Is Shutterstock the bellweather of the stock photography industry, or the exception to the norm? First off, Shutterstock recently reported strong results, with 2013 revenue of $236 MM, up 39% from the year prior, and EBITDA margin of 23%, up from 20% the year prior. Even though sales and marketing increased by 25% from 2012, the company reinforced that their cost per acquired customer remained the same.
But how does that compare to the industry, and how far can this growth go? The total stock image market is estimated to be between $1.5 B to $2.88 B or more, depending on the estimate and whether you include and how you account for video footage, illustration, individual producers, and more. Shutterstock has indicated that the market can grow to $6 MM by 2017, but that’s an expansion that doesn’t fit industry expectations that the market is stagnant or declining (but at the end of the day, it all depends on how you define the market).
So, how is Shutterstock growing? While Getty is far larger, with estimated revenues of ~ $900 MM in 2013, Getty certainly isn’t growing at a rate anywhere near Shutterstock, and neither is any existing stock photography company in the market. Simply put, a solid product for stock buyers, a wide library of images, smart partnerships, and strong marketing have driven Shutterstock’s growth to date, and continue to be the core of their business. Additionally, Shutterstock noted on the earnings call that their enterprise business doubled in 2013 and now represents 15% of revenue. While the company refused to estimate that the enterprise business would double again, they did predict growth would be at “the higher range”. Additional growth from international expansion and diversification with their education product Skillfeed are growth areas, but also come with their own risks and challenges.
The bigger question is how the stock photography market itself, and how the rising imbalance between the volume of images on stock photo marketplaces and community photography sites impacts strategies in the space. Do emerging “social stock” companies like EyeEm, 5000px, Twenty20, Foap, and Scoopshot to an opportunity to source stock content from a broader community of contributors? Do community-driven photography sites like Instagram and others have the opportunity to turn their community into photo sellers? Do buyers want, at scale, more “authentic” imagery that can be sourced better from the crowd than professional photographers? Can social stock expand the stock photo market, or does it merely steal market share? Many observers cite the quality of imagery and the difficulty in filtering through images as major barriers to social stock, but I think the technical challenge of improving image search is one that someone will solve, to great profit. The issue of model and property releases is more challenging, and requires significant investment from the new photography community sites to build the infrastructure necessary to manage releases, but it’s possible to build.
Stock photo companies innovated in pricing (microstock) and mobile technology (of note, Getty, Alamy, Fotolia, ImageBrief, Shutterstock and others have mobile apps that allow contributors to upload content directly from their phones and/or buyers to find images through their phones). But will they innovate in social?
The impact of mobile photography and popular photography communities like Instagram and EyeEm on stock is multi-faceted. As Stephen Mayes pointed out, “stock imagery is designed to reflect societal values so it can be a vehicle for commercial communication”, but also shapes culture by the values expressed in the images distributed to the masses. At the moment, the social platforms appear to be shaping stock: the stock buyer’s current quest for “authentic” images is shaped by the look and feel of the millions of images shared every day on Instagram, Tumblr, Pinterest, Facebook and more. Awash in images of our daily lives, we’re more acutely aware images as a tool for communication, and we’ve become more attuned to the message behind an image. Instagram may not launch a stock photo business, but it’s impact on the stock business has already happened.
Stock images are a big business, and the generic stock image isn’t going away anytime soon, no matter what the social stock companies do. The legal issues of rights management, property and model releases and quality benchmarks are real barrier to entry for stock photography companies and stock photo producers. But social stock, reflecting the desire for buyers to use “authentic” imagery that is more attuned to our photo sharing culture, has an opportunity to be a big business also, and that’s surely behind the moves of EyeEm, 500px, Twenty20, and others to launch social stock marketplaces.
The hardest part, though, may be getting the contributors on board. Do you want to sell your photos? And will you jump through the barriers to get your photos ready to sell, for a likely low return? My bet is you do, but you won’t, respectively. For most of us, a like, a heart and a comment will be enough … at least until we start seeing real dollars.
Getty stole the headlines recently with their move to “make its pictures free to use,” as all the headlines proclaimed. Getty released 35 MM of their over 150 MM images free for people to embed into their sites for editorial and noncommercial uses. The embed (see what it looks like here) uses an iframe to deliver the image and provide a backlink and attribution to the photographer, with additional sharing tools enabled. It’s a powerful tool, but it’s crippled in many technical ways that will drive many publishers away from using it regularly.
Why did Getty do it? Getty’s betting that one of the best ways to fight copyright infringement is to give people an option to use images for free, recognizing that a lot of infringement cases aren’t really lost revenues but lost opportunities. Getty is now providing people a free option, at least under their conditions of use.
What’s interesting to me is that while embedded video, audio and interactivity is a common part of the web, embedding images isn’t as common. From a user perspective, embedding rich media is easier than managing self-hosting and delivery, but images are easy for most publishers to handle, from irregular bloggers all the way up. Embedding is actually harder for most people making web pages, especially for many mobile and responsive designs today, so why would we want to embed an image? We won’t, unless we get something valuable in return, and it’s hard to see how ‘free’ is enough for most publishers with the current product.
What does Getty get from it? The biggest value in my mind is the option value Getty creates by distributing their photos across the broader web. Getty has the option to distribute advertising through the embed player, and if nothing else, gets the benefit from the logo and branding in the embed to spread the Getty brand across the web. Getty also gets access to the data about how their photos are used, outside of just sales data, and it’s valuable data that can be used to better understand who uses images and how they are viewed. And let’s not underestimate the value of the PR and media coverage Getty is getting. Getty has been experimenting with ways to keep up with the changes forced on them by digital distribution, working with Pinterest, Stipple and others. At the end of the day, Getty gives themselves a chance to learn from how the web chooses to use their images and potentially build a larger footprint across the image-enabled and social web, and that creates a strategic option for them to leverage in the future.
Is this a groundbreaking innovation? Is it going to change the face of stock? Not hardly. But it’s a smart move, nonetheless, for Getty to create the option for you and for them.