MicrostockGroup
Agency Based Discussion => iStockPhoto.com => Topic started by: luissantos84 on September 05, 2013, 10:01
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http://www.businessweek.com/news/2013-09-04/caryle-group-s-getty-images-ratings-on-review-for-cut-by-moody-s (http://www.businessweek.com/news/2013-09-04/caryle-group-s-getty-images-ratings-on-review-for-cut-by-moody-s)
(from https://www.facebook.com/ThoughtsBohemian (https://www.facebook.com/ThoughtsBohemian))
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That's not surprising, but it paints a rather gloomy picture. Thanks for posting.
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Just more proof why they came in and slashed our commissions. They are desparate. The pieces are starting to come together and they can't hide it anymore.
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It´s great to see real financial information. Now the photographers have much better insight into how agencies are performing and how that might affect their income.
Now that istock has slashed their prices so drastically, it will be interesting to see 3rd quarter results.
I am surprised to read that the premium market is supposedly half of their creative returns. So this is the market that Offset will be moving into. And Fotolia has high end collections as well. And then there is stocksy...
What I also don´t understand is why they are just blaming the decline on SS and Fotolia and not looking more closely to what Getty did to themselves.
Interesting times.
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So it looks like they were expecting an up swing in the third quarter but Moody doesn't agree. I have to agree with Moody here as I have never seen a company run so poorly as GettyImages. I mean they don't even have to create the content all they have to do is sell it and not shaft the artist at the same time. Fire the management and start over I say!
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oooh Yuri could you please plug the hole on the Titanic!
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oooh Yuri could you please plug the hole on the Titanic!
yes the professional is listening to your concerns and will rescue you/getty/world, get a chair just in case it takes too long ;D
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I am on life support could you please hurry!
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt. I'd say both are self-inflicted; SS and others are just getting the benefit of disastrous decisions by Getty and its past and present owners.
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt. I'd say both are self-inflicted; SS and others are just getting the benefit of disastrous decisions by Getty and its past and present owners.
We can blame SS & Fotolia for driving the price of our assets down and keeping them down for over 8 years so that they can gain market share. The margin has been so high that I am sure they could have raised prices and done the same thing.
I agree with your post, the most disgusting aspect is that the guys on the top make sure they benefit no matter how the cookies crumble.
Leverage exists when an investor achieves the right to a return on a capital base that exceeds the investment which the investor has personally contributed to the entity or instrument achieving a return.
Snip
Leverage at Getty was about six times when Carlyle bought the company in 2012 and rose to about 7.1 times as of June 30, according to Moody’s. Leverage increased to 3.2 times in 2008 from less than 1.5 times when Hellman & Friedman purchased the company, according to Moody’s. Leverage increased during Hellman & Friedman’s ownership after a 2010 dividend.
“We believe long-term leverage will be high because of Getty’s private-equity ownership, history of special dividends and aggressive financial policy,” Standard & Poor’s analysts wrote in a March 26 news release.
http://www.businessweek.com/news/2013-09-04/caryle-group-s-getty-images-ratings-on-review-for-cut-by-moody-s (http://www.businessweek.com/news/2013-09-04/caryle-group-s-getty-images-ratings-on-review-for-cut-by-moody-s)
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We can blame SS & Fotolia for driving the price of our assets down and keeping them down for over 8 years so that they can gain market share. The margin has been so high that I am sure they could have raised prices and done the same thing.
Driving the price down? Not my experience at all. When I joined, SS was paying .20 per subscription download and there weren't many options for anything else. Now they pay almost twice that, not counting all the on-demand and other non-sub sales. They did it by raising prices and royalties to match. As far as I know they haven't raised prices since the financial meltdown in 2008. To raise royalties without raising prices would be to cut their share, which I can understand their unwillingness to do. And I can see and hear some of where their share goes, in all the advertising they do on radio, on podcasts and on blogs. They think that'll draw more customers, and I'm willing to believe they're right.
(I won't defend Fotolia. They have cut my royalties several times, which is why I stopped uploading there. I don't know if there is room for them to raise prices, nor do I particularly care. They're a small contribution to my bottom line.)
It might be useful to remember that iStock started as a free image exchange, then went to a broader sales model. They kept raising prices over the years, even as they cut my share of the selling price. Now they've raised them too high and lost sales, or maybe the two are unrelated. But they're facing declining revenues even as their debt skyrockets, and that's a recipe for disaster.
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They say that the price of Getty debt fell to 95c on the dollar. Doesn't that mean that the market is pricing in a default?
I may have misunderstood, as I am not a money-man, perhaps someone who understands the arcane byways of high finance could clarify that.
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We can blame SS & Fotolia for driving the price of our assets down and keeping them down for over 8 years so that they can gain market share. The margin has been so high that I am sure they could have raised prices and done the same thing.
Driving the price down? Not my experience at all. When I joined, SS was paying .20 per subscription download and there weren't many options for anything else. Now they pay almost twice that, not counting all the on-demand and other non-sub sales. They did it by raising prices and royalties to match. As far as I know they haven't raised prices since the financial meltdown in 2008. To raise royalties without raising prices would be to cut their share, which I can understand their unwillingness to do. And I can see and hear some of where their share goes, in all the advertising they do on radio, on podcasts and on blogs. They think that'll draw more customers, and I'm willing to believe they're right.
(I won't defend Fotolia. They have cut my royalties several times, which is why I stopped uploading there. I don't know if there is room for them to raise prices, nor do I particularly care. They're a small contribution to my bottom line.)
It might be useful to remember that iStock started as a free image exchange, then went to a broader sales model. They kept raising prices over the years, even as they cut my share of the selling price. Now they've raised them too high and lost sales, or maybe the two are unrelated. But they're facing declining revenues even as their debt skyrockets, and that's a recipe for disaster.
You are confusing the IS greed and contempt for contributors with market dynamics which are two different things. IS contempt for contributors who are also buyers can not be underestimated.
This is where we have all been naive, while we were in a financial meltdown since 2006, SS was thriving, gaining market share and the cash was rolling in. During this time we did not hear a word of this from Jon, he kept SS's profitable success hush hush. He could have raised sub prices but chose not to so that he could gain lion size market share by keeping prices for customers down at the expense of it contributor's increasing production expenses. While the price of producing images rose for contributors our sub compensation has not changed for over 8 years.
Do you remember what type of images were coming in to the micro sites when the sub prices were .20C. Let me remind you. Yuri was still shooting blurry poorly lit lizards in his back yard in 2005. This is Jon Oringer's port on SS and the majority of contributors did not even reach this level of quality. http://www.shutterstock.com/portfolio/search.mhtml?gallery_username=shutterstock&page=27. (http://www.shutterstock.com/portfolio/search.mhtml?gallery_username=shutterstock&page=27.)
The bar has been raised substantially since 2004 without Commensurate compensation.
If you earned a .38 royalty in 2008 we did so by substantially raising the quality of our images and shooting HCV work.
The quality and content bar continues to rise as well as the costs to produce those assets, the sites benefit from all of this without incurring any of the expenses to produce those images.
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt. I'd say both are self-inflicted; SS and others are just getting the benefit of disastrous decisions by Getty and its past and present owners.
I thought saddling acquisitions with debt was standard operating procedure for private equity firms.
Driving the price down? Not my experience at all. When I joined, SS was paying .20 per subscription download and there weren't many options for anything else. Now they pay almost twice that, not counting all the on-demand and other non-sub sales.
That's still a very small increase considering it could be 10 to 100 times more.
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Just more proof why they came in and slashed our commissions. They are desparate. The pieces are starting to come together and they can't hide it anymore.
Either that, or they are now getting in worse and worse shape *because* they came in and slashed commissions.
Risky strategy to keep on cutting what they pay suppliers in the hope that it'll make iStock/Getty more sustainable. The opposite could be true.
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Follow
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They say that the price of Getty debt fell to 95c on the dollar. Doesn't that mean that the market is pricing in a default?
I may have misunderstood, as I am not a money-man, perhaps someone who understands the arcane byways of high finance could clarify that.
It means that you can buy Getty debt, from those who currently hold it, at a discounted rate (reflecting the risk it entails). I think when you buy the debt you are also buying any income from interest on the debt.
It basically means the lender has already accepted that it will likely lose money on the debt and is willing to accept a small loss now to avoid risking a bigger loss in the future.
You can currently buy Greek debt for about 40c on the Euro ... but you might get a 'haircut' instead!
http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html (http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html)
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt. I'd say both are self-inflicted; SS and others are just getting the benefit of disastrous decisions by Getty and its past and present owners.
Some of that debt was for H&F's dividend recapitalization - payback for H&F when they couldn't sell Getty as quickly as they'd hoped. See the following discussions here from a few years ago
http://www.microstockgroup.com/general-stock-discussion/photos-from-gettyimages-direct-to-thinkstock-ouch/msg194494/#msg194494 (http://www.microstockgroup.com/general-stock-discussion/photos-from-gettyimages-direct-to-thinkstock-ouch/msg194494/#msg194494)
http://www.microstockgroup.com/istockphoto-com/hf-presses-on-with- (http://www.microstockgroup.com/istockphoto-com/hf-presses-on-with-)$4-billion-getty-images-sale/msg262167/#msg262167
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They say that the price of Getty debt fell to 95c on the dollar. Doesn't that mean that the market is pricing in a default?
I may have misunderstood, as I am not a money-man, perhaps someone who understands the arcane byways of high finance could clarify that.
It means that you can buy Getty debt, from those who currently hold it, at a discounted rate (reflecting the risk it entails). I think when you buy the debt you are also buying any income from interest on the debt.
It basically means the lender has already accepted that it will likely lose money on the debt and is willing to accept a small loss now to avoid risking a bigger loss in the future.
You can currently buy Greek debt for about 40c on the Euro ... but you might get a 'haircut' instead!
[url]http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html[/url] ([url]http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html[/url])
That's what I thought. It seems that Getty has finally discovered the secret of how to make yourself unsustainable: borrow beyond your means.
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt. I'd say both are self-inflicted; SS and others are just getting the benefit of disastrous decisions by Getty and its past and present owners.
Great post.
Of course, as most of us here on MSG are currently owed money by IS/GI ... then we too are amongst their creditors (whose position is considered insecure). That's a reminder to make sure you always cash out as soon as you can.
Just think how much IS/GI owe Yuri & Co from week to week. Just as well 'Professionals deal with professionals'.
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If instead of paying out "special dividends" they had actually made a huge investment in the company itself - technology, marketing and hiring the best team - where would they be now?
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Has anyone else noticed that Getty's falling revenue (and discounted debt) all seems to have occurred in the last few months ... since a certain Yuri Arcurs went exclusive?
PDWP!
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To me the most telling statistic is how leveraged the company is. As I understand these things, first H&F and then Carlyle saddled Getty with increasing amounts of debt to finance their purchases of the firm. So Getty goes from a leverage of 1.5 before the H&F acquisition to 3.2 afterward, and then from 6x when Carlyle buys it to 7.1 in June. That's less and less sustainable, and is a combination of declining revenues and increased debt.
Does that mean that the indebtedness went from 6x earnings to 7x earnings in six months? Was that the result of additional debt being taken on, or a result of the earnings declining so that the ratio between earnings and debt changed? If it is the latter, then the ratio will continue to increase until (or unless) they can start to grow their income.
And if you have borrowed 7x your earnings and you are paying, say 4% interest, then wouldn't more than 20% of what you earn will be going into interest repayments?
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Has anyone else noticed that Getty's falling revenue (and discounted debt) all seems to have occurred in the last few months ... since a certain Yuri Arcurs went exclusive?
PDWP!
Since they kicked out Sean, Rob, Alex and encouraged others to leave after the Getty Google Drive disaster???
Maybe the public outrage among the artists, who also happen to be buyers is affecting the bottom line? Just a little bit???More than a little bit? Lost social network marketing and personal recommendations?
Of course not...it is all SS and Fotolia...who else...
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Has anyone else noticed that Getty's falling revenue (and discounted debt) all seems to have occurred in the last few months ... since a certain Yuri Arcurs went exclusive?
PDWP!
I wonder if Yuri is second guessing his decision right about now. He should.
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Nice to get some real info about what's actually happening for once.
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Does that mean that the indebtedness went from 6x earnings to 7x earnings in six months? Was that the result of additional debt being taken on, or a result of the earnings declining so that the ratio between earnings and debt changed? If it is the latter, then the ratio will continue to increase until (or unless) they can start to grow their income.
And if you have borrowed 7x your earnings and you are paying, say 4% interest, then wouldn't more than 20% of what you earn will be going into interest repayments?
It does mean that they took money from a bank to pay dividend (simply words - to cash % the acquisition of GI business). This is very simple operation, in East Europe - companies like GI hire a person from bank industry with good connections to bypass this shameful valuation; more often the person responsible for granting a 'sum' lands in the company as a new financial director or similar position. Who cares, 7x, 12x? It's nothing more than money.
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I find it really hard to grasp: They take 83% of all my sales... where do they put that money???
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I find it really hard to grasp: They take 83% of all my sales... where do they put that money???
It's all in the links that Jsnover has quoted above.
The money went to Hellmann & Friedmann. They took up a loan to pay themselves a dividend. Now Getty has to use your money to pay interest on that loan (and to pay it back eventually).
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I only hope IS demanded a long term contract with Yuri before inking the deal with signatures.
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They say that the price of Getty debt fell to 95c on the dollar. Doesn't that mean that the market is pricing in a default?
I may have misunderstood, as I am not a money-man, perhaps someone who understands the arcane byways of high finance could clarify that.
It means that you can buy Getty debt, from those who currently hold it, at a discounted rate (reflecting the risk it entails). I think when you buy the debt you are also buying any income from interest on the debt.
It basically means the lender has already accepted that it will likely lose money on the debt and is willing to accept a small loss now to avoid risking a bigger loss in the future.
You can currently buy Greek debt for about 40c on the Euro ... but you might get a 'haircut' instead!
[url]http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html[/url] ([url]http://online.wsj.com/article/SB10001424127887323297504578579111798293062.html[/url])
No, it may not mean that at all.
There are several factors that determine the pricing of fixed income instruments. Two of the main ones are credit (default) risk and interest rates.
Here in the US, intermediate term interest rates have risen very sharply over the last few months. The 10-year Treasury bond yield closed today near 3%, up from below 2% only 3 or so months back. That's a 50% increase in yield, which is huge. The yield on corporate debt has also risen, though not as much since the yield wasn't as artificially low as Treasuries.
When yields rise, prices fall: It's a direct and immutable correlation (since one determines the other).
That doesn't mean that the price drop doesn't also include some component of an increase in Getty default risk. But I suspect the bigger part of it is the general rise in interest rates, not a rise in default risk.
ETA: Upon re-reading the article, I see that price quote is referring to the term loan, not their longer term note. I assume the term note is very short duration / low interest, so I have to revise my conclusion and say, yes, most of the price drop is almost certainly due to an increase in default risk. Though the risk can't be too high, since their 7-year, 7% note is still priced only about 10% below par, which doesn't seem too far from other similar, lower quality debt.
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I only hope IS demanded a long term contract with Yuri before inking the deal with signatures.
I'm sure both of their lawyers had a field day with that contract negotiation.
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Meanwhile Shutterstock has millions in the bank........
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Meanwhile Shutterstock has millions in the bank........
It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.
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Meanwhile Shutterstock has millions in the bank........
It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.
show is about to begin ;D
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Meanwhile Shutterstock has millions in the bank........
It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
I reckon that the SS management team are probably the only people with the detailed knowledge of the industry to make Getty work. The only problem is that their valuation of Getty's true worth is likely to be a lot lower than those with less knowledge of the industry.
SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.
The advantage with online customers and digital assets is that they can move around very fast.
Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.
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iStock website looks fine, what they offer customers is good how they treat artist is bad, they have made so many short term gain moves and now it is catching up. I will be thrilled for a turn around but I have to plan as if it won't happen
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SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.
The advantage with online customers and digital assets is that they can move around very fast.
Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.
Hopefully, I've finished my rocket ship by then, so I can escape. ;D
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SS might indeed have the money to buy getty, especially in two or three years when they have grown even more and also have a flourishing high end creative business. But to make those business cultures compatible would take a lot of work. Much easier for them to slowly win over customers and artists and just do their own thing.
The advantage with online customers and digital assets is that they can move around very fast.
Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.
Fair comments Jasmine. It has to be said that the recent changes at IS are indeed bold and extremely painful financially, both for them and for us, so maybe Getty does have what it takes to turn their ship around. I doubt it though. As bold as the move might have been, it was largely reactionary in that they were most likely forced into it by the sales patterns. It was a move to stem the losses rather than one to grow the business.
Of course the financial assessments by Moody's don't actually take into account the last couple of months since IS introduced the changes. The 3rd quarter results from IS, and therefore the impact on Getty's bottom-line, might be much worse than Moody's realises right now.
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My concern that Getty will make istock commissions 20% (fixed) for exclusives to reduce expenses. You KNOW this has to be on their minds. But they must also know the fallout and backlash would be significant and possibly drive away MORE of their "valued" content base.
They have to stop bleeding money from their greedy stupid debt load they created.
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;
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The advantage with online customers and digital assets is that they can move around very fast.
Which also leaves Getty the chance to achieve a turnaround and head back for growth if they really want to.
Internet companies can change quickly but persuading customers to come back if they have not been happy with their experience is another matter. Rapid customer growth belongs to the exciting new kid on the block, not to an old established company whose only way of innovating is through juggling product prices.
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The elephant in the room has taken an almighty dump in the corner and their only solution is to spray it with Febreze.
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You have to love this part :
Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didn’t return a telephone call seeking comment on the Moody’s action.
:)
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Meanwhile the SS and FT sales are very good in September ;D.....
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I agree that winning back customers and trust will be very expensive and need at least two years. But if they really want to, they can do it. Is the current strategy the right one? I don't know and we will see how long the new manager lasts under pressure from investors. But at least some visible attention is being brought to istock after years of neglect.
Of course SS and Fotolia and all the others will continue to press forward.
So I will continue to upload where I expect the money to be in the forseeable future....and I certainly feel safer working with several agencies than just one. It helps me to focus on my work and just enjoy what I am doing without having to worry whatever disaster might strike next.
It's also great to see new uploads sell. Looks like the customers that like my work have moved on as well.
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Here's a quote from Bloomberg's report;
"Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didn’t return a telephone call seeking comment on the Moody’s action."
I can't help thinking that Getty would do better by fessing up to what's gone wrong and stating what they are going to be doing about it. By staying schtum they are allowing the story to keep rearing it's ugly head. It's a racing certainty that the next quarter's results will be even worse (as it will include Istock's price reductions) so it is surely to Getty's advantage to go public now and let the story die a natural death before then.
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Here's a quote from Bloomberg's report;
"Randall Whitestone, a Carlyle spokesman, declined to comment and referred questions to the company. Jodi Einhorn, a Getty spokeswoman, didn’t return a telephone call seeking comment on the Moody’s action."
I can't help thinking that Getty would do better by fessing up to what's gone wrong and stating what they are going to be doing about it.
I see no evidence that they know what's gone wrong, or have any plan to reverse the decline, particularly on the iStock side of things.
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Plan B in the works
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It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
Lol. And in a universe of infinite possibilities, it's not inconceivable that a consortium from the Microstock Group might one day own it. Or maybe the people who run the mini-mart along the road from here. But this is certainly also equally as unlikely :) Shutterstock and Getty are completely different businesses on completely different scales. Also - Getty is the same business no matter who owns or operates it.
I see no evidence that they know what's gone wrong, or have any plan to reverse the decline, particularly on the iStock side of things.
Naturally optimistic as I am, and wanting to see Getty do well (because they matter to the industry IMO) I disagree. Drastically reducing prices on microstock content which is available everywhere is potentially a very good strategy as follows:
Many of the microstock companies are potentially extremely under-diversified and therefore exposed to the risk of quickly losing their perceived value in a prolonged price war on microstock priced content. By under-diversified, I mean that budget is their only business. How long could they survive if Getty decide to be the cheapest for basic entry level content ? Suppose they go nuclear and decide to offer some really good extended deals on new Thinkstock accounts. Say - free for the first 3 months, or something. The point being that a price war may very well be the best way of maintaining higher prices longer term.
Higher prices and lower volume is a more sustainable model for most photographers.
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Plan B in the works
Yuri gave you a hand? ;D
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Suppose they go nuclear and decide to offer some really good extended deals on new Thinkstock accounts. Say - free for the first 3 months, or something. The point being that a price war may very well be the best way of maintaining higher prices longer term.
Higher prices and lower volume is a more sustainable model for most photographers.
It would be tough to say. They don't own all their content, so contributors are always an x factor in any decision they make. They seem to lose some people every time they make a large move. I do agree about the higher prices lower volume part. I still wonder about the future of these subs packages. How long will that continue to pay and be viable?
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Suppose they go nuclear and decide to offer some really good extended deals on new Thinkstock accounts. Say - free for the first 3 months, or something. The point being that a price war may very well be the best way of maintaining higher prices longer term.
Higher prices and lower volume is a more sustainable model for most photographers.
It would be tough to say. They don't own all their content, so contributors are always an x factor in any decision they make. They seem to lose some people every time they make a large move. I do agree about the higher prices lower volume part. I still wonder about the future of these subs packages. How long will that continue to pay and be viable?
That sort of strategy can surely only be applied from a position of enormous financial strength - they would have to continue to pay suppliers or they would just quit. Of course, they could do it with wholly-owned content, but it would still destroy the earnings of that market sector - and destroy iStock, too.
While some (many) of their iS decisions seem to be irrational, there is no sign that they have the will to launch such a wealth-destroying strategy - and there must be some doubt over whether they actually have the cash to take that sort of earnings hit.
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It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
Lol. And in a universe of infinite possibilities, it's not inconceivable that a consortium from the Microstock Group might one day own it. Or maybe the people who run the mini-mart along the road from here. But this is certainly also equally as unlikely :) Shutterstock and Getty are completely different businesses on completely different scales. Also - Getty is the same business no matter who owns or operates it.
The idea of SS taking over GI is nothing like as absurd as you think. The scale of the 2 businesses is not too far apart and the gap is narrowing every day. SS has annual sales of $220M and growing, GI is $900M and reducing. SS has a market capitalisation today of about $1B. Getty's market value, just before H&F took them over, was under $2B (Getty's sales were higher then too and they didn't have all that debt either). Smaller businesses launch takeovers of bigger rivals every day. They can borrow money based on the value of the greater business if their bid is successful.
SS have stated their intention to become the biggest player in the stock image industry. The quickest way to grow in a competitive market is via the acquisition of rivals. Imagine how dominant a combined SS/GI business would be and how much more control of pricing they would then have. If you were Oringer, wouldn't a takeover of Getty be your ultimate goal? He's now in touching-distance of achieving it. All it needs is a willing seller.
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SS buy GI, that would be like 2 galaxy's colliding :)
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"SS buy GI, that would be like 2 galaxy's colliding"
No, more like one Galaxy of Stars (SS) going towards a black hole...
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SS buy GI, that would be like 2 galaxy's colliding :)
I was thinking a dinoshark that spits sharknadoes, but either way, it sounds like a disaster.
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It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
Lol. And in a universe of infinite possibilities, it's not inconceivable that a consortium from the Microstock Group might one day own it. Or maybe the people who run the mini-mart along the road from here. But this is certainly also equally as unlikely :) Shutterstock and Getty are completely different businesses on completely different scales. Also - Getty is the same business no matter who owns or operates it.
The idea of SS taking over GI is nothing like as absurd as you think. The scale of the 2 businesses is not too far apart and the gap is narrowing every day. SS has annual sales of $220M and growing, GI is $900M and reducing. SS has a market capitalisation today of about $1B. Getty's market value, just before H&F took them over, was under $2B (Getty's sales were higher then too and they didn't have all that debt either). Smaller businesses launch takeovers of bigger rivals every day. They can borrow money based on the value of the greater business if their bid is successful.
SS have stated their intention to become the biggest player in the stock image industry. The quickest way to grow in a competitive market is via the acquisition of rivals. Imagine how dominant a combined SS/GI business would be and how much more control of pricing they would then have. If you were Oringer, wouldn't a takeover of Getty be your ultimate goal? He's now in touching-distance of achieving it. All it needs is a willing seller.
http://www.stockmarketstudy.org/wordpress/tag/sstk/page/2/ (http://www.stockmarketstudy.org/wordpress/tag/sstk/page/2/)
Snip SSTK Questions/Answers
So our strategy is really volume leadership
Ross Sandler – Deutsche Bank
Would you talk about that for a sec, the landscape because we’ve taken a lot of questions about it, as the IPO was happening in the sense, but you guys are now officially that the largest online royalty free inventory business out there. How would you characterize the competitive landscape today versus maybe a year ago, between a few of those bigger guys that you just mentioned and some of the smaller? Which are you more focused on if at all?
Thilo Semmelbauer
So our strategy is really volume leadership and Ross, you’re quite right that in volume terms, we delivered more downloads, paid downloads last year than all of Getty combined.
And Getty is certainly continues to be the revenue leader in this space. If Getty is sort of in the $800 million to $1 billion revenue range, we think the market is somewhere in the $4 billion to $6 billion range, just for stock imagery.
And given our size, $170 million last year we’re really still a very small player in a large and growing market, and we see opportunity for several big players continuing to dominate in the market. So and obviously we want to be one of them.
In terms of changes in competitive dynamics, I’d say in the last year, not significant changes. Getty continues to be a big player. Numbers of years ago they bought iStockPhoto. From everything we can tell, Getty is not growing but they continue to generate lot of cash. It’s a strong business. There are always new players popping up and disappearing because as Tim mentioned barriers to entry are very low in this space but barriers to scale are high and we’re not really seeing – we’re not seeing anybody else anywhere close to where we are.
More SS PR
http://pandodaily.com/2013/03/28/shutterstock-dives-into-gettys-domain-with-offset-a-premium-photo-site-next-step-video/ (http://pandodaily.com/2013/03/28/shutterstock-dives-into-gettys-domain-with-offset-a-premium-photo-site-next-step-video/)
Snip
Shutterstock is one of New York tech’s quietest success stories. From a nondescript Financial District office, the company grew to $219 million in revenue*, with 250 employees,
Snip
Managed rights images make up the majority of Getty’s $1 billion in revenue (the rest is through its Shutterstock competitor, iStock). That’s not terribly efficient revenue, though, as most of it involves a human, a handshake, and a complex contract. Offset seeks to upend that entirely, as the first set of high-end images sold royalty-free, online, without an agent. The images will cost between $250 and $500 to use. Images of this quality aren’t available royalty-free elsewhere, a Shutterstock spokesperson said.
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=23442750 (http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=23442750)
Snip
For the year 2013, the company is increasing its expectations for revenue to $227 million to $229 million, adjusted EBITDA to $48 million to $50 million, an effective tax rate of approximately 40%, capital expenditures related to network servers and technology of approximately $5 million and capital expenditures for non-recurring leasehold improvements related to headquarters office relocation of approximately $10 million.
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Anyone thinking iS might adjust the RC levels downward to help make up for poor contributor performance due the slashing of Main prices and the poorly thought out collections change had better think again.
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The way things are going I'm not sure SS needs to buy IS as long as IS are on the way down SS has plenty of room for growrh
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If ANY Company is losing revenue to Fotolia they are in deep Sh$!
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If ANY Company is losing revenue to Fotolia they are in deep Sh$!
That's exactly what I was thinking. How the heck is Fotolia a threat to anyone?
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If ANY Company is losing revenue to Fotolia they are in deep Sh$!
That's exactly what I was thinking. How the heck is Fotolia a threat to anyone?
I guess the question is: Is Fotolia growing in terms of downloads and or revenue? If they are than they are a threat.
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My guess was that Fotolia was only mentioned because of the investment by KKR, not because they're really going anywhere in microstock.
Interesting find when I searched to see if Moody's had followed through - a Moody's report from a year ago, Sept 28, 2012, when they previously downgraded Getty's debt
https://www.moodys.com/research/Moodys-downgrades-Gettys-CFR-to-B2-from-Ba3-assigns-B1--PR_256183 (https://www.moodys.com/research/Moodys-downgrades-Gettys-CFR-to-B2-from-Ba3-assigns-B1--PR_256183)
For comparison, here's the current note on the possible downgrade
https://www.moodys.com/research/Moodys-places-ratings-for-Getty-Images-on-review-for-downgrade--PR_281428 (https://www.moodys.com/research/Moodys-places-ratings-for-Getty-Images-on-review-for-downgrade--PR_281428)
A year ago they said "Although revenue is expected to be flat in FY2012 compared to the prior year, EBITDA is expected to grow in the mid-single digit percentage range reflecting the benefits of recent cost-cutting initiatives"
This recent one said "As a result, Moody's revised forecasts for the next 12 months indicate the company will need more time than initially anticipated to stabilize revenues, restore operating margins, and bring financial metrics, including debt-to-EBITDA ratios (roughly 7.1x as of June 2013, including Moody's standard adjustments) and free cash flow-to debt ratios (estimated at less than 2% for FY2013) in line with the company's operating and financial plan presented when Moody's initially rated debt instruments for the October 2012 buyout. "
First they were talking about growth, now they're talking about stabilizing revenues...what a difference a year makes
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Plan B in the works
Plan 9 From Outer Space might work better.
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If ANY Company is losing revenue to Fotolia they are in deep Sh$!
I am sorry but Fotolia is one of the few companies that still has a somewhat decent review process and keeps a standard. The other agencies are accepting almost everything. This will pay in the long term.
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Plan B in the works
Plan 9 From Outer Space might work better.
ROFL! Sometimes I get the feeling Ed Wood is directing operations at a couple of micro agencies ;D
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I really think the big problem here is more the debt and less the competition. Subsequent owners have increased Getty's debt to pay for itself. It is insane. The debt isn't real debt it is tax avoidance for the owners.
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Interview by Jonathan Klein in the British Journal of Photography:
http://www.bjp-online.com/british-journal-of-photography/news/2294014/getty-images-jonathan-klein-we-need-new-economic-models#ixzz2eat6TiPn (http://www.bjp-online.com/british-journal-of-photography/news/2294014/getty-images-jonathan-klein-we-need-new-economic-models#ixzz2eat6TiPn)
"We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing. "Do I buy something? Where do I click to purchase?" That website is very focussed on the contributors. We have to have the right balance."
I can't see that it's 'very focussed on the contributors', so maybe it's more accurate to say its 'totally unfocussed'.
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That interview is laughable. He should have given it on stage with a microphone and a brick wall behind him.
"We also have a love and respect for the product, which is a problem, to be honest. I'm often told by critics that we're not customer-focused enough, and it's true. Every decision that we make, the first question that we ask ourselves is not: "Is this good for the customer?" It should be the first question. Instead, it's: "How will our contributors and partners react? Does it make sense for them? Is it the right thing to do in the long-term?""
Have we ever had the sense that contributors were first? For example, I am trying to remove some content from Getty, and I'm basically told that it is being held hostage (as is every image there), unless I terminate. I don't imagine they thought how contributors and partners would react when they sold work to Google for $12 to the contributor.
"You see businesses like Shutterstock that are doing extremely well with no content. Their pictures are available on pretty much every other website, but they are doing extremely well because it's so easy."
I don't even know what "no content" is supposed to mean.
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That interview is laughable. He should have given it on stage with a microphone and a brick wall behind him.
"We also have a love and respect for the product, which is a problem, to be honest. I'm often told by critics that we're not customer-focused enough, and it's true. Every decision that we make, the first question that we ask ourselves is not: "Is this good for the customer?" It should be the first question. Instead, it's: "How will our contributors and partners react? Does it make sense for them? Is it the right thing to do in the long-term?""
That and those two groups could actually be the same people. Or did I just blow their minds?
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That interview is laughable. He should have given it on stage with a microphone and a brick wall behind him.
GREAT comment! Absolutely hilarious! ;D
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That interview is laughable. He should have given it on stage with a microphone and a brick wall behind him.
"We also have a love and respect for the product, which is a problem, to be honest. I'm often told by critics that we're not customer-focused enough, and it's true. Every decision that we make, the first question that we ask ourselves is not: "Is this good for the customer?" It should be the first question. Instead, it's: "How will our contributors and partners react? Does it make sense for them? Is it the right thing to do in the long-term?""
I think this actually explains a LOT about what has happened over the last 3 years or so.
The only thing is, the rest of that quote was missing:
"... And if the answers are it is good for them, it makes sense, and it is the right thing to do in the long term, then we do the opposite thing."
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"You see businesses like Shutterstock that are doing extremely well with no content. Their pictures are available on pretty much every other website, but they are doing extremely well because it's so easy."
I don't even know what "no content" is supposed to mean.
It's poor proof-reading. There were quite a few obviously missed words in there. I'm sure what Klein actually said/meant was "... Shutterstock are doing extremely well with no exclusive content."
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Kind of interesting.
Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
and then: "...You see businesses like Shutterstock that are doing extremely well.."
Sounds like from his view iStock is having major problems against the competition.
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Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
I have a hard time believing that not one out of 13 could figure out how to buy something on an ecommerce site. After "an hour".
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Hence the lowering of prices of nonexclusive content and increased exposure for Thinkstock, I'm sure most people will blame Istock but really what caused them to change?
They were competing just fine for several years, so I don't think Shutterstock has much to do with it.
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Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
I have a hard time believing that not one out of 13 could figure out how to buy something on an ecommerce site. After "an hour".
Agreed. I went on each site as an "new user" searching for an image with one keyword. Both processes were pretty much the same. I think his assertion for the cause of iStock having problems doesn't ring true.
I find his language interesting though, almost praising the competition. He must feel that it is well known and established that SS is doing much better than iS.
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SS and JO are magicians - they are successfully selling nothing ("no content")
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Hence the lowering of prices of nonexclusive content and increased exposure for Thinkstock, I'm sure most people will blame Istock but really what caused them to change?
They were competing just fine for several years, so I don't think Shutterstock has much to do with it.
I think Shutterstock has grown a lot in the last few years. At least here many people that have been around for a while are saying Shutterstock is taking a much larger % of sales than they used to. Curiously to me, as Shutterstock goes up overall earnings for many seem to be declining. Any connection there?
I can't speak to much of that. My SS numbers are very different from most.
My point was that IS wounds seem self inflicted. They punched contributors and customers in the gut at the same time, so their reputation which used to be great went to garbage. They can blame SS for taking their customers and contributors, but really they just handed them over in a bloodless coup.
It doesn't make me happy that it happened because it messed everything up for me, but it happened.
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Hence the lowering of prices of nonexclusive content and increased exposure for Thinkstock, I'm sure most people will blame Istock but really what caused them to change?
They were competing just fine for several years, so I don't think Shutterstock has much to do with it.
I think Shutterstock has grown a lot in the last few years. At least here many people that have been around for a while are saying Shutterstock is taking a much larger % of sales than they used to. Curiously to me, as Shutterstock goes up overall earnings for many seem to be declining. Any connection there?
Shutterstock has a bigger piece of the pie for me because I stopped submitting to middle tier agencies. They arent bringing me any revenue to justify my time with them. On the other hand Shutterstock for the last 3 months has been really good. I know of others who have dropped agencies, so logically the SS piece of the pie grows % wise.
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Dear Getty,
You destroyed the community spirit at iStock. You yanked customers around with prices and raised them to high to fast. You kicked out one of your most helpful artist, remember Sean? You mocked us when we said sales are slipping and you said all is good.You are not up front and honest with how you did cash prices. Now take all the artist you shafted and their collective blogs and the forums they visit like this one and there you have it, business is not booming anymore. It's not your site!! iStock was doing just fine before your so called great changes for the customer! Stop blaming SS and site design for your own demise because you did this to yourself! Now Drop RC's pay a decent % to the artist... oh did you realized a lot of artist were buyers as well or maybe they knew a lot of buyers? SS has content and buyers don't care who owns it! they advertise on podcast and in the mail. They don't call my house offering me credits! they advertise in other countries and are pushing forward with their brand! Now you can figure it out can't you?
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Dear Getty,
You destroyed the community spirit at iStock. You yanked customers around with prices and raised them to high to fast. You kicked out one of your most helpful artist, remember Sean? You mocked us when we said sales are slipping and you said all is good.You are not up front and honest with how you did cash prices. Now take all the artist you shafted and their collective blogs and the forums they visit like this one and there you have it, business is not booming anymore. It's not your site!! iStock was doing just fine before your so called great changes for the customer! Stop blaming SS and site design for your own demise because you did this to yourself! Now Drop RC's pay a decent % to the artist... oh did you realized a lot of artist were buyers as well or maybe they knew a lot of buyers? SS has content and buyers don't care who owns it! they advertise on podcast and in the mail. They don't call my house offering me credits! they advertise in other countries and are pushing forward with their brand! Now you can figure it out can't you?
^^^ Excellent summary. I'd have given you 2 hearts if I could!
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Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
I have a hard time believing that not one out of 13 could figure out how to buy something on an ecommerce site. After "an hour".
Let me speculate: were those 13 persons by chance high ranked Getty officers?
Apart from Mr. Klein, there are actually 13 of them:
http://company.gettyimages.com/officers.cfm?idT=EA (http://company.gettyimages.com/officers.cfm?idT=EA)
and they certainly also "have no idea what they are doing".
They could have asked their janitors. I'm pretty sure after 1 hour most janitors would have no problems to figure out what a site is about.
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Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
I have a hard time believing that not one out of 13 could figure out how to buy something on an ecommerce site. After "an hour".
Let me speculate: were those 13 persons by chance high ranked Getty officers?
Apart from Mr. Klein, there are actually 13 of them:
[url]http://company.gettyimages.com/officers.cfm?idT=EA[/url] ([url]http://company.gettyimages.com/officers.cfm?idT=EA[/url])
and they certainly also "have no idea what they are doing".
They could have asked their janitors. I'm pretty sure after 1 hour most janitors would have no problems to figure out what a site is about.
I think that the most unconventional and "not customer focused" issue for a new potential image buyer on Istock is the stupid CV-based search system. If Google, Amazon and every other web-based retailer allows you to search in your own 'normal' language then it should be good enough for Istock.
Every other site gathers huge amounts of useful data about their customer's needs from the actual keywords that they use to search with. The business is supposed to learn from their customers __ not the other way around.
Am I alone in noting the irony that Istock's ridiculous CV-based search facility ... was a 'gift' from Getty themselves?
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I like the CV idea. They just ignored it for years and stuffed whatever they wanted at the front of searches.
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Dear Getty,
You destroyed the community spirit at iStock. You yanked customers around with prices and raised them to high to fast. You kicked out one of your most helpful artist, remember Sean? You mocked us when we said sales are slipping and you said all is good.You are not up front and honest with how you did cash prices. Now take all the artist you shafted and their collective blogs and the forums they visit like this one and there you have it, business is not booming anymore. It's not your site!! iStock was doing just fine before your so called great changes for the customer! Stop blaming SS and site design for your own demise because you did this to yourself! Now Drop RC's pay a decent % to the artist... oh did you realized a lot of artist were buyers as well or maybe they knew a lot of buyers? SS has content and buyers don't care who owns it! they advertise on podcast and in the mail. They don't call my house offering me credits! they advertise in other countries and are pushing forward with their brand! Now you can figure it out can't you?
As a buyer the thing that annoyed me more than anything else was the content they were serving us. The old IS allowed the cream of the crop to rise to the top of the searches. When they started serving crap content at high price points in lieu of better content, buyers became annoyed. Add to that, the many stunts they pulled on submitters and I will never ever be going back to buy from the site. The same goes for sites which choose to follow suit.
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But, the word that I struggle the most with since starting the company almost 19 years ago is "agency". That's a word you'll never hear me say. Because to me, an agency is an intermediary that doesn't add much value. I had to sell a house not too long ago, I used a real-estate agency. I booked my flight here with a travel agency.
Thats pretty good use of a word he never says!!!
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Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
I have a hard time believing that not one out of 13 could figure out how to buy something on an ecommerce site. After "an hour".
If they were people who had never been on the iStock site and never bought anything on an ecommerce site (which is what it sounds like), who had no idea how to even buy something, I question why in the world he would use them as his test group.
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Then maybe his interview wasn´t convincing enough in the way he conveyed those thoughts. People here are interested in their immediate prospects for making money. Reading here, can give a good analysis if any targets for marketing and corporate pr have been achieved.
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I didn't find the interview particularly reassuring.
He seems resigned to Shutterstock winning the microstock war and doesn't really know what to do with iStock.
If they lose too much ground to SS and subs dominate image downloads it could eventually suck in a lot of high production images and I don't see how anyone will survive on subs alone without a huge increase in demand for images.
The overall value of Getty could deflate quite catastrophically, great for SS not so good for long term sustainability.
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IT strikes me as just an attempt to shift blame onto someone else. "It's not my fault istock's in a mess, those amateurs that run the place just can't make a proper website and don't have a professional approach", which sidesteps the fact that since Bruce Livingstone left Getty has been calling the shots there.
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He seems resigned to Shutterstock winning the microstock war and doesn't really know what to do with iStock.
Wow. I'm not reading that at all. I think he is acknowledging that they have done well. Is all. I think you are all trying to read far too much between the lines.
FWIW I think that Shutterstock are going to need to be ready to quickly diversify their business if and when a price war breaks out for non exclusive microstock content. As seems inevitable. All the roads are definitely leading in that direction.
Because as it stands SS have all of their eggs in that one basket. Their Offset brand still has not launched and most of the small stock houses and agents currently distribute via Getty.
Which is not a criticism of Shutterstock they have shown that they can be very innovative.
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Kind of interesting.
Him saying "...iStockphoto is the extreme example for that. We've put 13 people who had never been on the iStockphoto website before in a room and we watched them. At the end of a hour, they had no idea what we were actually doing..."
and then: "...You see businesses like Shutterstock that are doing extremely well.."
Sounds like from his view iStock is having major problems against the competition.
Hence the lowering of prices of nonexclusive content and increased exposure for Thinkstock, I'm sure most people will blame Istock but really what caused them to change?
I don't really see how slashing prices of content is an effective response to the problem of potential buyers being confused by the site ???
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"No content" comment about SS is just a simple put-down. SS has great content, better actually that they themselves realize. It simply amazes me how after all these years some people still see microstock as low-level crowd-sourcing amateurish collection of images. They say "real" photographers don't sell on microstock ... how can someone be so blind? Even if you don't count so many extremely talented newcomers, look at Blend Images - they sell on SS. When they admit that SS is doing extremely well while pointing out they have no content in one sentence it tells you one thing - badmouthing SS is the only thing they have left, they don't get how and why SS is successful, which means they don't get the business. The only hope right now for them is drastic change of the leadership and strategy, but this doesn't seem to be happening. Instead, they decide that a garage sale will get them out of their financial trouble!
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
I'm not sure that's true. I've posted some of the competitors pricing and the range was from around $2.50-$12 for many full sized images (much much less if you count subs, SS says they charge less than $3 average when all file types are counted) but Istock was charging $27 for that same exact content. 10x more than canstock, 3x more than Shutterstock and now guess what they lowered the prices to be the same as Shutterstock. I think it's clear why they did it.
You can look at Thinkstock too and see how their pricing and royalties mirrored Shutterstock, they paid exclusives the tiniest bit more than what Shutterstock's top level is (coincidence?) and the plans are very similar in terms and pricing.
The other collections pushed to the front were a separate issue and I think they changed that a while before lowering the prices.
So it appears to be a classic example of everyone attempting to copy (at least pricewise) the market leader. Is that enough? Usually, someone has to best the leader to take leadership. This is more like "follower-ship"
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
I'm not sure that's true. I've posted some of the competitors pricing and the range was from around $2.50-$12 for many full sized images (much much less if you count subs, SS says they charge less than $3 average when all file types are counted) but Istock was charging $27 for that same exact content. 10x more than canstock, 3x more than Shutterstock and now guess what they lowered the prices to be the same as Shutterstock. I think it's clear why they did it.
You can look at Thinkstock too and see how their pricing and royalties mirrored Shutterstock, they paid exclusives the tiniest bit more than what Shutterstock's top level is (coincidence?) and the plans are very similar in terms and pricing.
The other collections pushed to the front were a separate issue and I think they changed that a while before lowering the prices.
It depends on who you compare. SS charges around $20 for single sale images. DT charges up to around $30. There are cheap sites too like FT and Envato, but IS always seemed to be within the same range ($1-$30) for their main collection.
I stopped shopping at IS several years ago when I couldn't find anything to spend my expiring credits on. Even with the price sliders, it was just too difficult to shop there.
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The differentiation is the ability of buyers to find what they want easily and quickly the opportunity cost of visiting multiple sites makes saving a few c on images trivial. With the ever increasing number of images this will become more significant.
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
I'm not sure that's true. I've posted some of the competitors pricing and the range was from around $2.50-$12 for many full sized images (much much less if you count subs, SS says they charge less than $3 average when all file types are counted) but Istock was charging $27 for that same exact content. 10x more than canstock, 3x more than Shutterstock and now guess what they lowered the prices to be the same as Shutterstock. I think it's clear why they did it.
You can look at Thinkstock too and see how their pricing and royalties mirrored Shutterstock, they paid exclusives the tiniest bit more than what Shutterstock's top level is (coincidence?) and the plans are very similar in terms and pricing.
The other collections pushed to the front were a separate issue and I think they changed that a while before lowering the prices.
So it appears to be a classic example of everyone attempting to copy (at least pricewise) the market leader. Is that enough? Usually, someone has to best the leader to take leadership. This is more like "follower-ship"
If all the content is exactly the same then there isn't too much room for real differentiation except maybe on price, but that is also becoming more homogenized. The leader is still Istock by a large margin and they have the most unique content, I think that makes sense.
Why would iStock completely upend their pricing and collection scheme if they were the leader by a large margin? Wouldn't they stick with what made them the leader? Do you have data that supports this?
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"No content" comment about SS is just a simple put-down.
Actually, I agree with Gostwyk that it's probably a mistake on the part of the reporter which wasn't picked up, and he meant, "no exclusive content" or some qualifier of that sort.
Saying 'no content' wouldn't be a put-down, it would just be nonsensical.
Trust me, I'm the Typo Queen. I've made far worse mistakes.
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
I'm not sure that's true. I've posted some of the competitors pricing and the range was from around $2.50-$12 for many full sized images (much much less if you count subs, SS says they charge less than $3 average when all file types are counted) but Istock was charging $27 for that same exact content. 10x more than canstock, 3x more than Shutterstock and now guess what they lowered the prices to be the same as Shutterstock. I think it's clear why they did it.
You can look at Thinkstock too and see how their pricing and royalties mirrored Shutterstock, they paid exclusives the tiniest bit more than what Shutterstock's top level is (coincidence?) and the plans are very similar in terms and pricing.
The other collections pushed to the front were a separate issue and I think they changed that a while before lowering the prices.
So it appears to be a classic example of everyone attempting to copy (at least pricewise) the market leader. Is that enough? Usually, someone has to best the leader to take leadership. This is more like "follower-ship"
If all the content is exactly the same then there isn't too much room for real differentiation except maybe on price, but that is also becoming more homogenized. The leader is still Istock by a large margin and they have the most unique content, I think that makes sense.
Why would iStock completely upend their pricing and collection scheme if they were the leader by a large margin? Where do you get your data that supports this?
Because they had an even wider margin before? I got the information from the link in OP of this thread. "One third of Getty’s revenue comes from its midstock business" by midstock they mean Istock. Total revenue of around 900 million so Istock is at 300 million. I think Shutterstock was projected at around 230 million for the year, close to that at least.
About 30% I guess that's believable. I thought you were implying an order of magnitude type of difference. I guess another interesting question is what is the "velocity" of the change (in relative revenue). Where was it a year ago...two years ago?
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"No content" comment about SS is just a simple put-down.
Actually, I agree with Gostwyk that it's probably a mistake on the part of the reporter which wasn't picked up, and he meant, "no exclusive content" or some qualifier of that sort.
Saying 'no content' wou'dn't be a put-down, it would just be nonsensical.
Trust me, I'm the Typo Queen. I've made far worse mistakes.
Sure could be a typo. Although in my opinion having exclusive content is another irrelevant for the buyer thing. Many said - it's about how fast and easy I can find and buy relevant content. So what matters is search engine and the order of search results. I just did an experiment - searched for the following phrase: "woman real estate agent"
On SS, I got 3,882 results
On FT - 3,600
On DT - 2,099
All 3 agencies are showing different files on their first page sorted by relevance (with a little overlap mostly of new images). Effectively, I am looking pretty much on different content on all 3, at least on first few pages.
You know what's funny though? I put those words in Istock search and it told me - "Sorry, no results were found." !!! :-)
No wonder they have trouble keeping buyers;-)
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You know what's funny though? I put those words in Istock search and it told me - "Sorry, no results were found." !!! :-)
No wonder they have trouble keeping buyers;-)
Ah, see, that's where the 13 testers had their problem.
You need to understand that their system requires you to search on woman real "estate agent". You then get 398, very few of whom look like real estate agents, as they don't on the other sites.
On another note, is it not DT that I see complaints about 'similars' being rejected? (or is that Ft?) Because sorted by 'most relevant' there are a lot of pics of the same big-haired glamour puss.
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Ah, see, that's where the 13 testers had their problem.
You need to understand that their system requires you to search on woman real "estate agent". You then get 398, very few of whom look like real estate agents, as they don't on the other sites.
I understand that I need to understand but why should I understand?:-) I don't want to. I want to type in search terms, simple as in Google, and get my results. Their disambiguation system - in my opinion - was introduced by a person (or for people) who had trouble learning how to use a search engine. Getty is so behind on many fronts it really is a wonder they are still in business. Giants usually take a while to die since they have a lot of inertia and money and also somewhat inert customer base, but eventually they do kick the bucket. Unless some miracle saves them like a visionary CEO... which they are sooo far from having at this point:)
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You're doing something wrong.
When I type "woman real estate agent" I get 2118 results (http://www.istockphoto.com/search/text/woman%20real%20estate%20agent/filetypes/photos,video/source/basic#7527f9c), and they look like a pretty good result to me.
It does disambiguate to "woman" and "real estate agent" but that seems appropriate enough...
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While Getty is trying to find different ways to license photos like youtube ads ShutterStock is find customers who actually buy video's and images. How about plain old fashioned selling of our work instead of new ways to shaft the artist with pennies for views garbage!
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"No content" comment about SS is just a simple put-down.
Actually, I agree with Gostwyk that it's probably a mistake on the part of the reporter which wasn't picked up, and he meant, "no exclusive content" or some qualifier of that sort.
Saying 'no content' wou'dn't be a put-down, it would just be nonsensical.
Trust me, I'm the Typo Queen. I've made far worse mistakes.
Sure could be a typo. Although in my opinion having exclusive content is another irrelevant for the buyer thing. Many said - it's about how fast and easy I can find and buy relevant content. So what matters is search engine and the order of search results. I just did an experiment - searched for the following phrase: "woman real estate agent"
On SS, I got 3,882 results
On FT - 3,600
On DT - 2,099
All 3 agencies are showing different files on their first page sorted by relevance (with a little overlap mostly of new images). Effectively, I am looking pretty much on different content on all 3, at least on first few pages.
You know what's funny though? I put those words in Istock search and it told me - "Sorry, no results were found." !!! :-)
No wonder they have trouble keeping buyers;-)
No, you did something wrong on IS.
Istock Search Results is (2176) for "woman real estate agent"
http://www.istockphoto.com/search/text/woman%20real%20estate%20agent/filetypes/photos,illustrations,video/source/basic#17fdfd36 (http://www.istockphoto.com/search/text/woman%20real%20estate%20agent/filetypes/photos,illustrations,video/source/basic#17fdfd36)
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You're doing something wrong.
When I type "woman real estate agent" I get 2118 results ([url]http://www.istockphoto.com/search/text/woman%20real%20estate%20agent/filetypes/photos,video/source/basic#7527f9c[/url]), and they look like a pretty good result to me.
It does disambiguate to "woman" and "real estate agent" but that seems appropriate enough...
Interesting and surprising disambiguation, but indeed 2118 results with video turned off.
(I have no idea what purpose 'real' has with reference to most of these images.)
:-[ I forgot Americans call it 'real estate', nothing to do with whether the 'estate agents' are 'real'.
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While Getty is trying to find different ways to license photos like youtube ads ShutterStock is find customers who actually buy video's and images. How about plain old fashioned selling of our work instead of new ways to shaft the artist with pennies for views garbage!
Yep, the customer is out there, just go and find them...and when you have them treat them well so they keep coming back to you. There is "no magic bullet" where you just piggy back your files on other businesses and just feed of their success automatically. Just normal business relationships, building years of trust with hard work.
By the way have a look at the comments below the article. Quite interesting. Didn't know the photographer with Klein is not "contributing" to Getty.
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You're doing something wrong.
When I type "woman real estate agent" I get 2118 results ([url]http://www.istockphoto.com/search/text/woman%20real%20estate%20agent/filetypes/photos,video/source/basic#7527f9c[/url]), and they look like a pretty good result to me.
It does disambiguate to "woman" and "real estate agent" but that seems appropriate enough...
Nope, I did not do anything wrong. When I did my first search I got no results - I copied and pasted the message I got. When I tried to search for exactly the same word combination again just now, I got 1968 results. Which is different from my first time searching and from the other results that were posted here. All the settings were default.
What it means the site and the search is incredibly flaky, but if I was a customer, I'd be gone after the first "no results found" and never came back, since other sites provided me with plenty to choose from. I spent less than a minute to search all 4 sites. If I was a buyer, I'd go with the site that served me best relevant results, fast, and had a simple way to pay.
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The website was never the main issue, it's cheap prices at the competitors.
But, the main collection prices really weren't an issue. Those were fairly competitive already. It was all the specialty collections that were jammed at the front of searches that were expensive.
Thank you. Now I don't have to type that.
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Getty is doing fine, don't believe the hype on Bloomberg
What's the problem ? a 10-20% loss ? so what, there's economic crisis in the entire West, many industries are going to be shut down, Stock photography instead is not yet in dire straights, Getty selling a bit less is compensated by SS and some other micros selling a bit more.
I would be more scared in the pants of Apple or Microsoft or BlackBerry.
Debts : they will be repaid, it will just take a bit longer than expected and therefore cost a bit more in interests, but that's all, do you think banks have any problems ? their business is to keep you in debt forever not to make you pay back faster !
As for premium vs midstock content : it may be an indicator that the buyers are changing their needs and their budgets, actually i would have expected a drop in their editorial sales but instead they're doing fine.
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But there appears no coherent turnround plan to suggest losses won't continue. You are right about Blackberry - Toast!
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But there appears no coherent turnround plan to suggest losses won't continue. You are right about Blackberry - Toast!
Part of that plan will happen in a few months when our RC levels aren't adjusted with the crummy price reductions that just happened. Honestly, I will probably drop two levels. That will be step one for sure.
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Getty is doing fine, don't believe the hype on Bloomberg
What's the problem ? a 10-20% loss ? so what, there's economic crisis in the entire West, many industries are going to be shut down, Stock photography instead is not yet in dire straights, Getty selling a bit less is compensated by SS and some other micros selling a bit more.
I would be more scared in the pants of Apple or Microsoft or BlackBerry.
Debts : they will be repaid, it will just take a bit longer than expected and therefore cost a bit more in interests, but that's all, do you think banks have any problems ? their business is to keep you in debt forever not to make you pay back faster !
As for premium vs midstock content : it may be an indicator that the buyers are changing their needs and their budgets, actually i would have expected a drop in their editorial sales but instead they're doing fine.
But Getty aren't 'doing fine' are they? Their revenues appear to have been roughly static since 2007 as you can read here;
http://company.gettyimages.com/article_display.cfm?article_id=169&isource=corporate_website_ind_press_release (http://company.gettyimages.com/article_display.cfm?article_id=169&isource=corporate_website_ind_press_release)
Back in 2007 Istock were still a tiny part of the business but over the last 5-6 years they probably grew to become 30-40% of total revenues. It's pretty obvious from the recent drastic actions that Istock's revenues are imploding and it's not easy to see if and when they will be able to improve the situation. If revenue continues to fall then servicing the mountain of debt, bestowed by H&F as a parting gift to Getty, may become increasingly difficult.
Personally I think we are witnessing a massive upheaval, of truly geological proportions, within our industry. It won't happen overnight but the process is most definitely underway.
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slightly offtopic but one of my contacts who is doing news and reportage yesterday had a bit of luck and his images of a political event have been published in almost a dozen mainstream newspapers and been credited as Demotix/Corbis, AP, AFP, Reuters, and Getty, not sure about his workflow i guess he uploads to at least two different agencies (demotix and AFP) and then they're sublicenced or cross-licenced ?
however, it just shows that if you're in the right place at the right time and with the right connections there's still good money to be made.
talking about RM, all those images are sold as RM editorial.
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But Getty aren't 'doing fine' are they? Their revenues appear to have been roughly static since 2007 as you can read here;
Back in 2007 Istock were still a tiny part of the business but over the last 5-6 years they probably grew to become 30-40% of total revenues. It's pretty obvious from the recent drastic actions that Istock's revenues are imploding and it's not easy to see if and when they will be able to improve the situation. If revenue continues to fall then servicing the mountain of debt, bestowed by H&F as a parting gift to Getty, may become increasingly difficult.
Personally I think we are witnessing a massive upheaval, of truly geological proportions, within our industry. It won't happen overnight but the process is most definitely underway.
Getty owns the stock industry, if the slice of the pie where they can't compete anymore with SS is losing money they can pretty much dump it and sell out .. no problem ... they still make money with news, editorial, sport, reportage, etc
Do you see any newspaper sending his own in-house photographer in the middle of the action ? i don't see many ... most of them stick to wire agencies and wire agencies use freelancers in most of the cases too and they're the one doing the dirty job actually.
So, Getty losing up to 40% of their earnings because of istock and falling sales in creative RF/RM ? no big deal first of all because they're no more a public company, secondly because these are market-wide events affecting the entire industry and there's nothing Getty or their competitors can do to reverse the trend overnight.
If buyers unanimously cut their budgets agency can either slash their prices to accomodate buyers' needs or accept losing a big slice of their pie, in both case their market value will drop, same sh-it happens to journalists by the way, many newspapers have been shut down and jobs has been lost ... blame whoever or whatever you want but there's no going back, the whole media industry is under fire since a long time.
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Xanox, my thoughts exactly, I am surprised more don't realize this, lower downloads caused by the economy and less demand.
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Xanox has it mostly right.
However Getty sends it's hired photographers for sports, and many event will not give credentials to Freelance at all. You need accreditation and that means letter from the Editor. But these people are not staff photographers in either case. Corbis runs second in some categories and beats Getty in some others.
For sports there are also agencies that specialize. LAT is motorsports. US Presswire formed from AP and other photographers who were let go in the cutbacks. That was sold to USA Today. It's not a simple picture of who does what, but correct, agencies and publications don't have staff much anymore.
There are also photographers with hard cards, working for publications, but retaining their own rights for distribution. The leagues, sanctioning bodies Etc. issue them seasonal credentials, good for all events. Newspapers draw from these people, and so does Getty.
Newspapers are cutting staff for their news photos or handing reporters cameras or worse, cell phones. What ever happened to displaying quality images as a source of pride?
Maybe Getty will dump their loss leader agency. Maybe after it shows some profit or growth, which seems to be tossed out and gutted with the previous co-owner. I'm just guessing but if they want to sell, it needs to be pumped, before it can be dumped. That's why the changes and open doors for new images. Upload limits in effect removed. QC apparently loosening up a little, for content over deadly specific demanding rejections. That will produce growth.
I don't understand how they are losing on the wholly owned collections and agencies they purchased, which are paying no commissions to anyone outside themselves. That's the ThinkStock subs from the agencies they bought. Unless someone seriously over estimated revenue from those collections.
So I agree, maybe Getty will really sell IS, instead of having investor partners and a revolving door of people miking the profits and leaving again.
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The End
R.I.P Getty... :(
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Because they had an even wider margin before? I got the information from the link in OP of this thread. "One third of Getty’s revenue comes from its midstock business" by midstock they mean Istock. Total revenue of around 900 million so Istock is at 300 million. I think Shutterstock was projected at around 230 million for the year, close to that at least.
That's an interesting figure. If iS is paying 20-25% commission on average, that would work out at $60-75m per year, or between $1.15m and $1.44m per week in commissions. Compare that with the $1.7m per week in payouts Kelly Thompson told us about three years ago or so, when I think he said the aim was to get payouts up to $2m the following year. http://alisterpaine.com/2011/01/17/coo-interview-kelly-thompson-of-istockphoto-com/ (http://alisterpaine.com/2011/01/17/coo-interview-kelly-thompson-of-istockphoto-com/)
Now, if iStock was paying 28% on average back in 2010 (which I think is what we reckoned), then 1.7m per week translates into total revenue of $315m per year.
So what appears to have happened in the last three years is a) iStock revenues have dropped a bit - by maybe 5%, contrary to the expectations of growth b) the commissions paid out have dropped enormously, by about 20-30% c) a significant proportion of those commissions have been redirected to Getty via the infusion of "wholly owned" material, thereby boosting Gettyimages earnings while further reducing the payout to private suppliers - maybe they are only actually paying others $1m a week now. d) the collection has grown enormously - double maybe? I don't keep track.
So, weekly payouts virtually halved while the collection size doubled means earnings per file down by about 75% from three or four years ago. No wonder people are feeling the squeeze.
Of course, for Getty's bottom line, the reduction in payments to contributors of maybe $40m a year is enough to compensate for a decline in turnover of maybe 15m a year and make the business "more profitable" despite the fact it is static or ailing. Whether it is enough to service the debts that were piled onto it for dividends after it failed to generate the cash its owners wanted is another matter.
I also seem to recall that we reckoned SS had only maybe 20% of iStock's turnover back then and now it seems to have 70% or so, which means SS is growing its business but iS hasn't been able to - which isn't really a surprise when iS tries to redirect its clients off to TS where they can get things cheaper. while its doting big sister, GI, tells people that iS content is legally unsafe.
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Xanox has it mostly right.
However Getty sends it's hired photographers for sports, and many event will not give credentials to Freelance at all. You need accreditation and that means letter from the Editor. But these people are not staff photographers in either case. Corbis runs second in some categories and beats Getty in some others.
For sports there are also agencies that specialize. LAT is motorsports. US Presswire formed from AP and other photographers who were let go in the cutbacks. That was sold to USA Today. It's not a simple picture of who does what, but correct, agencies and publications don't have staff much anymore.
There are also photographers with hard cards, working for publications, but retaining their own rights for distribution. The leagues, sanctioning bodies Etc. issue them seasonal credentials, good for all events. Newspapers draw from these people, and so does Getty.
Newspapers are cutting staff for their news photos or handing reporters cameras or worse, cell phones. What ever happened to displaying quality images as a source of pride?
Maybe Getty will dump their loss leader agency. Maybe after it shows some profit or growth, which seems to be tossed out and gutted with the previous co-owner. I'm just guessing but if they want to sell, it needs to be pumped, before it can be dumped. That's why the changes and open doors for new images. Upload limits in effect removed. QC apparently loosening up a little, for content over deadly specific demanding rejections. That will produce growth.
I don't understand how they are losing on the wholly owned collections and agencies they purchased, which are paying no commissions to anyone outside themselves. That's the ThinkStock subs from the agencies they bought. Unless someone seriously over estimated revenue from those collections.
So I agree, maybe Getty will really sell IS, instead of having investor partners and a revolving door of people miking the profits and leaving again.
Who could afford it? They would have to overvalue Istock unless Getty absorbed the loss and just wrote it off, but shareholders wouldn't like that. In my mind it's kind of a "damned if you do and damned if you don't". The critical mass of lies, deception, poor management & technological shortfalls has helped to cause the alienation of buyers and contributors, the two "assets" critical to this kind of business. If another venture capitalist decides to buy IS then it is almost certain that IS will meet it's doom as that kind of group is all for money grab.
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<snip> So what appears to have happened in the last three years is a) iStock revenues have dropped a bit - by maybe 5%, contrary to the expectations of growth
Istock revenues have dropped a bit? I think you'll find it's actually a lot more than 'a bit'! Dropping the prices on Main collection images alone will have reduced income from those by about 40% if my numbers are anything to go by. They certainly wouldn't have taken such drastic action unless the situation was critical. From what I read in the forums, particularly from exclusives with mature portfolios, I'd hazard a guess that Istock's revenue could easily be down 40% from their peak. The difference in revenue from my own portfolio is way more than that.
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<snip> So what appears to have happened in the last three years is a) iStock revenues have dropped a bit - by maybe 5%, contrary to the expectations of growth
Istock revenues have dropped a bit? I think you'll find it's actually a lot more than 'a bit'! Dropping the prices on Main collection images alone will have reduced income from those by about 40% if my numbers are anything to go by. They certainly wouldn't have taken such drastic action unless the situation was critical. From what I read in the forums, particularly from exclusives with mature portfolios, I'd hazard a guess that Istock's revenue could easily be down 40% from their peak. The difference in revenue from my own portfolio is way more than that.
I'm going by the two published figures - the latest price changes obviously aren't factored in there. I suspect that the drastic measures owe more to cranking up unsustainable debts than to a collapse in turnover on iStock. Obviously, they imagine they can pump up earnings by slashing prices but I am still mystified by the logic behind that.
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There is a segment of venture/ investor capital that doesn't care about profit and earnings but instead focusses on simple number of customers/nominal market share/subscribers. Like all the websites with a huge number of people listed but no profit.
If they are trying to attract new funding or fresh money, then lowering prices to just attract warm bodies to their spreadsheet might be enough.
Some people invest (other people's money) in the hope of an IPO later or that at some stage the company beomes profitable again.
Depending on what their goals are - a real increase in profits might not even be necessary. The illusion of a growing business is enough.
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It's not inconceivable that when Carlyle Group eventually lose patience with their irksome 'investment' ... that SS might become the next owner.
Lol. And in a universe of infinite possibilities, it's not inconceivable that a consortium from the Microstock Group might one day own it. Or maybe the people who run the mini-mart along the road from here. But this is certainly also equally as unlikely :) Shutterstock and Getty are completely different businesses on completely different scales. Also - Getty is the same business no matter who owns or operates it.
The idea of SS taking over GI is nothing like as absurd as you think. The scale of the 2 businesses is not too far apart and the gap is narrowing every day. SS has annual sales of $220M and growing, GI is $900M and reducing. SS has a market capitalisation today of about $1B. Getty's market value, just before H&F took them over, was under $2B (Getty's sales were higher then too and they didn't have all that debt either). Smaller businesses launch takeovers of bigger rivals every day. They can borrow money based on the value of the greater business if their bid is successful.
SS have stated their intention to become the biggest player in the stock image industry. The quickest way to grow in a competitive market is via the acquisition of rivals. Imagine how dominant a combined SS/GI business would be and how much more control of pricing they would then have. If you were Oringer, wouldn't a takeover of Getty be your ultimate goal? He's now in touching-distance of achieving it. All it needs is a willing seller.
Take over IS let Getty stay on its top level that makes money. End TS and Getty sell out deals that cheats us.