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Author Topic: Getty revenue declining: Shutterstock and Fotolia to blame  (Read 41221 times)

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« Reply #50 on: September 06, 2013, 11:57 »
+2
Plan B in the works

Yuri gave you a hand? ;D


« Reply #51 on: September 06, 2013, 12:01 »
+1
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?

« Reply #52 on: September 06, 2013, 12:36 »
+3
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.

« Reply #53 on: September 06, 2013, 13:06 »
+3
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.

« Reply #54 on: September 06, 2013, 13:15 »
+1
SS buy GI, that would be like 2 galaxy's colliding :)

tab62

« Reply #55 on: September 06, 2013, 13:21 »
+7
"SS buy GI, that would be like 2 galaxy's colliding"


No, more like one Galaxy of Stars (SS) going towards a black hole...

« Reply #56 on: September 06, 2013, 13:27 »
+3
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.

« Reply #57 on: September 06, 2013, 13:53 »
+1
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/

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 weve 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, youre 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 were 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, Id 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. Its 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 were not really seeing were 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/

Snip

Shutterstock is one of New York techs 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 Gettys $1 billion in revenue (the rest is through its Shutterstock competitor, iStock). Thats 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 arent available royalty-free elsewhere, a Shutterstock spokesperson said.

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.

mlwinphoto

« Reply #58 on: September 07, 2013, 16:50 »
+1
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.

« Reply #59 on: September 07, 2013, 16:54 »
+1
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
« Last Edit: September 07, 2013, 17:01 by Pauws99 »

tab62

« Reply #60 on: September 07, 2013, 16:57 »
+12
If ANY Company is losing revenue to Fotolia they are in deep Sh$!



EmberMike

« Reply #61 on: September 07, 2013, 17:01 »
+3
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?


wds

« Reply #62 on: September 07, 2013, 20:24 »
0
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.

« Reply #63 on: September 07, 2013, 20:32 »
+6
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

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

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

« Reply #64 on: September 08, 2013, 06:30 »
+1
Plan B in the works

Plan 9 From Outer Space
might work better.

« Reply #65 on: September 10, 2013, 21:53 »
-6
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.

lisafx

« Reply #66 on: September 10, 2013, 22:31 »
0
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

« Reply #67 on: September 11, 2013, 10:05 »
0
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.

ShadySue

  • There is a crack in everything
« Reply #68 on: September 11, 2013, 10:12 »
+4
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
"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'.
« Last Edit: September 11, 2013, 10:31 by ShadySue »

« Reply #69 on: September 11, 2013, 10:22 »
+18
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.
« Last Edit: September 11, 2013, 10:28 by Sean Locke Photography »

« Reply #70 on: September 11, 2013, 10:36 »
+3
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?

lisafx

« Reply #71 on: September 11, 2013, 10:41 »
+1
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

KB

« Reply #72 on: September 11, 2013, 10:55 »
+7
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."

« Reply #73 on: September 11, 2013, 11:18 »
+2
"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."

wds

« Reply #74 on: September 11, 2013, 11:34 »
+3
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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