Efficient Market

Recently, an investor asked me if the stock photo market functions efficiently? Here’s what I told him.

Customers

From a customer’s perspective the stock photo market offers a huge oversupply of images relative to demand. And that oversupply is growing dramatically every day.



The same images - or images that can easily replace a similar image-- are available through multiple sources. Thus, a customer has multiple options and can choose a supplier based on the one with the best user interface, the best overall service and the lowest price.

The Internet has made it very easy for customers to do all their shopping from their desks and receive immediate delivery. However, given the overwhelming number of choices, and the limited time most customers have for research, they often miss seeing the best image for their purposes. Nevertheless, they easily find something that is satisfactory.

As a result customers are in a position to pressure suppliers for ever lower prices.



The Internet has made it simple for suppliers to show everything they have to offer. The Internet has also made it possible for countless part-timers and amateurs to participate in the market. A decade or more ago, it was not only much more difficult for most amateurs to produce good, usable pictures, but it was almost impossible for them to show their work to potential customers.

Image Creators

Many of the most experienced professionals are getting out of the business because they can no longer justify the time and cost required to produce new images. At current prices most image creators cannot earn enough to cover their costs. More and more creators are amateurs, for whom profit, or even covering costs, are unimportant. They are just having fun taking pictures.



Many of these amateurs supply images for a little while, but when they begin to consider their time invested, they stop and move on to some other way to enjoy themselves. But whenever someone stops producing there seem to be at least five more who decide to give producing images a try, at least for a little while.

Many amateurs produce great images, but they tend not to produce the model released business and lifestyle imagery that is in greatest demand. However, there is such a huge over supply of this type of imagery that suppliers can probably service the needs of most customers for years to come with very little new imagery of this type being added.

Can a market that consistently delivers products for less than cost be efficient? Does such a market have the potential to grow revenue?

And on top of all this there is a huge, and growing amount of free imagery available online giving potential customers even more options.