One of the premises for the acquisition by Getty images of Istockphoto was that customers of the microstock site would eventually migrate to the higher priced imagery placed on the Getty images site. Instead, it has been a growing cannibalization of high end, full price paying customers to the micro priced site.

From the 8% of common customers between Getty Images and Istock at the time of the acquisition, the figure is probably now closer to 20 to 25% .The proof of this increasing trend was indirectly revealed recently in a memo send out by CEO Jonathan Klein to his employees. In it he revealed that revenues for Getty in  2008 were flat and that 2009 doesn’t look much better. At the same time, revenues from their Istock division were increasing, clearly showing a customer desertion of the traditional stock pricing offering towards for low end priced alternative.

If the initial premise had been true, that Getty would be able to migrate those new, low end customers, from Istock to Getty, revenues would have been increasing  strongly.

When Getty had bought Photodisc (RF) and attached it to Tony Stone, the migration had worked. Getty had been successful at migrating some new found customers from RF to higher priced RM . The reason was simple. Traditional RF pricing is much closer to RM pricing and the only real difference was a service charge that would allow a very specific rights management ( Let’s make sure the competition doesn’t grab the same image).

However customers of microstock apparently see no value in switching to neither traditional RF or RM. The image quality is very, very similar, and they do not seem to care a bit about the possible use of the same image by their competitor.  Mostly, probably, because they do not see the image they just purchased as an added value to their brand, service or product. It is just a function, a tool.  Getty, and others, cannot make a valid point for why a similar image with the same rights ( RF) is 300 times more expansive.

So what does Getty do? It devaluates all its collections to  a lower price point ($5 for one image) in the hopes of feeding this buying frenzy. It no longer tries to convince customers to pay more but encourages them to purchase for less, probably giving the last stab at its traditional offering. It also diminishes its services in order to cut cost. They are on a very aggressive path to make all their sales operations fully automated ( a la Istock) as per Johnathan Klein memo. They have also started to take down their in house production facilities as they realized that it was much cheaper to leave the burden of creation to outside, independent free lancers. They have done it already with the Commercial stock  division and are well on the path to doing it in their editorial division. Why have staff photographers when you can have images for free from AFP or Bloomberg ? You pay nothing to produce them. Most Photo agencies already work that way.

So where is all this heading? Well, for the moment, its clearly the policy for Getty Images to become a low priced photo distributor. They want to succeed in controlling so much of the sales distribution channel that they can literally force their providers (photographers and photo agencies alike) to accept their pricing policies . A la Wal Mart, or any retail distributor.

Like Wal Mart, or Target, Getty works for Getty and no one else. They are not around to help this and that photographer, or collection. They are not around to help the MLB or NHL or Soccer league succeed in their photography needs but the opposite. All images providers to Getty are in to make Getty succeed.

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