It is time

February 1, 2008 by pmelcher.

It is time that the MBA’s and other “number” people leave this industry. It is time for talent, instinct, gut and artistic gutzo to regain control of an industry that doesn’t need to generate millions of $$ to be happy. Let’s face it, there is no money in the photo industry. No one will become the Google or Microsoft of photography because the market is just not there.

It is expensive to produce, it fluctuates all the time, it has no real tangible rules and it is populated by annoying photographers that can be great one day and awful the next. It cannot be quantified, boxed in, exceled and projected properly. It looks like a commodity but it is not. It looks like it can be set to follow some rules, but, in reality, it never does. And it is really not scalable either. It is not the more you produce images, the cheaper they become to produce. Furthermore, quantity isn’t even a guarantee of profitability in photography. Both in production and in sales.

Getty Images just released its 4th quarter numbers yesterday amid speculation that it had been sold for an insulting $1.5 billion dollars. Two important information came out of Jonathan Klein’s mouth :

1) For the full year, Getty’s profit fell to $125.9 million, from $130.4 million, in the year before. The company’s 2007 revenue rose to $857.6 million from $806.6 million.

2) The company is NOT for sale .

Profits are going down. By a few millions. Not a good sign. Especially when revenues are up. This doesn’t come as a surprise when one hears that, for example, Getty had 90 people covering the Sundance Film Festival. 90 ! For a festival that doesn’t even sell in stock because all the celebrities present are dressed for winter and have skin burns from the cold. A month later, you have the same celebrities, and more, parading in summer cloth and looking magnificent at the Oscars. Multiple 90 by plane tickets, hotels, meals, probably overtime, booze and you can just imagine how much money came out of Getty’s savings. Because you have to sale a lot of images to cover those costs. A lot. But how would an MBA know that? Even the great Carnegie wouldn’t have known that. It’s not business, its not science, its plain photography common sense and experience.

Getty not for sale. I believe Jonathan Klein when he says that. It written clear and simple on the Kohlberg Kravis Roberts’ website : “The firm’s investment approach, however, is fundamentally simple: KKR acquires industry-leading companies and works with management to grow and improve them and thereby create shareholder value.” Jonathan needs help, that’s all. He is at a lost on how to grow the company and is calling for external help. Not a bad thing. Even Nielsen, the company that owns PDN, is a KKR investment. “An advantage of KKR ownership is that the boards and managers of our portfolio companies need not concern themselves with the short-term perspectives of the financial markets. We are patient investors. We do not focus on quarter-to-quarter results. We focus on building businesses over the long term. Typically KKR holds investments for several years, and in some cases we have held them for more than a decade.”. Well, that must be appealing to Mr. Klein !!!

The bad year that Getty had, couple with Corbis inability to make a profit in 14 years, and JupiterImage struggle to come out of a very low trading stock is a sign that it is not an industry for the bean counters. Not an industry for Wall Streeters. It surely looked like it from afar. But the reality strikes deep. Yes, you can make a few millions if you work very hard, yes, you can consolidate some operations together and try to streamline cost. But at the end, you still make less than a restaurant chain. And you have a brand that no one knows about, besides in the very small world of licensed photography. You can’t even license it to Nikon or Canon and say, here, let’s make a Getty camera, as sure sign of quality. Photographers will buy it like crazy, consumers will go wild. But Ferrari can, and they build cars.

So what is the point, Mr. Klein, Shenk, Meckler ? Why suffer so much? For people that don’t even appreciate what are you doing? or trying to. You have talent, why waste in the photography world ? This is not a world of high finance, crazy deals and earth shattering mergers and acquisition. The only millionaires in this business, quite an irony, are those who sold their agencies to you. No one, before you came around with your checkbooks and slide rulers, had ever made that much money before. It is a land of talent, obsession, dedication, rewards, reaction, instinct, emotion ( lots of that), and pure passion. Time to leave, guys.

You will never see that in our industry and you know it : “Microsoft Offers to Buy Yahoo for $44.6 Billion“

Pack up your gear before it is too late and let us be. We would all benefit from it.

It’s time.

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