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Totally agree with the OP. An acquisition of any of the other top sites by Getty at this point would be pretty much game over for independents. If SS, DT, or FT were to go, I'm deleting images asap and applying for that crown. I'd have no other choice.

The odd thing to me is that there are still some notable movements in the smaller independent market that make me hold out hope that some up-and-comers will finally rise to the occasion. I do surprisingly well at Vectorstock lately, especially since hitting the 2nd earnings tier. GraphicRiver is another one. Sites like that seem small but have decent followings and pull in some good business. And they are priced well enough below istock and some others to keep them competitive.

It is true that the balance right now is maintained by the big independent sites, but those smaller sites still show promise. If some of these sites can step it up, there would be opportunity to fill a gap if a big site got acquired. Especially if they can scoop up the buyers from the acquired sites that don't want to go to istock. The reality for StockXpert buyers is that if they migrate to istock, they are probably going to be spending more money than they are used to spending. There are cheaper options out there, and some buyers will seek them out.

« Reply #23 on: February 26, 2010, 22:30 »
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I still wonder what Corbis are going to do about Getty?  They are their main rival in the traditional market, so will they take them on in microstock?  If Corbis bought SS, FT or DT, the market would look different again.  Or they could just buy Getty and istock, that would be fun :)  Do competition laws apply here?  I know sometimes a company is stopped from taking over all its rivals and monopolising the market.


Publicly traded companies face such scrutiny ... Getty was taken private two years ago for a premium of 55% to its existing publicly traded stock price at the time for a cash deal valued at $ 2.4 Billion $USD ... the name was probably kept for marketing purposes.

-Mark
http://markwpayne.wordpress.com

molka

    This user is banned.
« Reply #24 on: October 08, 2010, 06:50 »
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"Does my analysis make sense? "

No, actually it doesn't. Just because your income or someone else's income from a place like let's say SS isn't that great doesn't mean that they don't make great business.


 

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