A State of Stock (1 of 3)

I’d been doing research recently on the state of the Royalty-Free Stock image industry, as it’s a field that directly effects the bottom line of most publishers, be they print or online. My next three entries in this new blog will outline that research and some conclusions. This blog is written from the perspective of a back-end user, as opposed to the wide variety of photographers blogs out there which discuss the perspective of the front-end photographer/seller. Their viewpoint, for the most part, seems a lot more bleak, and I invite you to explore some of their perspectives.

History according to Marcus

Five years ago, the major players in the realm of royalty free stock were numerous; Corbis, Digital Vision, Digital Stock, Rubberball, Thinkstock, Stockbyte, Punchstock (to name but a few), and the grand-daddy of them all, some might say the evil step-grand-daddy, Getty Images. But in the ensuing years, there’s been major consolidation in these names, bringing most of the stock houses under a single roof.

In some ways this has been good. Consolidation of the multiple houses has helped clarify licensing expectations, no longer having one house say one thing in its Royalty Free license, while another offers something completely different. Such inconsistencies make it difficult for companies that take licensing, copyright and intellectual property issues seriously, to keep it all straight. One company means one take on the agreement, one consistency.

But it also means monopoly. Previously there was considerably wider variation in pricing within the stock industry. Royalty-free stock CDs contained about 200 images, at a price-tag of about $300, just two short years ago—at an average cost of approximately $1.50/image. Today, sample CDs in Getty Images Royalty Free library contain about 50 images for about $500-$600—a new average of $10/image. That’s a huge jump. And that jump is driven mainly by Getty Images, which establishes the standard prices the rest of the industry follows, and uses that industry leadership to buy up other smaller houses to further enforce its price structures.

The pond gets smaller, the fish get bigger.

In 2002, Getty bought the number three stock photo agency, Digital Vision for $165 million. In 2005, Getty purchased Photonica and Iconica, for about $50 million, In 2006 it purchased WireImage and iStockPhoto for another $50 million. And in February, Getty was in talks to acquire Jupiter Images, which had previously acquired Thinkstock, Stock Image/Pixland, Goodshot and Bananastock, and had launched it’s own micro-payment agencies, called Stocxpert.com and stock.xchng. A bit before, most disturbingly, Getty had purchased iStockphoto. iStockphoto was the precursor of a new micro-payment stock photo trend in the industry, rather like the Napster of digital photography. through this major outlet, individual, non-affiliated amateur and pro photographers alike can make their digital images available for purchase. And other individuals, agencies, companies, designers and corporations alike can purchase the royalty-free images. I’ll go into this development in a bit more detail in the next part. It's changing everything, and in a real sense, is the answer to a lot of the issues I'll outline here, while raising a host of other issues as well.

While all this gobbling was taken in stride by the industry as a whole, there were personal repercussions. I had been a major purchaser from both companies, coordinating a collection comprised of dozens of Digital Vision CDs, second only to the Getty CDs. As such, I had relationships with account managers (AMs) at each of the companies. Getty’s Account Managers were less responsive, and in some cases almost belligerent in my requests to clarify elements of their licenses. In contrast, Digital Vision and Stockbyte’s AMs seemed to bend over backward to give good deals, and great service. Smaller fish were much more eager to please, and I came to be on a first-name basis with those AMs. Getty, on the other hand, shifted me off to no less than 4 AMs in six months, moving their offices from one coast to the next, and my calls were not readily returned. But they had the CDs that the designers I managed were requesting, and so I had to continue to deal with them. And in the years that followed, both Digital Vision and Stockbyte, and the relationships I had built with their AMs, were swallowed.

Now, just a month ago at the start of May, Getty has purchased Punchstock. Punchstock was one of the largest remaining stock houses, offering all the other houses, plus some unique offerings of their own. As with all the others, the acquisition was met with an immediate stream of CD titles being retired, and the remaining titles being raised in price. Somebody’s got to pay for all those acquisitions. And it’s not going to be the Getty stockholders.

Next: The rise of the micros.