Given the microstock discussion that took place during the recent Getty Images conference call with industry analysts, there may be a misinterpretation of iStockphoto’s strength in the worldwide marketplace.
In a recent Piper Jaffray survey of “professional†image buyers, 54% of respondents said they use iStockphoto sometimes, often, or all the time. In second and third places were Shutterstock with 18%, and Fotolia with 15%. These numbers alone seem to indicate iStockphoto’s clear dominance, but there are other factors to consider.
It should be recognized that this survey was of “professional†buyers who are generally recognized as representing no more than 2% to 3% of all microstock users. The industry has very little understanding of how the other 97% of microstock buyers use the images they download, or what motivates them to use one site over another.
In addition, the survey was also entirely focused on U.S. buyers and did not gather information from the 55% to 60% of buyers in the rest of the world. IStock may dominate the U.S. market, but other brands may have much more traction in other parts of the world, particularly price-sensitive areas. It is important to remember that three of the five major brands were started in Europe and appeal to European buyers and photographers.
A factor that could give iStock more credibility among professional buyers is its connection with Getty Images. Many professional buyers are reluctant to purchase microstock, due to concerns about releases and rights. Given iStock’s connection with Getty Images, customers may believe iStock has tighter control on releases and rights than the other brands, although as best I can determine all the microstock companies are equal in this regard.
From what I can tell, many of the major microstock shooters are European, not American or Canadian. Also, many photographers seem to come from the developing world, where they may find microstock an attractive business model given they don’t need to earn as much as U.S. and Western European photographers to make a living.
Most photographers are not exclusive with one microstock company (as iStock would like them to be). They make more money being with many brands, most of which pay a higher royalty than iStock. From the photographers I have talked to (admittedly a very small sample of the approximately 100,000 microstock photographers), about one-third of their revenue comes from iStock and 2/3rds from all the other brands combined. Thus, I think iStock currently owns something in the range of 33% of the total worldwide market, not 55%.
In addition, iStock currently has a strategy for accepting work that I believe could lead to a decline in their market share. In their efforts to try to grow their number of contributors and upgrade their image quality they only allow photographers to submit 15 new images a month. Not all those are accepted. This may force amateurs to more tightly edit their submissions, but it discourages professionals.
Photographers prepared to work full time as microstock producers create a lot more than 15 good images a month. In addition, iStock’s editing process seems to have slowed tremendously due to staffing issues, resulting in a much longer time to market than with other brands.
Photographers trying to make a living shooting microstock needs to get a lot of images in play in order to make a living licensing them at $2 to $3 each. IStock is not giving them that opportunity. Consequently, iStock is driving some of the best shooters to the other microstock brands. One top microstock photographer estimates that there are currently over 400,000 good saleable images available in other brands that can’t be found on iStock due to its editing strategies. Limiting customers choices may not be a winning strategy for iStock.
During the conference call, Getty Images CEO Jonathan Klein acknowledged it is “very hard for us to validate (market dominance) as we don't know the size of the market.†But, he said iStock has 600,000 customers who have actually purchased images and that “means that people who want to submit their imagery as amateurs to a site will go to the site where the action is. Customers who are looking for imagery and looking for a community, we'll go to that place where the product is.â€
Taking all these factors into consideration, I'm not convinced that iStock will dominate the microstock space -- and I do expect increasing competition there.