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The State of the Print Media in the World
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Wall Street Pummels Getty Images Again For Failing to Meet Sales and Revenues Projections -- The Still Picture Archive Business Is Being Eaten Alive By Low Cost Internet Providers

If there was any good news for Getty Images this week after it announced it failed to meet its third quarter profits forecasts, and said the fourth quarter didn’t look too bright, it was that its share price fell just 8.68% on the day. When it made a similar announcement on its second quarter earnings the shares took a 13.75% bath and on July 26 they sank 18%.

Getty Images logoWhat it all means is that Getty’s share price started the year at $89.28 and it closed Wednesday at $41.97 – that’s a 53% fall for the year. So what’s gone wrong at the world’s largest distributor of visual content? The problem is in the company’s largest segment – the sales and licensing of creative still images. Low cost Internet picture providers are eating into what was a very high margin business. Why pay a $248 license fee for a picture when one similar is available online for $1?

And there is something obviously wrong with its cost structure. Revenues actually grew 7% to $198 million, and for the nine months of the year revenue is up 10.2%, but on the profit side the third quarter was down 3.6% from the year before.  Wall Street looks ahead and was not pleased with the full year revenue forecast of $800 million, lower than the $830-$850 million forecast made early in the year which in turn was lowered to $820 -$830 million in July.

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Reuters Purchase of Action Images Directly Targets Getty Images Commercial Sports Business, But Can Reuters Escape the Getty Perception That Its Commercial Ties with the NHL, NBA and Others Adversely Affects Its Media Sports Coverage
There can be no doubt that Getty Images is an absolutely incredible media success story. In just 10 years it has established itself as not only the world’s leading image company owning the world’s largest collection of still and moving images, but at the same time it is recognized by the world’s leading media as a major player in the daily news pictures business.

Bill Gates, The World’s Richest Man For The Past 12 Years, Says Newspapers Are Going to Survive, But They Have To Adapt to the Digital World. And He Sees Anything With a Screen As The Perfect Customer for His Corbis Digital Pictures Business
Bill Gates is well known as the founder of Microsoft, the business that according to Forbes Magazine has made him the richest man in the world for the past 12 years. Not so well known is that Gates is also the owner, separate from Microsoft, of Corbis, a pictures archive owning some 80 million images of which 4.2 million are available for sale via the Internet.

AP Pulls Coverage of Ladies Golf Tournament Over Rights and Credentials Issues That Are Finally Resolved, But Sports Organizers Are Getting Progressively More Arrogant In Commanding What The Media Can And Cannot Do With Its Coverage
The AP position was very clear; “Any stories and photos produced by AP staffers belong to the AP.” But that’s not the way the Ladies Professional Golf Association (LPGA) saw it. The LPGA wanted access forever to the AP tournament photos for free, and even worse if the AP wanted to use those pictures itself in the future for editorial purposes it would need the LPGA’s permission.

Getty has 20 offices around the world with about half of its staff in the Americas. Getty’s largest office is in London with about 500 people. There are some 420 in Seattle, its headquarters, and around 300 in New York.

The company says it has laid off an unspecified number of people, with numbers said to range anywhere between 30 – 180, mostly in sales, but it plans to hire more marketing people. The company has tended to base most of its sales people in one central location (for instance, many in New York, none in Miami or Dallas) whereby customers prefer frequent face to face meetings (sales 101), so Getty says it will be moving sales people into major cities where it does not now have representation.

There have also been hits in the executive ranks in Seattle with the office of chief technology officer eliminated and also, according to an internal memo obtained by Seattle media, the senior vice president for business development is also going, but will be on hand for consultancy, and the editorial photography director is gone.

CEO Jonathan Klein said it all boils down to more competition, especially low priced, low cost competition by web-based image providers finding a ready customer base seen as cost-effective alternatives to Getty’s high end products.

Royalty-free and rights-managed stock images sales volume was dropping, Klein said. Royalty-free sales volume is down four per cent from a year ago, perhaps because prices rose six per cent, and rights-managed sales were down 1% with those prices decreasing three per cent.

Still images make up 79% of the company’s business; which is why Klein is now anxious to invest far more in building the company’s film business.

Under the “if you can’t beat them, join them” scenario, Getty bought iStockPhoto eight months ago and that micro payment site is showing good growth. It appeals to amateur photographers and small-time image users, but more and more commercial buyers are attracted to prices anywhere from $1 - $5 for a picture whereas in Getty’s high-end business it could cost around $250.

Klein also said that it is using iStockPhoto as a basis for a new way for professional photographers to submit images to Getty for distribution. The system, internally called Open, will allow Getty editors to choose which images they wish to distribute, opening or closing the tap as market needs dictate. It’s similar to the way iStockPhoto works in which photographers decide what they want to shoot, which images are submitted, and then editors select those images for online sale.

As far as the company is concerned, 2006 has not been a good year, but it has taken steps to fix whatever might be broken and it is anxious to get on with 2007. But Wall Street is not so sure and several analysts have downgraded the shares.

Perhaps the best explanation of what the market thinks comes from Troy Mastin at William Blair & Co. “We applaud management for attempting to get out in front of change as early as possible; however, the number and nature of the challenges facing the company make it extremely difficult for us to handicap the odds of success.”



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