The road to editorial supremacy is paved with many dangerous potholes and if Shutterstock wants to succeed in that space, it has to be ready to change the rules. The same way it has done with commercial stock. However, this time, the competition is ready and up in arms. Surprise strategy will not work. Firepower, and a lot of it, will be necessary.
First by acquiring Rex Features for$33 million and then recently by announcing a partnership with Penske Media, Shutterstock has made it clear that their next target for growth is editorial photography. By taking over the control of one the last major independent celebrity and news photo agency, most certainly number one in the UK, the empire state building based microstock company put a big foot in the pond. Last month’s inking of the Penske Media deal clearly threw the gantlet at Getty Images, the previous owner of the deal. But there is a huge gap between declaring your intentions and winning the war. Can it win it?
While both deal with photography and photographers, one could be easily fooled into thinking that the commercial and editorial photography markets are the same: They are not. While commercial photography is well suited for vast streamlining of production, operations and sales, editorial requires a much more intense hands-on approach. In every step of the process. Thus, whatever means of operation Shutterstock has currently in place, few will be adapted to the editorial process.
Access is everything
The production of editorial content is a heavily protected wall garden. Whether its celebrity, sports and some of the news, it is event-centric with very strict regulations on who can photograph them. Publicists for celebrities, Leagues for sports and Press department for news rigorously decide who can cover their events. More than often, they work with those they know and ignore the rest.
No crowdsourcing opportunities here. In fact, Shutterstock has tried and failed while attempting to rely on its existing pool of contributors to produce editorial images. Thus the necessity to acquire a company like Rex Features. The UK-based editorial photo agency has 60 years of experience in working with a variety of sources that have some access to these privileged events. With independent photographers or smaller photo agencies, Rex has developed a wide network of producers who continuously submit photo content for licensing, mostly for the UK market. But to crack the barriers, Shutterstock needs more than Rex. While the English company can provide professional photographers, they have little credentials. This is where Penske Media comes in. When approaching a publicist to get the authorisation to cover a movie premiere, saying you are shooting for Variety magazine ( part of Penske Media) is your golden pass.
But it’s just a small step. Getting access to celebrity events, while a requirement to be a player in the editorial space, is just one step to a long flight of stairs. You also need the right photographers. While it might seem easy, shooting celebrity events is not something anyone can do. There are rules and regulations, from behavior to image composition, that you need to master. Rex can supply those, but at a price. When dealing with professionals, the commission structure (usually 50% in the editorial space and 20% in the microstock world), as well image pricing, vary. Unlike crowdsourcing, the vast majority of Shutterstock contributors today, professional photographers demand revenues they can actually live from, which affects the image pricing. And since they live in major cities, like Los Angeles for the celebrity content, it is hardly inconsequential.
A lot of what is true about celebrity coverage is true for sports and news. Leagues control who can cover their games and besides the NFL, Getty Images has contracts with all the sports leagues, all the way to the Olympic Organising Committees. They can be broken, of course, but it will take money and influence, as well as time. News coverage’s hardship is not so much access, as a lot of news events are open to anyone, but its vast geographical dispersion. Once a company starts offering news, its clients expect to see everything, from the latest earthquake in remote China to the flash floodings in India. Miss a few and no one will take you seriously. Cover all and you need a vast network of on-call photographers willing to sometimes risk their lives for a photograph. Not something you build overnight.
A formidable competition.
Getty Images has spent the last 30 years building its editorial division. Via many acquisitions, mostly in the celebrity space, and internal evolution, it has built a formidable and aggressive editorial content machine. Via its name only, Getty Images can cover the majority of the celebrity events. Furthermore, it has crafted such strong bonds with publicists, that in some of the events – those that matter- they are the exclusive photographers. Meaning that to find and license some of the most important celebrity events in the world, the only place is Getty Images. There are not the only ones. Associated Press, in recent years, has launched Invision, a direct competition to Getty’s celebrity offering and in some places have chewed inside that space with success. Both are not about to let Shutterstock in easily. It matters because with editorial, if you cannot get the content, you cannot compete.
A smaller marketplace
The buyer marketplace is also vastly different. While commercial stock photography lends itself to be used by everyone for about almost everything, the content of editorial photography, as well as its timeliness, has a much more confined sales environment. At 90%, the editorial market is made of professional publishers ( book, press, website). SMB’s or consumers are episodic buyers with no long tail effect. Key here is to tap directly into the major consumers of editorial content as the periphery have little to offer. Those are also a group that has been pampered by Getty Images sweet deals: The last 10 years have seen a switch from a la carte, one on one image pricing to yearly company-wide subscription deals. A Time inc., for example, has a deal with Getty for all its publications. Because it can supply a high-quality array of relevant content, publishers have no reasons to leave them or even to look elsewhere. Of course, Shutterstock could play the pricing game and try to undercut Getty’s contracts. However, it will need to have at least the same broadness of content to be able to even start those conversations. Today, it is far from it.
A mountain of challenges
Shutterstock is certainly well placed to take the editorial challenge. It has numerous enterprise clients ready to consume their new content, against higher fees, and many more at the gate that would love to join in. In fact, offering editorial will allow the company to get more customers to their commercial stock content, as some publishers are holding back until they can offer the two. However, if they want to succeed, they have two clear paths. One, the most obvious, is to go head on against the market leader, Getty Images, and fight a long, hard battle on all fronts ( content, operations and customers). While the Seattle giant seems to be struggling lately, it is still 4 times bigger than Shutterstock in yearly revenue. It is extremely well implemented in the editorial space and with its recent setbacks in the commercial space, has no other options than fighting back with all the will power of a wounded animal. For Shutterstock, that means they will experience defeats that could batter their stock prices, a key weak point Getty will certainly take full advantage of. At a time when Adobe is threatening Shutterstock’s core revenue with the acquisition of Fotolia, it will require smart juggling to keep Wall Street investors quiet and in-line.
The second option for Shutterstock is to break the rules. Instead of going heads on with Getty or Associated Press, redefine the whole editorial marketplace altogether. While certainly a preferred route, it takes high stake strategic creativity to execute with success. Many have previously tried and none has succeeded. But none had the firepower and legacy of a Shutterstock. What Jon Oringer has succeeded in building in the last 10 years in the commercial stock space can certainly inspire creative intuition to the editorial space.
A long road
Either way, where Shutterstock can quickly make a dent is in the rest of the editorial market, not controlled by Getty. There is a myriad of small to medium editorial photo agencies, in the US and in the world, who have carved a little niche for themselves. Due to their mom and pop nature, they can offer only weak resistance to a well-oiled operation like Shutterstock. But their market shares are limited and besides offering a good starting base, it is not enough for Shutterstock appetite. Another place is international markets. While present in strong editorial markets worldwide, Getty has relied mostly on partnership and small owned offices. Shutterstock has had a much more aggressive local presence approach which they could turn into a formidable tool for their editorial strategy. The acquisition of Rex Features would certainly confirm this strategy, as they are number one in the UK market, one of the biggest in the editorial space. Could Shutterstock be thinking of acquiring leading editorial photo agencies in other major markets, like France or Germany?
It is going to be a long road with no promises of a successful ending. We will certainly see more acquisitions, talent poaching ( the best way to go after Getty) and high-level contracts ( like Penske Media) in the next few years. It will also be important to watch where Getty’s new CEO ( yet to be announced) will bring the company’s strategy.
Photo by ohhhbetty