Getty Images is finally declaring iStock a �Midstock� brand given how high they have pushed the prices of iStock�s exclusive imagery. I estimate that about 35% of the images on iStock are exclusive. Getty has told debt investors that 70% of iStock revenue is generated from exclusive images and that the gross revenue for the last 4 quarters was about $300 million. In Q2 2013 iStock revenue was down 9% compared to the revenue in Q2 2012.

Based on my analysis of the downloads of 192 of iStock�s leading contributors (http://www.selling-stock.com/Article/istockphoto-download-trends) with almost 33 million total download (about 20% of iStock�s total downloads since its founding) I believe that iStock had about 10 million total downloads in 2012. Based on first half results downloads for 2013 should be about the same as last year. Downloads are down from about 25 million in 2009 and 2010.

Demand For High Priced Exclusive Images

It is helpful to get some idea of how many exclusive images are actually being purchased by customers. It is unclear whether the 70% of revenue for exclusive was based on the prices before the �1/2 Our Imagery Is Now 1/2 The Price� promotion, but I will assume it was before.

The price of a credit ranges between $1.40 and $1.67 depending on the size of the package purchased. For the purposes of my calculation I will use an average price of $1.50 for each credit.

Non-Exclusive images range in price from 4 to 18 credits or $6 to $27
Exclusive images range in price from 5 to 28 credits or $7.50 to $42
Exclusive+ imges range in price from 10 to 55 credits or $15 to $82.50
Vetta images range in price from 35 to 160 credits or $52.50 to $240.00

It is interesting to note that Midstock images are often higher priced than Premium images purchased on Gettyimages.com. And on gettyimages.com the customer is not limited to 500,000 impressions before paying an additional �Extended License� fee.

Recently, I was able to analyze the sales figures of several of the major RF contributors to Gettyimages.com. In 2007 when Getty was a public company the average price of an RF license was about $240. In the sales of the collections I reviewed the average price per-image-licensed in 2008 was $219. In 2012 the average price pre-license had dropped to $126. (Images had been added to the collections during the period.) This wouldn�t have been so bad if there were more sales, but in fact only about one-third as many images were licensed in 2012 as in 2008. In addition, 25% of the licenses were for prices under $25. Is the Midstock model sustainable when Getty�s Premium images are being licensed at these prices?

The large file sizes on each of these iStock brands are priced as follows:
Non-exclusive   - $15.00
Exclusive             $25.50
Exclusive+           $60.00
Vetta                 $112.50

If 70% of iStock revenue is from images that are �Only from iStock� that means that about $90 million is from the licensing of Non-exclusive images and about $210 million from the three higher priced categories combined.

Assuming 10,000,000 downloads, if we divide $90 million by a $15 average price per image we get 6 million downloads of non-exclusive images. If we assume a $60 average price for the various exclusive collections we get 3.5 million downloads of exclusive images. The $60 price may be a little high because relatively few customers may be purchasing Vetta images at their higher prices, or on the whole customers may be purchasing smaller file sizes. We also have to take into account that a portion of that $210 million in revenue comes from the purchase of Extended Licenses. That, or a higher average price in general, could mean that there are fewer exclusive downloads.

Non-exclusive Revenue

If iStock licenses the same number of non-exclusive images in the second half of 2013 as they did in the first half their revenue from non-exclusive images will be cut to $45 million since non-exclusive images are being licensed at half price. It is hard to believe they will license as many non-exclusive images since those images now appear so much lower in the search return order.

That would mean that in order for Getty�s Midstock revenue to grow they will have to license a lot more of their higher priced images. But, are there really more customers that are willing to pay that much?

If you disagree with my numbers, or my analysis, please let me know.

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Quote from: Sean Locke Photography on October 04, 2013, 15:49

"Getty Images is finally declaring iStock a �Midstock� brand given how high they have pushed the prices of iStock�s exclusive imagery."

Are you saying they've slapped a label on it somewhere?

"One third of Getty�s revenue comes from its midstock business"
http://www.businessweek.com/news/2013-09-04/caryle-group-s-getty-images-ratings-on-review-for-cut-by-moody-s

Well that's a newspaper saying it.  Of course it doesn't matter what you call it.  It is what it is.

1.

In Q2 2013 iStock revenue was down 9% compared to the revenue in Q2 2012.

The Bloomberg report said that mid stock revenue was down 9% - is anyone else saying that specifically means that iStock is down 9%.

2.

Based on my analysis of the downloads of 192 of iStock�s leading contributors with almost 33 million total download (about 20% of iStock�s total downloads since its founding)

I am very dubious of this metric as a starting point because I believe that  imported exclusive content (much of it very high quality) now likely accounts for a very significant proportion of sales. I do not believe that the time-served leading contributors and iStock members are taking nearly such a big share of the total. That is not to say that they are not still doing very well - only that much of the work in the imported collections is probably doing very well also.

I do not believe that you can extrapolate from 192 accounts.

3. I am not convinced that it is possible to draw a useful picture from a calculation put together from so many guesstimates, ifs and maybes - the uncertainty compounded and the possible accuracy diminished at every if ?

.

"Getty Images is finally declaring iStock a �Midstock� brand given how high they have pushed the prices of iStock�s exclusive imagery."

Are you saying they've slapped a label on it somewhere?

Well, there is the new logo ...

Personally I think it is extremely feasible that the top 200 contributors were responsible for 20% of total sales ... I'm almost surprised that it's not higher.

How can you tell who the top 200 contributors are today when so much of the best quality content is from collections which were not represented even 18 months ago ?

Either way, it's feasible. But it's a guess. As is more or less everything else here. There is no data. Building a calculation out of guesses is pointless because anything multiplied by guess = an unknown. And the unknown gets bigger at every iteration.

Also - there is nothing here about strategy.

wds
I lumping all the Exclusive images into one group. I�m not trying to make judgment about the percentage of sales that are just Exclusive, the percentage that are E+ and the percentage that are Vetta.

Gostwyck
Thanks for the insight on your numbers.

I didn�t say that my list is the 192 top contributors, I said the list is �192 of the top contributors.� There is a difference. I know I am missing some of the top contributors. Back when we had istockcharts.de I started tracking the top 200 people and later expended it to the top 500. Some of the original top 200 have slipped down in the list and a number of the lower ones have had a lot more downloads and have moved up. I have also been able to add a few people that I have discovered from other sources as the years go by. Regardless this group of contributors has a combined total of almost 33 million downloads and I can�t imagine that iStock has had more than 150 million total downloads given the numbers istockcharts was reporting when they finally stopped supplying information. Thus, I think the contributors I�m tracking representing 20% of total downloads.

Bhr
I think we all have to make judgments about what to shoot, how much to invest in new production and the likely direction the business will take in the future since every stock producer is betting that there will be increasing demand for the images he shoots one, two or three years down the road. I wish we had more and better data, but I think it is worth basing our judgments on what little data we can find, rather than just hoping that everything will work out alright.

since every stock producer is betting that there will be increasing demand for the images he shoots one, two or three years down the road.

Surely that isn't the case? Over and over again we hear of declining sales as images age. Lifestyle work is particularly vulnerable to changing fashions, but other subjects are prone to being buried under the weight of new, similar material, not to mention the iStock phenomenon of "lost and gone forever" for new material entering the search, never to be viewed at all. Twelve of my last 20 images it iStock (uploaded between three and four months ago) have not been viewed even once. I guess you'd need a deep-water drilling rig to reach them in the search now.  The other eight have produced three sales from 19 views. That is a pretty good hit-rate and I like to think it means that if people looking for the type of work I do get to see it then I have a reasonable chance of making a sale, but search burial destroys that chance and it's hard to see it as being a reversible effect.

I'm seeing much the same pattern as Gostwyck.

"Getty Images is finally declaring iStock a �Midstock� brand given how high they have pushed the prices of iStock�s exclusive imagery."

Are you saying they've slapped a label on it somewhere?

Getty has $2.6 billion in debt and that debt is traded. Getty is telling Debt Investors that iStock is "Midstock" and they are trying to make an argument that it is aimed at a different customer from those who buy Premium stock (Getty's name for what they call the higher quality stock that can be found on Gettyimages.com -- their characterization, not mine).

What you are saying here (along with the rest of this item) seems to be based entirely on the summary of Moody's Sept 03 report and the reporting of that summary eg - Bloomberg / Businessweek item.

I would like to specifically ask whether you have another source for your statement that "Getty is telling Debt Investors that iStock is "Midstock" ". And I would like to ask from what you are concluding that iStock is down 9%. Let me explain  my question:

The Moodys summary does not say that iStock is midstock. iStock is not mentioned.

The Bloomberg Businessweek item pads out the summary with various related factoids including, for example, that Getty's midstock business has been challenged by Shutterstock etc - but it does not define the midstock business as being specifically iStock. That could equally mean that midstock (as a price point) has been challenged by microstock. As we know. Word association maybe makes us think they mean iStock specifically.

And - even if iStock is "midstock" - from what are you concluding that iStock is all of their midstock and therefore that iStock is down 9%. The Bloomberg piece talks about midstock being down 9%.

Unless there is specific evidence to the contary I would take Getty midstock to mean mid priced RF in general across all sites. I would take premium to largely mean RM.

So - what makes you say that iStock is down 9% ?

Jim, in short, midstock is just an outdated term.  More and more, there is no "microstock" or "midstock" or "traditional agencies".  There are only price points that relate to license rights.

The challenge isn't in trying to define semantics...it's about educating buyers about rights associated with a certain price point.  What's going on at iStock isn't about the customer...it's about attracting more contributors to become exclusive at their agency.

The thing I do find fascinating about your research is your discovery that iStock had 10 Million Total Downloads in 2012.  Are you sure this is just iStock and not Getty in total?  James, at Alamy, in comparison stated that they had about 365,000 downloads at the same time with about 30 million images.  That's a very big difference.

Thanks everyone for your comments. Here�s some more thoughts.

I agree that Midstock is a pricing policy that is an attempts to define a price point between Premium pricing and Microstock and tha I would say that in general there are 4 different price points � Premium, Midstock, Microstock and Subscription. It seems clear to me that the higher you price the product the fewer sales you make.

The rights buyers get with Subscription, Microstock and Midstock are pretty much the same. The only difference is price.

It seems to me that with its Midstock offering Getty is saying, �We�re going after customers that have more money to spend and we�re willing to give up sales to those buyers who can only afford Microstock prices.� The question is whether the higher prices will make up for the reduced volume. It is very difficult to position a brand so it will be attractive to off-the-rack shoppers and also attract buyers who want exclusive, unique and are also willing to pay premium prices for such a product.

How I get to the 10 million downloads is very simple. I have identified a group of contributors who are responsible for over 20% of iStock�s total downloads and they had about 2 million downloads last year. If somehow the people who have the other 80% of downloads historically are making a disproportionally higher share of downloads today then my 10 million estimate is off. In the last year-and-a-half I�ve expanded the list of people I track to over 400. The total downloads for all 400 are about one-third of iStock�s historical total and the downloads for this group in the last 12 months seem to be around 3.3 million.

In coming up with my average price per credit I didn�t take into account that some buyers could be paying a lot less for their credits as a result of corporate account buying and discount codes. If we assume the average price per credit is $1.20 instead of $1.50 that would mean that there would have been about 7.5 million non-exclusive downloads and 4.375. Exclusive downloads for a total of 11.875 million based on the gross revenue reported. My estimates could certainly be off by that much.

The interesting thing is that any iStock contributor receiving a reasonable number of downloads could easily calculate what their average royalty per download has been over a period of 6 months or so, factor in their royalty percentage and come up with an average price paid for the use of their images. I haven�t seen that kind of reporting and I would think such a number would be useful for the people participating in this group.

If the volume of non-exclusive content is on the rise that would be a good thing and mean that Getty is pulling customers back from SS and FT. However, given that a customer has to use the slider to find the non-exclusive content I would think it would be more likely that it is in decline. If people with a fair number of images can tell us that their unit sales went up in the last quarter compared to earlier in the year that would help us understand what is happening.

My guess is that most customers want to use the default search and that should mean that Exclusive sales are on the rise as a percentage of total units licensed.

Gostwyck�s analysis that the percentage of exclusive files is closer to 50% than 35% makes sense.

I get a lot of calls from investors wanting help in understanding the stock photo industry. It is clear to them that when Getty talks about Midstock they are talking about the iStock brand and not Premium RF. If Getty was including the RF they sell on Gettyimages.com in Midstock then the total sales of Midstock would certainly be much more than $300 million. The investors are also told that Premium sales also generate about $300 million and there is no way RM alone is doing that well.  It is unclear where Getty puts Thinkstock. It shouldn�t be part of either Premium or Midstock, but it must be rolled into one of these categories. I can�t imagine Thinkstock generated much more than $10 to $20 million annually which doesn�t make it a big issue in either case.