Tagged: shutterstock

Oh, What A Difference (Or Not?) 5 Years Makes

Stock image consultancy firm Visual Steam recently published a summary of their 2014 survey of US art buyers in stock image licensing. It outlines some of the major trend lines from the previous year (continued pricing pressure, use migrating to online and away from print), and provides insight into buyer habits across sourcing, pricing models used most, and “top of mind” destinations for sourcing images (it’s still Getty’s game, but Shutterstock continues to nip away).

Comparing trends between this year and last might reveal glacial-type movements among art buyers, who largely have not changed their habits over 12 months. What about 5 years? The publication Graphic Design USA, for many years, has been publishing its own stock visual survey (itself sponsored by a commercial stock licensor). Have 5 years of buyer habits changed all that much, and what do their habits reveal about trend lines and the stock industry’s response? Similarities between GD USA’s 2009 survey and Visual Steam’s 2014 are close enough for comparison.

Motion

The use of motion has increased greatly over 5 years, according to those polled. In 2009 the amount of buyers licensing motion was 35% — today it is 73%. The amount of producers and licensors of motion have not commensurately increased within the stock industry, so where is increased demand met? Is inventory finally being exploited across Getty, Pond5 and others, or has the increase in use been met through assignment?

General Use

41% of buyers polled in 2009 said they use stock more than in the previous year. 60% of buyers polled in 2014 said they expected to increase their use in the coming year. While this comparison is reality vs. forecast, it does not at a general volume increase year over year, which should be aligned with ad growth. However, sales volumes do not equal revenue volumes. To further illustrate the eclipse of digital over print, almost all of those surveyed in 2009 used stock for print campaigns, and today it’s roughly half.

Spending

To which pricing and licensing models does the money go? RF licensing still sees the lions share, which is little surprise. RF saw over half (54%) of what was spent in 2009, while 2014 increased to 59% over RM. What was not tracked in 2009, but relevant today, is Free use – 13% accounted for total licenses acquired in Visual Steam’s survey, making the rise of direct to photographer sourcing by buyers a powerful theme. Certainly, Flickr, Creative Commons, Google Images, and outside distribution and sharing has accelerated this trend. Spending little, if anything, is still a major driver in content sourcing: only 23% said that quality trumps price every time.

Sourcing

Perhaps a trivial difference, while most all sourced their imagery online in 2009 quite a few were reliant upon print catalogs and CDs. While GD USA’s poll doesn’t give us buyer preferences around where they source, Visual Steam’s does, and Getty is still top of mind among stock licensors. Getty and iStock accounted for well over half of those who were asked of an immediate “go-to”, with Shutterstock not far behind. Corbis and Veer are very much considered tier 3. These findings certainly reflect market share capture. A distant, yet powerful, source was Google Images, but what remains opaque is whether this a front door to industry licensors who benefit from tagging and ads or a method for sourcing outside of stock licensing (and what is the differential?).

Buyers seem to have grown accustomed to subscription and trolling micro sites for cheap RF in the past 5 years, since questions in 2009 (“have you used a micropayment site?” and “have you used a subscription service?”) seem as antiquated as print catalogs and CDs. No doubt, with the move by iStock to go up market with its Vetta collection (and with Shutterstock mimicking the same in its recent Offset), buyers are challenged to break old prejudices even if in practice it was a shell game of content by the licensors.

Will we see the same prejudices – this time with user-generated content – be defeated in 5 years time? UGC was raised as a question in 2009, and over 1/3 of respondents said they’d used UGC at some point in a campaign. Oddly, Visual Steam’s survey did not cover UGC. On the tip of the tongue in 2009, today it remains as fragmented and immature a market as ever, with many startups and incumbents seeking traction and market acceptance as iStock did. What most photo tech companies who venture into monetizing UGC for the stock buying community consistently fail to grasp is that quality still is paramount (quality implying provenance – or assurance of rights), and that a simple exercise in aggregation does not account for the convoluted landscape built on the preferences and practices of a fickle market. Is 5 years really that long a time to solve the problem?

4 Indicators That Outline the Decline of Image Licensing as We Know It

The annual conference CEPIC recently took place in Berlin, where international photo libraries congregate primarily to seek distribution for their images and/or image collections to represent for their clients. The industry they serve is commercial and editorial image licensing, and their clients are advertisers and publishers of all stripes and colors; the fact that publishing has been in contraction for quite some time has displaced many image licensors, but to add insult to injury the advertisers are showing attrition as well.

Typically, CEPIC has been viewed as the single-most important conference for the dissemination of news on mergers and acquisitions, launching of new ventures and products, and the type of intel gathering that can significantly inform one’s business strategy. What was once a critical gathering full of insight is now devoid of such news and intel, but even a room full of people (the most telling no-show: local photo startup EyeEm) going through familiar motions without any real buzz isn’t proof of an industry in decline. We can look to more conclusive evidence of a decline than what didn’t happen at CEPIC.

1. Diversification from the Big Incumbents

Getty, Shutterstock and Corbis are arguably the largest image licensors and oldest stories within the industry. What have they been up to lately? Moving away from transactional licensing models and diversifying their product portfolios and revenue streams. Getty’s core commercial licensing business has it’s challenges, but their infringement recoupment business has seen significant growth, and they’re seeking other monetization models that are built around the use of imagery online (embedding for data culling, sharing image data to Pinterest users, etc.). Shutterstock has taken significant market share away from anyone engaged in commercial image licensing, and while they’ve almost invented the subscription category through its continued improvement in experience to the end user, it’s still a fixed market. Aside from product diversification (Music, Video, How-To Videos), a key acquisition made in WebDAM allows them to move into the CMS area and – overtime – less reliant upon image licensing revenues. Corbis has all but given up on their commercial offering, instead throwing their chips into the new Branded Entertainment Network. Pivoting toward the entertainment industry carries a larger future promise for Corbis, and leverages their equity in rights and clearances.

2. DIY Campaigns

The skills required to execute a powerful image have migrated from a core group of experts (photographers) to virtually anyone, thanks first to digitization from analog processing, then online distribution. Being able to take your own photo for a campaign, product or reliant upon UGC participation to help market brands and products has significantly displaced traditional markets for image licensing from being the sole source (outside of assignment photography) to a last resort. It’s free (relatively) and you don’t have to sweat rights.

3. Distribution of Photography

The core image licensing industry controls around 250 million images (in abstract), many of which are redundantly available across multiple sites and shared and distributed out across the web. This is a tiny amount compared to the 1.8 billion photos uploaded and shared out on social networks per day. Not including Pinterest, which is all about photo distribution, and Google, which is the defacto site for image search, 1.8 billion is still a staggering number that relegates the image industry to outsiders looking in. Most image licensors expect clients to engage with images on their own storefronts, on their terms, but those potential clients have far fewer impediments to acquiring an image elsewhere…and do.

4. Investments Have Migrated

The investment community has put money back into photo businesses, but it’s all banking on models that are monetization of UGC and closer alignment to customers – the vendor role is an obsolete one. Companies that are getting funded and are getting traction have focused on providing request platforms (reinventing and bringing value around the photographer/buyer relationships), photo communities (aggregating first, then engaging the buy side), or analytics and services that are tied to retail and branding. All of them have a fundamental product identity that is not search/license/download, and for most photography is a means and not an end.

 

These trends are not the customary topics of conversation among incumbents, and at CEPIC the conversation revolved around shrinking distribution channels, lower prices, lower volumes, and Google’s latest battles with the EU. This is well-worn fodder, but missing the larger picture. The state of transactional image licensing is one of continued irrelevance — there’s a reason why Shutterstock has gained marketshare, and why new offerings crop up that look nothing like their predecessors. A whole new generation has been educated on what image acquisition means, and its expectations on everything from price, use, and point of access are far afield from the realities of years past. This generation, as well, is defining a reality that is broader in scope than image licensors can envision. The good news for those incumbents that solely engage in transactional licensing is that they’ll have more and more avenues available to them than ever before, and their advantages (niche aggregation, robust data, clearances) can position them to take advantage of the new marketplace, but it won’t be easy.

The Value Beyond The Transaction

The traditional image licensing business is a transactional one. Historically, the management of rights was considered to be an ongoing service, but with royalty free models eclipsing rights managed volumes, this is of little to no value for today’s image buyer. All value is wrapped up in the transaction: image rights and metadata are pre-vetted, and those are the most important and critical components to the product. Consumers are buying a license – not an image – and that license makes warranties of accuracy that assuages risk.

Today, there’s little perceived value in the function of an image agency. It’s all about the transaction (and sometimes the organization of inventory). Customers have little loyalty, and it’s of little surprise; the image industry has done little to evolve with the needs of their customers – those exceptions are responsive to price and convenience (e.g., iStockphoto). There are many vendors hawking the same inventory in most markets, and the resultant expectation of the market is akin to vending machine behavior.

Image agencies, in order to secure a future relevancy and add value for their customers, need to diversify. Shutterstocks’ recent acquisition of WebDAM can certainly occupy the category of diversification. The digital asset management company, successful in the enterprise content management space, will allow Shutterstock to drive its core business deeper into the existing corporate market. However, the ECM market is twice the size of the image licensing industry (and will grow over $9B in 2017), so penetration into this market allows for them to sell services across both sectors. With the rise of content marketing and brands as publishers, customer needs – and indeed customers – have converged. Demand for content (including imagery) goes hand in hand with content management demands.

Getty, for nearly a decade, has been selling its own DAM solution (Media Manager) for media-centric companies, but as an early entrant into the ECM market it was modeled on the needs of companies close to Getty – near-in opportunities to sell a new product to existing customers. Developed prior to cloud storage, and repackaging existing technology, it still represented the type of service mentality and alignment with customer needs that is critical in the deployment of successful ECM SaaS solutions.

In the spirit of aligning with the needs of customer, a few other image agencies have been willing to move beyond the transaction into unchartered waters. Yay Images’ most recent subscription service allows customers to edit their images before generating an embed code (and thus hosting the image being used), pivoting toward providing web-based content solutions and away from a strict image vendor. Newly-minted Snapwi.re is focused on creating demand as a request platform, pulling the customer in close on the conversation and empowering them to participate in the creation process.

What about the reverse, where successful services-related businesses ventured into image licensing? Two tales come readily to mind and both share similar paths at the same time: PhotoShelter and Digital Railroad. Both came to market as a photographer portfolio platform, and both took steps toward building a marketplace for their photographers to opt-in and license. Digital Railroad exhibited good growth at the outset of their Marketplace – a big selling point being its unique collection – but other problems doomed the company. Photoshelter, after almost a year in market with their Photoshelter Collection, threw in the towel after not seeing the type of growth they had hoped for.

While service and solution-focused companies seeking to pivot into image licensing struggle in finding traction (in fact, they fail), the incumbents entrenched in image licensing struggle to hold onto their customers and move with them across a changing landscape. Shutterstock’s WebDAM acquisition is a convincing move that reframes the question of what an image agency is, and what it needs to be, but is it also hedging its bets on behalf of its shareholders; is it serious about innovating in the ECM space? Moreover, do others possess the ability, vision and mettle to follow their lead?

The image industry has a lot of knowledge and insight into content management, content distribution and content rights – all of which are highly germane to content marketing and publishing. Many are innovating on the creation and delivery of solutions into this space, but very few are image industry incumbents. If image agencies want to provide value beyond the transaction, they’d be wise to study not only their current customers, but identify their future ones.

Watch This Space For The Next iStock

Change agents often come from the outside. Not mired in the near-sightedness of immediate demands and constraints of status quo, new businesses that bring about a new solution to an old problem have the benefit of pure objectivity and the flexibility to commit resources to solving (seemingly) vexing issues for incumbents – or at least carving (seemingly) obvious shortcuts.

The prior wave of change agents to image licensing, deployed unique aggregation methods (crowd sourcing) with simple low cost access (credit system). iStockphoto, Fotolia and Shutterstock all sprung forth from the graphic design and amateur photographer world, where then-present problems – like the complexity, limited inventory and cost of acquisition – were directly challenged with engaging the network effect of the crowd. As change agents, both the network effect in establishing a community and the use of DSLRs were exploited as the primary means to success. The impact to incumbents was transformative, as it displaced the industry and redefined the marketplace and its rules.

Our present-day change agents in image licensing are once again focusing in on network effects and ignoring incumbent rules, and coming from the outside to do it. Where they are coming from is reflective in their solutions, will inform their market success and adoption, and will ultimately become another leader in transforming an industry.

In a prior post I outlined how the second wave of user generated content platforms are generating significant momentum. Many new businesses that seek change agent status see the path strictly through mobile, while others mobile is secondary to their platform.

Not all mobile aggregators will survive without solving the client side of the business. Foap, a stock photo startup focusing on mobile capture harvesting from the crowd, differentiates itself by its request platform experience. Perhaps similar to what OnRequest Images attempted to spearhead years ago (but prior to the benefit of present market conditions that make aggregation possible), Foap is communicating a personalized and unique source of corporate branding/marketing content (“Missions”). Competitive to Foap in the request platform space is startup Snapwire and ImageBrief. Where Snapwire is more centered on engaging the mobile photographer for their request platform, to ImageBrief mobile capture is an afterthought (perhaps due to their inception prior to a viable commercial mobile capture market).

More unique paths to transforming the industry are being carved by outsiders, all stemming from equally unique places. EyeEm, often referred to as the Instagram of Europe, has been explicit on its interest to enter the image licensing market (as well as monetizing its visual recognition technology), and has both the content and the resources to leverage against its competitors. Mobile-focused, EyeEm will no doubt stake further advantages in its ability to generate a network effect through its community of users – likewise with Scoopshot, who upped the ante on incumbents Demotix (Corbis) by not only committing to the network effect of mobile, but also more importantly of Twitter. The ethereal 500px are photo enthusiasts who have succeeded in aggregating (largely DSLR) along the lines of best of breed, evangelizing curation over all else. While they have outsider status, is their proposition unique enough to be transformative?

Some of the most compelling propositions to the image industry are still from technology, through attempts to monetize things like visual recognition tech (Stipple), but some non-incumbents might have a leg up on the competition purely based on where they’re from. Like iStockphoto, Imgembed comes from the design industry, which is a critical bridge between the needs and requirements of customers – or, more succinctly, the customer is defining the product. Imgembed seeks to solve the current gaps within unauthorized use, attribution and monetization, through an end-to-end system that provides transparency to all parties involved. Their platform could eventually be an immediate answer to not only closing gaps in the industry, but define how licensing is conducted. Given their broad exposure in the design industry, and proven ability to build an effective and influential network, they might be the change agent in a crowded field of aspirants.

Where Have The Customers Gone?

The short – and perhaps pithy – answer to where licensees of stock imagery congregate these days is “Shutterstock”, but the longer answer is more interesting, and reveals client-side fragmentation even with recent supply-side consolidation.

Nearly twenty years ago, the stock agency landscape was fragmented and analog, two of the requirements for Mark Getty and Jonathan Klein’s success. Their biggest achievement – like successors iStockphoto and Shutterstock – was in building a platform that had no peer in delivery to customers, across speed and accuracy of search, ease of use and price. Klein often referred to “the power of the platform”, and certainly today no one can boast platform power better than Shutterstock.

In recent past the value prop post-recession was price. iStockphoto and their peers instigated the balance of market share shift toward inexpensive credit-based prices, but the real battle in the trenches was around ease of use and access – price was important, but given the overall increase in price variance industry-wide it gradually ceded its argument to access. Market education, and the guidance of expectations fostered from mobile apps, informed customers along immediacy and not price.

Content was an afterthought, as oversupply afforded plenty of options in one place. The more customers turned to Google for image searches, and organic means of finding content via social platforms, the more fragmented the market became as did the noise-to-signal ratio. The non-exclusive nature of the industry in some ways worked against itself and siphoned off traffic from iStockphoto and Fotolia, as they all represented the same content, so why not go to Shutterstock’s all you can eat buffet?

So, where are the customers now? There are more of them, yes, and they are licensing more for shorter duration of use, so volume increased. The major problem with identifying where the customers are is tied to their behavior – they’re everywhere, yet nowhere (specific), spread out across the social graph and business landscape. More than ever, they’re finely and narrowly segmented from the personal publisher/passive user to seasoned ad campaigner. Moreover, they’ve moved on from traditional content sources, and often the only and earliest affiliation they have with licensing images is from iStockphoto, who set expectations that few businesses have been successful in emulating years later.

To reach customers with the type of network effect and scale of an iStockphoto or Shutterstock, you need a platform and truly unique proposition. For aggregators, the good news is there’s plenty of content on the market for free; rights grabs by Instagram and other apps, who aren’t even in the business of licensing, show how easy it is to gain broad rights to content. If you’re focused on licensing from the outset, like Foap, it’s a simple and transparent acquisition strategy (and a mobile one). The only real way to capitalize on acquired content, and engage customers, is to continue to shorten the span of the act of licensing, so that it becomes a mist in the background – the deus ex machina that simply grants permissions and exchanges money simply, effectively, and quickly.

UGC: The Second Wave

A year ago, image licensing platforms Shutterstock and Fotolia – both user generated content platforms – secured an IPO and substantial private equity (respectively). At the time this signaled a resurgent interest in photography business models, no doubt tipped off by Instagram’s $1B valuation and acquisition by Facebook. Today, this interest is materializing in the capitalization of a few seasoned startups in the image industry. It’s an odd array of similar-yet-divergent value propositions and models, but they all seem to be vectoring toward monetizing UGC from mobile within the commercial licensing industry.

The activity seems all outside of the US, where conditions in getting user traction and (against US trend) seed capital might have been more favorable in recent past. Finland’s Scoopshot, who cleverly leverage Twitter in a ploy to aggregate news imagery, secured $1.2 last month. Swedish company Foap built a mobile photo app enabling a photographer to sell to an end user, and recently secured $1.5M in capital for pushing its 5.7M images out into the US market. German company EyeEm, billed as Europe’s Instagram, secured $6M to exert its collection as well as leverage their own visual recognition technology. The most recent winner is Toronto-based 500px (who have built an extremely popular destination around best of breed/curated content) and have been pivoting toward commercial licensing for a while – it secured $8M to go full throttle.

While this level of capital isn’t a massive windfall, it is a story line that continues across many other startups who have focused on mining photo apps for end use licensing, and other outliers with similar models. They all seek to displace brick and mortar mainstays who have been unsuccessful in mobile aggregation for their market. Engagement and education of mobile photographers to make available their property for end use commercial licensing is fraught with hassle, and the return compensation is low enough to be a barrier for any involvement.

Where there has been decent coverage around investment, other startups have been flying under the radar. Snapwire, an angel-funded startup with the simple proposition of mobile aggregation for end use licensing (via a request platform), has been modeling their message around empowering the mobile photographer to monetize – there’s no subtlety (or aggregation pull) in pure commercialization, and Snapwire is quick to convey a deeper connection to mobile photographers via creative collaboration and pure photographic passion. Snapwire joins already existing ImageBrief, a request platform launched with DLSR-pros in mind and now certainly less agnostic about method of capture. Any UGC business knows that the joy and discovery in applications such as Instagram is a key component to participation, and critical in the success of any UGC startup with an eye toward the transfer of rights required for commercial licensing.

There are enough lessons learned from the first wave of UGC (iStock, Shutterstock, Fotolia) to apply to mobile capture. First wave aggregators did a good job of expanding the market by making content more accessible (i.e., cheaper, faster), but fell short on innovating on the supply side – particularly in the realms of content curation and mobile. The second wave of UGC – squarely focused on mobile – might benefit from the lessons of the past. Even though they face a crowded market with overlapping value propositions, they’re intent on making inroads to the millions of new and emerging artists, empowered by improving image quality on the cameras they carry in their pocket.