I haven’t spared iStockphoto a lot of criticism in the last year. I still believe that since Getty started to take over control of the business it is run by investment bankers and they will never be good in making business decisions. The last years have shown enough proof of that. In comparison, I have often used Shutterstock to show how a startup business with entrepreneur minds can do things better by inventing new offers and services rather than trying to optimize what they already have.
Well, I need to make clear: My true opinion is, Shutterstock is not our friend either. They keep being successful in what they do, and as long as they do, they can afford to share their success with their contributors. However, we have to keep in mind a few things for the future:
The stock market is demanding
Shutterstock is listed on the stock market since 2012. This did not have much impact on how they run their business so far for two reasons: Founder and CEO Jon Oringer still holds controlling majority of the company; the company has been very successful in keeping their predictions and growing their business.
But the truth is (for all companies), both won’t stay this way for eternity. I am not saying Shutterstock is going to fail growing further this year or next. In fact, there is potential to keep up the growth for a few more years. But at one point, things will not go perfect. It might be a wrong business decision, it might be new technology or it might be the economy.
A regular business always has to keep their clients happy. At least happy enough for them to come back and spend more money regularly. But a listed company also has to keep their stock holders happy. A steep drop in market capitalisation does not only impact investment funds or stock holders, it also impacts a company’s ability to generate new cash for further expansion if needed.
So what are we? As suppliers, we are the last piece in the chain. If customers need to be satisfied and stock holders need to be satisfied but there isn’t enough cash around to make all of us happy, the suppliers are the first to feel it.
Their success is based on a dangerous claim
“All images, all sizes, one price” – this is the basic claim of Shutterstock. It makes the offer easy to understand, the image purchase a no-brainer. Definitely a big advantage and it’s avoiding a lot of potential reasons to get upset with the company. I have read enough complaints in the iStock forums from clients who offered an image in a design only to find out the image was moved from a cheap collection to a higher one, now costing two or three times more than when the project started. Add to that the constant changes of credit pack prices and the image prices within the same collection.
Though, Shutterstock’s claim also makes it impossible to consider a different approach: That products should not be priced based on their cost but on their value. With web sized images, even paying one dollar for an image to illustrate a blog post is an investment that might not pay off for the client. From the AdSense banners I place in my blog I know how hard it is to get them to pay for the web hosting cost alone (thanks for reading and sharing my articles, by the way 😉 ).
But when I am designing a corporate brochure, a bill board or even business cards, I will take them to a print shop. And I will have to pay them. As a client I am aware of that and willing to pay a price to get well printed marketing collateral for my business. Why wouldn’t I be willing to pay a few dollars more to get the right image to support my message?
That is basically the idea of all credit or image based offers out there: Larger resolutions have a higher value for the customer than web sized resolutions. Shutterstock’s claim does not allow to profit from that customer perception. And I wouldn’t know how they would ever make a change to that without changing their whole strategy.
Devaluation of images in general started with Shutterstock
Well, this might not be completely true: Going back, we would have to blame iStockphoto for it. They were the ones exchanging images for free, or selling them at $0.25 per image at the start to cover cost.
Also, there are lots of free images out there. Mostly because the photographers do not even recognise that there is business value in it, sometimes because they do not like the idea of license payments themselves. They are available in the public domain or with a creative commons license and sometimes even with commercial licenses.
Still, we have to blame Shutterstock at least for parts of it. Mainly because it was so much more successful than all the competitors out there. In 2013, they have had 100.1 million paid downloads according to their annual statement. While leading in revenue for a long time, I doubt iStockphoto had ever come close to this. My estimate would be that iStockphoto made its $300 million with less than 20 million downloads a year. So in terms of licensing volume, Shutterstock has a huge majority of the global market share. And if you make only $2 per download for the largest part of the global licenses, this is certainly a message how valuable those images are in your opinion.
Also, their offer has forced others like Getty/Thinkstock or Fotolia to follow their lead and start offering subscriptions themselves. And as many of them failed to provide a better or different enough product, especially the smaller agencies like 123RF and Depositphotos can only compete through price, making the competition even worse.
At least there is hope: Shutterstock themselves have found that there is a type of imagery that justifies a higher price – they started their Offset website last year, and I am looking forward to how it will develop. But it won’t help us directly as there is no way to contribute as a small independent photographer unless you have a name in the market for a decade and a portfolio full of splendid images.
What can and should we do about it?
To be honest: There is not much. Like Getty was in the past, iStockphoto has become for a decade, Shutterstock seems to develop into the next market leader. There is no way to avoid them if you want to sell images.
And also I think maybe even they don’t have many options: The market forces are sometimes stronger and while you are in the lead, you are forced to make even riskier decisions and work harder to keep or extend that lead. We have seen how iStock failed in doing so. I am not sure if I should hope that Shutterstock will do better. But whoever would follow Shutterstock, I doubt they would be a wonderful place to work with as a supplier.
Finally there has been and still is a technology revolution around us that we all have to deal with. Be it Getty or Shutterstock or us contributors. We saw the move from analog to digital, allowing us to take images cheaper and integrated into a global workflow. We are now seeing a trend to mobile photography that will take up a certain part of the market in the near future with a whole new group of (mostly non-professional in the sense of not making a living from images) mobile photographers adding to it. The number of images for sale will only rise and it is improbable that the number of images used is going to keep up. We will have to find a new balance in the market and we are not there yet. I can’t say how it all will play out but I am afraid we don’t have much choice than trying to play the game as good as we can for as long as we can afford.