Impact of Microstock felt far and wide in Getty's memo

Daryl Lang at PDN is one of my favorite journalist and reports on some really interesting developments in the photo world. Today, he wrote on Getty's disclosure that showed how Getty believes that microstock customers and usages are the cornerstone for future growth. Bravo for Cutcaster and our contributors!

"Customer research suggests that approximately 40-50% of microstock demand is comprised of entirely new end-uses," the memo says. "As a result of the combination of new customer segments and new end uses, volumes of microstock images are 15-20x greater than traditional stills." Those are numbers that I think could be understated.

This makes one believe that the guys at Hellman & Friedman, who are about to close their deal to buy Getty are banking on microstock being a goose that can lay a golden egg for them. It's clear they are listening to their bankers, Goldman Sachs, who during their pitch to investors to take Getty private outlined some impressive growth for iStockphoto and other microstock sites. See the numbers below to hear what the bankers think.



According to Goldman, it appears that the iStockPhoto business, currently just 14 percent of total revenues, is expected to account for 22 percent in 5 years.

Getty published a graph in the papers that show volumes of traditional stock image licenses on a slippery slope downward since the beginning of 2006, while microstock volumes have nearly tripled. (Getty acquired iStockphoto in early 2006 for 50 million dollars, rather cheap now based on all the projections and performance so far.)



Something that Daryl pointed out that I found interesting but sad for Jupiter, "is that Getty now considers AP Images its second-largest competitor after Corbis. Previously, that distinction belonged to Jupiterimages." Since I am a former stock trader I checked out the price in the markets and it was trading at $1.34, the lowest since 2001. I bet, like others probably, that Jupiter gets taken over. They have great web properties.

Other interesting facts from the memo were:

Looking at the entire market, Getty's top dogs guesstimate the market for imagery is between $7 and $8 billion annually. Around sixty percent (60%) of that is commissioned, the rest is stock.

That would put stock imagery at around a $2.4 to $3.5 billion business, according to Getty.



What does this mean for the market and Cutcaster? I agree that the user base and usages for microstock photos and videos are increasing at an extraordinary pace and the buying market should be growing for everyone. We have always talked about making the pie bigger for everyone without trying to cannibalize one site's earnings. Everyone can prosper because of the new users and new usages creating more demand for microstock images and video. Educational tools and resources will need to be developed to show new buyers how this market can work for them and how to license content securely and legally instead of just taking it. Introducing a new set of buyers to the space as well as usages is exactly what Cutcaster is looking to do and what we have been researching. We don't want to be labeled as just a stock company but an image licensing community which is open to all but still secure for all participants. If a new class of buyers emerges I think the 2 to 3 billion dollar market for stock could easily double. Just ask Dan Heller. That would double or triple contributors' monthly payouts across all the sites they contribute to.

Read the complete story on Getty's disclosure here.