CHAPTER 12

The Future of Microstock Photography

What does the future hold for microstock photography? If you had asked this question in 2000, the answer would have been a puzzled look and a request to explain what you were talking about. Just 7 years down the road, and here I am writing a book on a subject most people are still only vaguely aware of. It might therefore seem like pure hubris even to begin to predict the future of such a new and exciting phenomenon.

So, before I try, let's see what some microstock photographers said when I put the following question to them: Is there a danger that the microstock bubble might be about to burst?

• “No, not as long as people want to buy pictures. There are a lot of buyers out there who have not yet found microstock.”
• “There will always be a need for imagery … more and more photographers are trying their luck on the microstock sites.”
• “We think that contributing to the microstocks will be an income stream for many but a main source of income for only a few.”
• “I don't think [the bubble] will burst; at some point. the growth will level out … I do see barriers to entry getting a lot tougher. This is already happening as the microstocks increase their quality standards, which will require better equipment and skills.”
• “No, but I do believe there will be a lot of merger activity in the future.”

Interesting comments from a diverse and intelligent group of people. Are they right?

THE GAP

First, let's consider stock photography in the round because it has not just been the microstocks that have evolved over the past few years. The traditional libraries have done so too and some, like Alamy, have grown in tandem with the microstocks.

In the last decade of the 20th century, the major traditional players, Getty and Corbis, helped to revolutionize the stock industry by acquiring a range of smaller libraries, incorporating their content, digitizing it, and moving a proportion of their huge databases online. They dwarf in size the largest microstock agencies. Corbis has somewhere around 100 million images and a turnover of $250 million or thereabouts. Getty earns even more. Compare this with the larger microstock agencies, with around 2.5 million images and a turnover in the single-digit million-dollar range and you will see how big a gap there is between the new kids on the block and the established players. Alamy, launched in 2001, is smaller than Getty and Corbis but is entirely Internet based, just like the microstocks, and offers strong competition, particularly in the editorial sector.

Over recent years, these giants of photographic retailing have secured key contracts for the provision of images to a range of top businesses. They have extensive international contacts and recognized brand names. But, hold on a moment. Has not Getty recently paid $50 million for iStockphoto? What about Corbis establishing SnapVillage, or Jupiter Images acquiring Stockxpert? What can we deduce from these developments and from the incredible growth enjoyed from start-up libraries like Fotolia, with well over two million images added to its database in a couple of years?

I deduce this: photography is ubiquitous and the barriers to entry low for library start-ups and for their contributing photographers. It is a paradigm of the new phenomenon of “crowdsourcing” (Figure 12.1), where work traditionally done by defined groups of employees or specialzeds is handed to and undertaken by the public at large or a nebulous and uncontrolled portion of it—basically a crowd! That includes you and me, by the way. It's nice to feel part of the crowd.

Certain media are highly susceptible to the crowdsourcing phenomenon, including photography. Think back to Chapter 1, where I listed the reasons I thought that the microstock revolution was inevitable: the Internet, fast and cheap broadband connections, and digital cameras. With the cost, time, and much of the effort removed, the distance between the producer of photography and the buyer has been greatly reduced. The libraries are receiving from you, the photographer, a product that is ready to sell with no further work needed, save a decision, taken in seconds online, about whether to accept or reject it. The microstocks do not need, and do not have, plush corporate headquarters or many staff members to pay for. Their business exists on hard drives and in cyberspace. Perhaps they come closer to that 1980s dream of the paperless office than most other businesses.

FIGURE 12.1 Crowdsourcing leverages the power of the people. © Peteralbrektsen/Dreamstime

Like many revolutions, it is starting from the ground up, building momentum. There is still a long way to go before the microstocks achieve anything approaching full market penetration, in my view. I was speaking to a designer friend the other day. The only microstock he had heard of was iStockphoto (and that was quite recently), and he is a top designer in a boutique London Web-design practice. Yet mention Getty or Corbis to him and he knows both and has used them (resenting the price but feeling he had no alternative). Imagine the potential for growth if others like him learn about the microstocks. (He will; I am buying him a copy of this book.)

The biggest single expense the microstocks have is marketing. They need to market to achieve penetration and reach the guys like my Web designer friend and his friends. If they do that and keep growing, I see no reason why the best microstock sites should not eat further into and up through the market shares of the major players like Getty and Corbis. There is nothing to stop them except themselves, or their owners, which is where I come to the first threat I foresee to the continued success of the microstocks.

THE WOLF EATS THE LAMB

Getty owns iStockphoto, Jupiter Images owns Stockxpert, and Corbis has a microstock start-up in SnapVillage. I recall a fear expressed before Getty acquired iStockphoto that the major traditional libraries would buy up and shut down the microstocks to preserve their high-value core business. For a while after Getty gave Bruce Livingstone and friends the lifestyle they no doubt deserve as innovators by purchasing iStockphoto, everyone held their breath to see what Getty would do. What is happening is that iStockphoto is being increasingly integrated in the Getty empire. Bruce Livingstone has taken a promotion within Getty; Getty's search engine has been adapted for use by iStockphoto. I guess the risk is that the major players will ensure the microstocks survive while at the same time protecting their core businesses from their effects.

However, I now see this as less likely, despite the Getty takeover. There are simply too many microstocks to kill them off or control them, unless their owners all decide to cash in, and it is now too late to close down a market so recently opened up and expanding. In fact, if the microstocks do not service that market, community sites like Flickr will do so. Jon Oringer tells me, “We have spent a considerable time investing in our brand and marketing our products. Companies who opt for short-term success instead of long term will, eventually, have to close or partner to survive.” This, to me, sounds like a manifesto for independence.

CONSOLIDATION

While I believe, therefore, that the microstocks will survive, we are likely to see some market rationalization and consolidation in the next couple of years. Some of the smaller sites do not seem to be selling very much. Most of the sales come from the top handful of sites (see Chapter 10 ).

Like the dot-com boom of the late 1990s, there is likely to be a shakeout, with some smaller sites closing, failing, or fading away to obscurity. I will not try to predict which sites those might be. However, I will say that it probably won't be the big current players or SnapVillage, due to its parentage although, if that site is not a rapid success, perhaps Corbis might be tempted to do a Getty buy-in to a major microstock player.

DIVERSIFICATION

The microstocks are already diversifying into video, flash, and graphics. Shutterstock was one of the first with a video offering, followed by iStockphoto. Jon Oringer said of this development, “Stock video is the newest addition to our product line. It's a young industry, but we believe it will be an important part of our overall business.” I personally cannot see why sound and music should not be added and the microstocks become truly multimedia in content.

PREDICTIONS

Bruce Livingstone, CEO of iStockphoto, is confident of the future of microstock but sees some enhancements in search engine technology. He says: “There will always be a need for new, fresh imagery. A collection must keep cutting-edge and modern. I think what you will see is much more attention to searching features, to allow people to find just the right image within a vast collection. … Industries change with advancements in technology. Smart 'professional' photographers are already looking into microstock as another sales channel.” But Bruce also recognizes that “this is the year for lots of microstock competition. It will get interesting.”

Serban Enache of Dreamstime is also confident looking forward: “With many other players jumping into the game, we feel that the future is simply brighter than ever. Our marketing channels are well put into place, and new players have to adapt to the rules of the game while we actually created them. … As to the industry's future, one can say that microstock will cause the bubble to burst of the traditional industry, if it has not done so already.”

Against this confident background, here are my predictions for microstocks in 4 years' time or less:

• There will be three to four major microstock players, with a few stragglers.
• New intermediate pricing structures will be put in place by Getty and Corbis, bridging the gap between the microstocks and the major libraries' core business lines (shortly after writing the foregoing but before I completed the manuscript for this book, the first steps in this direction were being taken by Getty with a Web resolution pricing structure).
• Some microstocks will introduce premium product lines to attract and keep their major photographers. These will price images at the bottom end of current traditional royalty-free pricing, around $35–$50, maybe a bit more or less.
• Several microstocks will also start selling images rights managed or on new hybrid terms. iStockphoto has already experimented with this idea.
• More information about image use will be provided to photographers. Fotolia already has the basis for this; why not take it further? It must be attractive to photographers, and it should be easy enough to build into the image-buying process.
• Commission levels will rise a little further and then plateau.
• iStockphoto will increase its base commission level for nonexclusive photographers from 20 to 25% as competition begins to bite. Exclusives will also get a rise, to a maximum of 50%–60% commission at Diamond level. They will also introduce image exclusivity, with an increased commission somewhere between full artist exclusivity and standard.
• Shutterstock will introduce a credit purchase system, moving to become a hybrid like Dreamstime.

Not all of the above will happen, but I think some will. Some parts of the above list are more of a wish list of what I hope will happen. I have no inside information in making these predictions; they are the product of my fertile imagination. We will see.

So, broadly, I think my photographer contributors have it about right. The microstocks are not about to implode; they will continue to grow and diversify and enhance the quality of their content by enforcing stricter standards and to build new product lines. I think that an increasing proportion of the royalty-free stock market will be taken over by them, but there will always be a need for top-quality, rights-managed stock photography; that higher-end market will perhaps shrink but remain intact for the foreseeable future. This is a good time for you to get involved and make money from microstock photography.

As for me, I became fascinated by the microstocks in mid-2005, about the time I realized that my small rights-managed library was becoming uneconomic to run. Many of my contemporaries were horrified at that time by my intention to submit work to be sold “for a few cents,” but I saw and realized the potential. I still have to admire the foresight of anyone like the entrepreneurs who own and run the microstocks. It is a simple marketing concept and, guess what, I think I have the answer to “What does the future hold for microstock photography?” Simple sells, and, for me, that is the essence of the microstock business model and why it works and will continue to do so until someone thinks of something better.

Any ideas?