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Author Topic: Getty revenue declining: Shutterstock and Fotolia to blame  (Read 31003 times)

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« Reply #125 on: September 16, 2013, 09:18 »
0
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.



« Reply #126 on: September 17, 2013, 20:50 »
+1
Xanox, my thoughts exactly, I am surprised more don't realize this, lower downloads caused by the economy and less demand.

Uncle Pete

« Reply #127 on: September 17, 2013, 21:53 »
0
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.

tab62

« Reply #128 on: September 17, 2013, 22:25 »
+1
The End

R.I.P Getty... :(


« Reply #129 on: September 18, 2013, 03:05 »
+7
Because they had an even wider margin before?  I got the information from the link in OP of this thread.  "One third of Gettys 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/
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.
« Last Edit: September 18, 2013, 10:09 by BaldricksTrousers »

« Reply #130 on: September 18, 2013, 07:48 »
+1
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.

« Reply #131 on: September 18, 2013, 09:14 »
+4
<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.

« Reply #132 on: September 18, 2013, 10:08 »
0
<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.

« Reply #133 on: September 18, 2013, 12:09 »
0
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.

Batman

« Reply #134 on: September 19, 2013, 12:13 »
0
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.


 

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