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)

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

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.

Quote from: gbalex on September 05, 2013, 11:30

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.

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. 

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.

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

Quote from: BaldricksTrousers on September 05, 2013, 12:19

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

That's what I thought. It seems that Getty has finally discovered the secret of how to make yourself unsustainable: borrow beyond your means.

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?

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?

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.