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Author Topic: SSTK: Not A Pretty Picture  (Read 7096 times)

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« on: April 14, 2016, 09:22 »
+1
Article discuss Shutterstock as investment. In short in long run it has not chance against Adobe.

For me interesting part was proposed strategies to fight back Adobe, especially one suggesting increasing percentage for contributors:
Quote
As I see it SSTK has two options, sacrifice profits or market share:

Option 1)

Increase payout to contributors. ~45% of revenue at an 8% lower margin (~4 to 5 points of margin but an 8ish% change relative to its current rate) = a ~4% hit to gross profit - Adobe pays roughly 33%, SSTK 28.5%. This still does not address Adobe's captive audience in Adobe creative suite.

Lower retail download price. ~50% lower price point * ~45% of revenues = 23% hit to revenue. This would not happen immediately, but likely over time as SSTK slowly steps down pricing.

Option 2)

Maintain pricing, sacrifice share and probably target a niche in which Adobe/Fotolia does not compete. Adobe's image library targets the middle & lower market (or at least Fotolia did historically). SSTK is reputed to have had a higher quality library and is solidly middle market in quality relative to Fotolia. Adobe hired away SSTK's head of content in fall of 2015 - likely to address that very issue. Targeting the higher priced enterprise market (currently ~28% of SSTK's business) might be a viable strategy over the longer term, but given 72% of SSTK's business is currently retail, it would likely be a painful and long transition to that model.


http://seekingalpha.com/article/3964909-shutterstock-pretty-picture


« Reply #1 on: April 14, 2016, 09:57 »
+6
Article discuss Shutterstock as investment. In short in long run it has not chance against Adobe.

For me interesting part was proposed strategies to fight back Adobe, especially one suggesting increasing percentage for contributors:
Quote
As I see it SSTK has two options, sacrifice profits or market share:

Option 1)

Increase payout to contributors. ~45% of revenue at an 8% lower margin (~4 to 5 points of margin but an 8ish% change relative to its current rate) = a ~4% hit to gross profit - Adobe pays roughly 33%, SSTK 28.5%. This still does not address Adobe's captive audience in Adobe creative suite.

Lower retail download price. ~50% lower price point * ~45% of revenues = 23% hit to revenue. This would not happen immediately, but likely over time as SSTK slowly steps down pricing.

Option 2)

Maintain pricing, sacrifice share and probably target a niche in which Adobe/Fotolia does not compete. Adobe's image library targets the middle & lower market (or at least Fotolia did historically). SSTK is reputed to have had a higher quality library and is solidly middle market in quality relative to Fotolia. Adobe hired away SSTK's head of content in fall of 2015 - likely to address that very issue. Targeting the higher priced enterprise market (currently ~28% of SSTK's business) might be a viable strategy over the longer term, but given 72% of SSTK's business is currently retail, it would likely be a painful and long transition to that model.


http://seekingalpha.com/article/3964909-shutterstock-pretty-picture


In short the bubble burst on SS as an investment. Overvalued. You can guess who's pocket they will pick to make more money, and it won't be by raising commissions.

« Reply #2 on: April 14, 2016, 10:03 »
0
Apart from the awful way its written interesting....I think SSs strategy is indeed to move "upmarket" and target Getty etc. I suspect the market is not quite as price sensitive as the Author believes but what it is sensitive is the ability to find the desired image conveniently Adobe has the advantage of being "embedded" SS need to have a superior search engine. I believe it is entirely possible for SS to go down quickly their current strategy of being more competent than everyone else may no longer be enough.

« Reply #3 on: April 14, 2016, 10:09 »
0
there is a third option which is use both points of the two option and
like all great innovators and investors, go on a limb think out of the box
where no one else dares to go...

- increase payout to contributors
- maintain that higher quality images which will warrant an increased payout and increase
cost to clients.

the days of cheap good are as solid as the dollar for all good business or fast food.
even they are moving away from the we are cheapest to we have the quality   no, not cheap but  affordable

the move in the opposite direction to dreamstime ,etc where we are giving away the goods free

in any thriving and longest lasting business, they never go the easy cop-out way to give away the goods for free, they always go where no one else dares to.
ask any old-timer classics store that is still being run by a family,
still having a business that their great grand-father started,
and they will tell you, selling it as the cheapest is the fastest way to bankruptcy
as you sell yourself and worst of all sell the producers to drive them away.

dare sstk do this??? surely, as soon as they fire the CEOs who gave them the idea
to be the next istock following istock way to doomsdom

« Reply #4 on: April 14, 2016, 10:15 »
0
and will it work, what i mentioned above???

it is already indiciation that the controlling shareholders idea of quick rich scheme to fill their pockets
are causing the run of value in the shares.
it is already indication with the absence of large single earnings of 28 to 120 dollars for months
along with the drop of sales ( worst months thread)
that their get rich scheme at the exploitation of the contributors
are not working
along with the great idea of allowing garbage to flow in with million of marijuana images
and dropping the 7/10 qualifying application

the boat has a leak, and the great wise get me rich first CEOs are looking like sh*t
now,
so yes, it can work to go the other way now, because there is nothing else left to do

except placate to the contributors who made sstk what they were once..
the only stock agency up there in the ranks.

i have confidence that sstk can still turn the market around
by winning us back , lifting the bar, and lifting the prices and our commissions

OM

« Reply #5 on: April 14, 2016, 10:16 »
+3
I doubt that 'Option 2' is a real option for SS and I'm dubious about whether SS is still regarded as 'middle market+' compared to FT/Adobe. SS has relaxed its standards to entry by contributors and is now adding around 800K images per week. Much of that new content, whilst sharp with correct white balance, ;) is not HCV and will probably never sell. That huge volume buries the better producers' new work and makes a search for the good stuff a most frustrating experience for potential buyers, causing them to look elsewhere. This also frustrates the better contributors whose feeling is that it's pointless to create good new work because it's never seen, never sells and why should I keep adding to the collection. But this is all JMHO.

I wonder where most of the 28% of the higher-priced enterprise market share is coming from. Is that SS + Offset or is it mostly SS alone? In that marketplace they also have competition from Stocksy (with lower prices compared to Offset).

« Reply #6 on: April 14, 2016, 10:24 »
+1
The "Nuclear" option would be to go for exclusive authors  I know they've said they never would but it would create  a difficult situation for many contributors

« Reply #7 on: April 14, 2016, 10:33 »
0
I doubt that 'Option 2' is a real option for SS and I'm dubious about whether SS is still regarded as 'middle market+' compared to FT/Adobe. SS has relaxed its standards to entry by contributors and is now adding around 800K images per week. Much of that new content, whilst sharp with correct white balance, ;) is not HCV and will probably never sell. That huge volume buries the better producers' new work and makes a search for the good stuff a most frustrating experience for potential buyers, causing them to look elsewhere. This also frustrates the better contributors whose feeling is that it's pointless to create good new work because it's never seen, never sells and why should I keep adding to the collection. But this is all JMHO.

I wonder where most of the 28% of the higher-priced enterprise market share is coming from. Is that SS + Offset or is it mostly SS alone? In that marketplace they also have competition from Stocksy (with lower prices compared to Offset).

my second comment above already answers your first para.
the second para response, is that there are lots of higher priced image makers with ss
, not offset,  ... they are the one with the images getting daily downloads from day one.
they have the quality and can move the bar even higher
if ss took a stand to bring them back to submitting new works.

many have just stopped contributing since the marijuana flood and atilla scandal started
right after the company went public.
they all saw ss going the istock way with lobo and kelly reminiscent.

that is why ss is now in this position fearing adobe /fotolia
and also moving into the editorial market by conglomeration with editorial giants.

it is getty the target, and the market of stock prices, stock photos that is,
can afford an increase to be somewhere between micro and mid
to supply a new base of pricing...

something not as expensive as getty and mid or trad,
but something much higher than micro
to afford an increase in commission for contributors who will come back  with new supply
of the "middle market" in sstk.

iow, give back the confidence and trust to the ones who came in with 7/10
and are still producing the sales with their oldest images.

« Reply #8 on: April 14, 2016, 11:03 »
+6
Very interesting.  Their share price at around $38 right now has a P/E ratio of over 70, which seems very high to me as well.  If the author of that piece is correct, there is a lot of money to be made in selling SSTK stock short.  Might be worth a gamble...

I still think SS had a huge missed opportunity when they went public and didn't offer stock options to contributors - would have made us all stock owners with an increased interest in their future success.

« Reply #9 on: April 14, 2016, 11:46 »
+2
Very interesting.  Their share price at around $38 right now has a P/E ratio of over 70, which seems very high to me as well.  If the author of that piece is correct, there is a lot of money to be made in selling SSTK stock short.  Might be worth a gamble...

I still think SS had a huge missed opportunity when they went public and didn't offer stock options to contributors - would have made us all stock owners with an increased interest in their future success
.

spoken like a man who knows and has a STOCK ( investment) portfolio .
yes, definitely, the offer of the stock option should have been the smartest thing anyone would have offered when the company goes public. it 's like giving the soldiers an interest to battle
for the country.
also, vested interest could also be a tax incentive for ss.

but they got greedier CEOs with their own agenda, ie. kill the goose after grabbing the egg.
« Last Edit: April 14, 2016, 12:07 by etudiante_rapide »

« Reply #10 on: April 14, 2016, 13:32 »
+5
SS is no doubt telling shareholders they'll compete with Adobe by having a 'better search engine'.   They'll describe themselves as a technology company with superior R&D.  But I don't think it will work, given the enormous amount of LCV and generally poorly-composed material they've already taken in - and it's still flowing in the door.   There's a lot of hype about "AI" these days but the reality is, it doesn't exist, no piece of software can recognize a good photo.   And SS can't afford to have human reviewers go back over 10s of millions of images and rank them in some meaningful way.   

My perspective comes from 30 years in the software business.  One of the oldest acronyms in that business is still applicable in the era of "Big Data":  GIGO.   Garbage In, Garbage Out. 


« Reply #11 on: April 14, 2016, 14:05 »
+1
SS is no doubt telling shareholders they'll compete with Adobe by having a 'better search engine'.   They'll describe themselves as a technology company with superior R&D.  But I don't think it will work, given the enormous amount of LCV and generally poorly-composed material they've already taken in - and it's still flowing in the door.   There's a lot of hype about "AI" these days but the reality is, it doesn't exist, no piece of software can recognize a good photo.   And SS can't afford to have human reviewers go back over 10s of millions of images and rank them in some meaningful way.   

My perspective comes from 30 years in the software business.  One of the oldest acronyms in that business is still applicable in the era of "Big Data":  GIGO.   Garbage In, Garbage Out.

well spoken, absolute 10.
the red line ... fact, definitely too...
esp with the lowering of 7/10 application criterion

« Reply #12 on: April 14, 2016, 15:01 »
0
The "Nuclear" option would be to go for exclusive authors  I know they've said they never would but it would create  a difficult situation for many contributors

Thos would be a huge gamble- SS is undoibtedly still #1 when it comes to volume. But to have artists go exclusive, you would have to make it lucrative enough that srtists would go for it - in other words SS would effectivly have to make up for the sum total artists receive from all their sites, including other agencies and even personal sites.  And it would have to be beleived by the artists that afterwards, another downward spiral in coms would not begin. Thats a big ask.
You would definitly polarize contributers. That is a huge gamble, I dont think they would risk - its all or nothing. Sometimes it might be better to even accept being #2 - keep a steady business going and swallow your pride.

« Reply #13 on: April 14, 2016, 16:00 »
0
The "Nuclear" option would be to go for exclusive authors  I know they've said they never would but it would create  a difficult situation for many contributors

Thos would be a huge gamble- SS is undoibtedly still #1 when it comes to volume. But to have artists go exclusive, you would have to make it lucrative enough that srtists would go for it - in other words SS would effectivly have to make up for the sum total artists receive from all their sites, including other agencies and even personal sites.  And it would have to be beleived by the artists that afterwards, another downward spiral in coms would not begin. Thats a big ask.
You would definitly polarize contributers. That is a huge gamble, I dont think they would risk - its all or nothing. Sometimes it might be better to even accept being #2 - keep a steady business going and swallow your pride.
I think you are right....also by the time market share starts to go down enough to think about it it is probably too late.

OM

« Reply #14 on: April 14, 2016, 16:19 »
+1
Stock options are very nice especially when there's lots of 'em and they're free but they don't give you as contributor the power to change anything about the way the company is run (because YOU don't get many) nor do they enable you to get executive decisions changed in the event that you feel the decisions are not in your contributor interest. All you can do is cash 'em when the price is high or curse yourself for hanging on to them when the price drops below acquisition price.  ;D

OM

« Reply #15 on: April 14, 2016, 17:30 »
0
Here's a suggestion for SS to improve things both for the better contributor and for its customers.

Set up a part of the Shutterstock site that's called 'Premium New/ Member Select' or something.
All Shutterstock contributors are invited to contribute a
 of 10 images (passed by Shutterstock review in their normal review procedure) which the contributor considers their best images or their best new images. Images may be replaced at any time for other images but a contributor can never have more than 10 images in the selection ever. To encourage contributors to put some thought into the selection, each image costs them a payment of $10/year..max $100/year!
Really, it's a sort of pimp your pics site within Shutterstock.
Shutterstock runs that part of the site like it's a part of the whole and good-selling pics there are also counted in their algorithms for the normal site whereby best-selling HCV images rise to the first page of the normal popular search.
For buyers, they have to sort through a fraction of the 'new' images admitted to the full SS site and for this time-saving privilege, they 'pay' with 2 subs instead of one (if the image is downloaded from that part of the site). The contributor receives 2 subs payments (at their level) for any downloaded subs from that site. ODDs, SODs and ELs remain the same.

If/when an image is successful on the 'Select' site and rises to the first page of the search on the full SS site, it may be time to replace that image on the 'select' site with another but you're free to do that at any time. If, after say a month, an image is not sold on 'select', you can choose to replace it with another...entirely free choice and up to you!

If the general contributor choice for 'select' is poor, then the site will fail because the customer will see no point in using it but if the better contributors place their better work in the selection, there's a good chance that it will enhance SS's reputation and be the go to site especially for customers looking for new and maybe innovative images that would otherwise get buried at the full site.

OK guys and gals, now tear it apart!

Shelma1

« Reply #16 on: April 14, 2016, 17:57 »
+4
They already have Premier and Premier Select and offer personalized search help to large enterprises. And it's "free" for contributors.

http://www.shutterstock.com/blog/what-premier-select-means-for-shutterstock-contributors

However, it would be nice if they allowed contributors to nominate their best work for Offset.


« Reply #17 on: April 14, 2016, 19:03 »
+4
However, it would be nice if they allowed contributors to nominate their best work for Offset.

+100

« Reply #18 on: April 14, 2016, 20:20 »
+3
As the article said, "the stock imagery business is very clearly becoming commoditized".  And the outcome will be "reductions in pricing and lower margins", which can only mean royalty cuts.  How can it be otherwise? 

Long term I think they'll end up selling the business, meaning basically their content archive, maybe even to Adobe.  And Adobe will then complete the demolition.  In the end, nothing but dust....   




« Reply #19 on: April 14, 2016, 20:50 »
+8
I would NEVER pay a fee to sell my images - esp the agency is already getting the lions share of royaltys. Thats our generous fee they pocket every time they sell our image.

Besides , how would you ever be able to moniter the 'fairness' of the system in display/promoting YOUR images? You have no say, no control, and no way to know how that is taking place. Fogettaboutit.

As was mentioned, they already have Offset. They should curate images from regular contributers into offset, that fit the criteria. Im sure many contributers would have at least a few images that could make it into the premium collection - and how would they be if that happened? They would probably be spurred on to submitiing more and better content.

« Reply #20 on: April 15, 2016, 02:56 »
+3
The big stock-photo companies which are owned by stockholders and corporate investors were volume businesses of the boom era and are not going to rescue themselves by opening boutiques. Boutique sales are going to be too few to make up for the declining income from volume sales. The big stock-photo companies will instead have to compete for declining revenues on the entry price of subscriptions and the number of images included in an entry level package.

A smaller more focused business with relatively low overheads and no significant debt can do enough business to carry on sustainably by focusing on a higher than average price point - but that volume of boutique trade would never satisfy investors or the markets.

If the author of that piece is correct, there is a lot of money to be made in selling SSTK stock short.  Might be worth a gamble...

For the domestic investor, short selling is seldom/never a serious option because the risk is potentially almost unlimited and disastrous.
« Last Edit: April 15, 2016, 03:12 by bunhill »

OM

« Reply #21 on: April 15, 2016, 05:17 »
+1
They already have Premier and Premier Select and offer personalized search help to large enterprises. And it's "free" for contributors.

http://www.shutterstock.com/blog/what-premier-select-means-for-shutterstock-contributors

However, it would be nice if they allowed contributors to nominate their best work for Offset.


Premier Select and Offset are based on someone else's opinion of whether your image is suitable for that collection or customer. Everything is effectively curated. My suggestion was that it's the contributor that decides which new work to confront the 'retail' customers with. Premier Select is for the big boyz but the largest chunk of SS earnings come from retail. They have to wade through the 800K new images that are accepted every week.....no help for them. I'd be prepared to throw $100/year at the wall to see whether any sticks. Besides, it's promotion and a tax deductible expense.

OM

« Reply #22 on: April 15, 2016, 05:53 »
0
I would NEVER pay a fee to sell my images - esp the agency is already getting the lions share of royaltys. Thats our generous fee they pocket every time they sell our image.

Besides , how would you ever be able to moniter the 'fairness' of the system in display/promoting YOUR images? You have no say, no control, and no way to know how that is taking place. Fogettaboutit.

As was mentioned, they already have Offset. They should curate images from regular contributers into offset, that fit the criteria. Im sure many contributers would have at least a few images that could make it into the premium collection - and how would they be if that happened? They would probably be spurred on to submitiing more and better content.

Absolutely agree on 'should' and the beneficial effect it would have on chosen contributors, but they haven't yet and probably never will.

Say, you take page #1 popular of any major search category at SS and select 10 possibles for 'Select/Offset'. Those images are already earning good money for SS and the customers keep coming back for more. Place them with Offset and you have to remove them from the SS site because they become exclusive to Offset...but you've already allowed usage in perpetuity on those popular images that have already sold. Can't be done IMHO.

The only way you can provide an option for a SS contributor to place some work in Offset is by making a selection of new work before it gets into the SS regular archive/approach the contributor and ask if they would be prepared to submit only a certain type of work to Offset. That would require a curator looking at all the new work coming into SS of which a percentage is 800K/week that gets accepted. That's also tough to do.


 

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