June 25, 2007
"I am bored," admitted Getty Images CEO Jonathan Klein in the beginning of his speech at the William Blair Growth Stock Conference. Having given hundreds of similar addresses to investors, Klein decided to forgo discussing financial information readily available through other sources. Instead, he focused on Getty Images' vision of its future.
While Klein acknowledged that image licensing is the foundation of Getty's business, he stressed the company needs to move beyond still photography to reach its customer base. Today, Getty's focus is on becoming a broad-based digital media company.
Music licensing is the first step, with a recent $42 million acquisition of Pump Audio. "We revolutionized the image-licensing industry, and believe we can do the same with licensing music," he said. Current music-licensing options are difficult, time-consuming and inefficient, and the industry does not have an effective way of monetizing its assets. Music remains one of the few pieces of the creative process that hasn't reached desktop. Getty plans to change that by simplifying the process and making music more accessible.
Pump Audio's revenues are currently under $10 million, but Klein believes this will grow, given Getty's 650-person global-sales force and the integration of music into its Web site. "In five years time, I'd be disappointed if it was not a $100 million business."
Stock footage is another area where Getty Images anticipates significant growth. Klein characterized this business as "a bit lumpy," due to a small number of larger customers. Getty will focus on making footage affordable, particularly for Web-based applications that the company sees as the future of video. The company no longer offers rights-managed video; it has shifted to rights-ready and royalty-free licensing structures, supported by the micro-payment brand of iStockvideo.
Getty's editorial business is booming, with $100 million in annual revenues. The company is first in the world in the sports-imagery market. It is the official photography provider for the NBA and has clients such as MSN. This success is due to the quality of the work produced by Getty photographers, who have won two of the three major photography prizes (short of the Pulitzer). Klein previously told investors that Getty would continue to grow its editorial business.
Despite editorial growth, Klein admits that the last 18 months have been financially disappointing: "There is not a major advertising agency, publisher, a broadcaster or media company in the world that is not already buying from Getty Images. Unfortunately, in the last several quarters, they have not bought as much as I would have liked." Getty Images missed a 2006 performance benchmark, which resulted in Klein losing a bonus, historically in the high six figures.
Klein also spoke of acquisitions, new business models, partnerships and new product formats. For example, Getty Images is currently experimenting with multimedia packages that combine still photography, video and music to meet customer demand for richer content.
He believes Getty Images brings together three key elements for success in the digital media world: old media, new media and an understanding of Web 2.0, particularly what user-generated content can and cannot accomplish.