It looks like the leveraged buy-out guys have sucked a lot of cash out of Getty Images.
pehub.com
While I suspect that the operations are still solidly profitable, we won't know until they file an S-1, though it is probably more likely that the company will be sold provately if their numbers do not compare favorably to Shutterstock.
The last two Getty Images related posts from Thoughts of a Bohemian:
Techno Cash
It is going to be interesting to see how the market reacts to Shutterstock IPO. For once, the stock photo market will be taken out of its own little world and confronted to the business world.
Also of importance, obviously, is KKR investments in Fotolia for 50 % of the company. Obviously, this is a revelation of perceived value from traditional investors.
It is clear that the recent sale of Instagram for 1 billion has impacted those decisions and will probably also affect their outcome.
Both companies, Fotolia and Shutterstock brand themselves as tech companies first, photo agencies (or a variation of sort) second (or third..or last). They are predominately sales platforms for crowdsourced goods. The fact that they are selling photograph instead of widgets is almost irrelevant.
How will these two investments impact the growth of these companies will be the real revelation. If both succeed in transforming this massive influx of cash into market shares, it will definitely signal the burial of traditional RM models and the end of those photo agencies that cling to it.
It will also declare the end of the professional stock photographer as we knew it ( hasn’t that happen already ?)
More importantly, it might signal the weakening of Getty’s formidable machine.
Bothe Fotolia and shutterstock are going for the more traditional marketplace, the up to know reserved hunting ground of Getty. Shutterstock clearly states it in its filing while Fotolia remains more general. However, both see their growth tracing a highway into the professional image buyers market.
In the process, they might force Alamy, who has a similar business model than they do, to revisit it’s own approach to the market and abandon RM while extending their crowdsourcing.
Fotolia and Shutterstock are both visibly aiming at becoming the only platform to buy and sell photography, similar to what Itune has done with music.
While the concept is not new, Getty has been flirting with success in that matter for years, it is now becoming closer to becoming a reality.
Think there is still a need for RM ? Let take editorial. Recent years have shown that no publication care for exclusive anymore. Time and Newsweek, for example, could never publish the same image. Today, they both use the same three source of images , Getty, Reuters and AP and could care less if they publish the same image. If they want exclusive content they just assign it .
Online, speed and volume only matter. Wether another site publishes the same images is irrelevant since whatever happens, the story can be, will be, copied.
Book publishers are tired of paying fees based on print run, language, digital , etc. With their need for multiple platforms publishing, RF is a much better model.
Advertising ? Sure, for large project. But then again, that is more the domain of assignment than stock photography.
Nothing new here.
What is really new is the amount of money being invested. Never since Getty’s entry in the market has the stock licensing world seen so much cash fire power infused so quickly.
Whatever the result, the impact on this already battered and lethargic industry will be phenomenal.
This entry was posted on May 17, 2012 at 8:59 am
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To sum it all
In a financial report hardly seen by anyone, it is mentioned that Getty Images will take a loan of $275 million in order to pay dividend to it’s shareholders. Those are well known. It is a equity firm called Hellman & Friedman . This payment will, in addition to previous ones, cover the cost the equity company had to pay to take the company out of the public market. $1.3 billion dollars. What does this mean ? Probably that, incapable of selling the company, it is paying itself back. Was that part of the plan when they initially bought it? Probably. It would certainly make sense. Does that mean that when the payment is fully done, Getty Images returns into the hands of Klein and company ?
However, what is really important in this report is that Getty has made $945 million in revenue for 2011. That is close to one billion dollars ( Instagram anyone ?). Nothing is said about how much it took to get to this number or about profits, so we can only speculate. Furthermore, since it doesn’t give any breakdown, this revenue certainly includes music and video licensing revenues.
Regardless, last time Getty had announced revenue, it was around $800 million, a few years back.
So what do we learn ? That Getty, despite terrible market conditions, is growing. At what cost, we don’t know.
If the overhaul stock photo market is indeed at $3 billion, then it owns a third of it. If it’s only at $1.5 billion, as some others claim, they control 60 %.
Undeniably , Getty is number one in the US. By a large margin. In other markets, in most European countries, they are certainly in the top 3 position. Are we close to a monopoly ? Certainly. The question should rather be, is Getty using its massive dominance in the market to shut others down. Difficult to argue since it seems that every week a new photo agency is born. Existing photo agencies all seem to continue to be in business ( 500+ expected attendees at Cepic this year), albeit at what cost?
When Getty first entered this market in the 90’s, no one believed that a photo agency could post a billion dollars in revenue. Most were happily satisfied to be in the tens of millions and only dreamed of bringing it to the hundreds.
So what is the key to Getty’s success ? Continued adaptation to the markets needs, regardless of the cost to photographers. Getty’s strategy has always been, ever since the famous Klein statement of ” photographers don’t pay our bills”, to meet or exceed their clients demands in pricing and content. If they acquire a company it is not so much to eliminate competition than to have what clients obviously desires.
On a related note, it seems Shutterstock, the subscription only microstock company is going for an IPO. This will be one of the very rare times when a stock photo agency enters the public market ( Getty tried and retracted after a few years) . There is a good chance that Shutterstock will heavily put the emphasis on the technology part of their company and stay away from the stock photo part. They are probably encouraged by the huge evaluation of Instagram and figure there is an opportunity here. If this IPO is successful, it shouldn’t be long we see the others, like Dreamstime or Fotolia, also attempt it.
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