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RANDOM THOUGHTS 128
December 15, 2006
Photodisc Option For Istock Photographers
Istock photographers who have had more than 25,000 downloads of their images on the site will be offered a Getty Images contract and allowed to upload up to 5 images a month to the Photodisc RF collection on the gettyimages.com website. As soon as Getty gets through the pilot stage (expected by summer) it is likely that photographers who have had only 10,000 iStock downloads will also be allowed to join. There is no fee to join or to submit images.
This offer seems to be in conflict with Getty's current offer to its contract photographers. Getty allows contract photographers to put up to 40 images per year, not 60, on Photographer's Choice Royalty Free. The Photographer's Choice photographers also must pay $50 for each image posted rather than getting to post images for free.
It is not clear from the information thus far provided whether the iStock images will be placed in Photodisc Red, Green or Blue, but it would seem likely that some images might go in each of these three brands. Given the way search return is currently organized images on the Photodisc brands have a better chance of being seen than images in Photographer's Choice RF. (See Story 897. In the first 270 images shown 10 of them are from Photodisc Red images, 8 from Green, 7 from Photographers Choice RF and 4 from Blue.)
Given that those allowed to participate in Photographer's Choice, and presumably among the worlds best photographers, are now handicapped in three ways, it seems likely that there will be some rebellion among the current contract photographers unless Getty makes some additional changes.
Photographers who have considered submitting work to Getty's new Lifesize brand may also begin to have some second thoughts since they will be limited to 40 images a year and must pay $50 per image to have them posted on Lifesize.
These moves seem to signal that in the future the best way to get images onto the Getty site will be to first upload them on iStockphoto and try to reach the 10,000 download level. Then, maybe, after giving away a lot of uses, photographers will be able to get images offered at prices that might offset production costs.
Boughn Leaves SuperStock
Ellen Boughn who was hired by a21 in March of this year as Vice President of content strategy will be leaving the company effective December 31, 2006. She plans to return to consulting with photographers and small image distributors.
Boughn founded After-Image in Los Angeles 25 years ago. She later sold that company to Tony Stone Images. Since then she has been employed by Tony Stone, Corbis, Artville, UpperCut and SuperStock as well as acting as a consultant.
Update On ImageState
Photographers who were among the first to contribute images to Photodisc through West Stock have been having some difficulty in tracking down there royalties since the demise of Image State. In 2000 WestStock was purchased by Global State and was later sold to ImageState.
After struggling for many years Image State moved in May 2006 to sell off what assets it could and close down its doors (See Stories 839 and 904). Getty Images purchased the John Foxx RF collection which was wholly owned by Image State and the remaining assets were transferred to Heritage Images.
Getty continues to make royalty payments for sales of the WestStock/Photodisc images to the ImageState account which is now being managed by Sheldon Marshall of Heritage Images. Given the debt that had been incurred by ImageState at the time of their bankruptcy all monies collected at this time go to pay off the debt to the secured creditor, the Bank of Scotland and nothing will be paid to the image creator.
In theory, somewhere down the road when the Bank of Scotland debt is paid off, royalties should start returning to the photographers through Heritage Images. Photographer should not expect to see any such money soon.
Standard & Poor's Downgrades Getty
Standard & Poor's has lowered its credit rating of Getty Images deeper into junk bond territory. The new rating is 'B+' down from 'BB' and S&P put a CreditWatch with "developing implications" on the rating. This resulted from an announcement in late November that as of the November 22, 2006 the Company had received two notices of a purported default from bond holders representing approximately 29% of the outstanding Debentures because the Company was delinquent in filing its Quarterly Report on Form 10-Q for Q3 2006.
The Company believes it has fully performed its obligations and intends to furnish to the Trustee (The Bank of New York) copies of its Quarterly Report on Form 10-Q for the third quarter of 2006 after it files such report with the SEC. The Company believes that such action would cure any default of the Indenture provision in question, if any default exists.
The Company delayed filing of its 10-Q because it was under an informal inquiry by the SEC for its stock option grant practices (See Story 894). The Company has formed a special committee to investigate and supply the information requested by the SEC, and it will be unable to file its Quarterly Report on Form 10-Q for the period ended September 30, 2006 until the committee completes its work probably sometime early next year.
The Company has still not filed its 10-Q but in its view, the notices of default are without merit. However, if an "Event of Default" were to occur and the Debentures were accelerated, the Company has adequate financial resources to pay any unpaid principal and interest that would then be due on the Debentures, but it would greatly diminish the company's cash.
Internet Ad Spending
Internet Ad spending in the U.S. is expected to reach $16.4 billion, a 30.8% gain over last year's $12.5 billion according to the Interactive Advertising Bureau. However, while growth is expected to continue in 2007, it is anticipated that it will be slower due to overall economic weakness and only reach about $19.5 billion or a 18.9% increase.
Meanwhile, growth in total U.S. ad spending next year is expected to be up only 1.4% meaning that a decline is expected in print advertising spending where so many stock images are used. Hardly a day goes by without some newspaper or magazine group reporting that ad sales for their print products are down and the only thing keeping them relatively even - if they are staying even at all - is the income generated from their Internet site.
Looking ahead to 2008 it is expected that Internet ad spending will be up 22.1% over 2007 to a total or $23.8 billion. The political races and the Summer Olympics are expected to contribute to this rise.
Declining Print Use
It seems clear that there is a steady decline in the number of pictures used in print publications, both for editorial and advertising purposes. The big question are why is this happening, and is it a trend that is likely to be reversed?
The following are a few trends in society that could be contributing to this decline and it seems unlikely that any of these trends will be reversed.
- Advertisers are finding that publications are charging higher fees for their ad space up while the ads themselves seem to be less effective and generating less sales volume than was the case in the past. Advertisers are actively looking for other ways to spend their ad dollars that might produce better results.
- The news hole in publications is based, not on what there is to write about, but on the number of ad pages. If there are 50 pages of ads then there may be room for 50 pages of news story. If there are only 25 advertising pages then there will probably only be 25 pages for news stories regardless of what is happening or how much there is to say.
- More and more content is being delivered on the Internet, and it is becoming easier and easier to burrow down and get information on very specific subjects.
- The very nature of creating a product designed to be of interest to the masses means that for any specific individual reader a newspaper and magazine is likely to have a few stories that are of interest and lots that are of little or no interest at all. Many people are finding that it is easier to get information on specific subjects that interest them by using the Internet rather than by subscribing to print publications. And the Internet is getting better about enabling users to search for specific content.
- The barriers to entry in the publishing business have been lowered dramatically. With the Internet it has become much easier for specialists to make their information or opinions available at low cost to them and to the customers. Thus, getting published in a major newspaper, magazine, TV network or cable channel is no longer a barrier to making your information available to a large audience. As a result there is much less need for printed products.
- It is also possible to supply information electronically that can be easily printed by the user, thus avoiding the cost of printing large quantities of information that used do not want to read or look at, and the cost of distributing the printed material.
- People want to buy just what they want. They don't want to buy a package for one cover story any more than they want to buy a CD to get the one song they want, or prints from a whole roll of film in order to get two prints they like. The era of selling people things they don't want of need is going away. The web allows them to make unbundled purchases.
- Kids are becoming less and less hooked on printed publications, and more and more on getting their information from the Internet.
- There is a decline in leisure time reading as the options for spending ones leisure time grow.
In the mid-1970s the American Newspapers Publishers Association and the Newspaper Advertising Bureau tried to determine the causes of tumbling newspaper readership since the mid-1960s. In the 1970 there were 70 million households with a total circulation of newspapers at about 60 million. Today there are 100 million households and the circulation is down slightly below 60 million.
Holman W. Jenkins Jr. writes in the Wall Street Journal that newspaper Web advertising is growing, but not fast enough to cover the declines in print advertising. A paper gets only 1/10th or 1/20th of its advertising revenue from a Web reader. But more people are moving to the Web to get information. In April the New York Times had a print circulation of 1.1 million, but served 25 million unique readers through its web site.