May 30, 2007
I believe the gross worldwide revenue that is generated from the licensing of stock imagery, both still photos and illustrations, is about $1.8 billion annually.
Stock images are produced in two ways. Usually the images are produced on speculation without any specific customer requesting their use. In some cases stock images are initially produced on an assignment for a particular customer with a specifically planned use in mind. They become stock when they are later licensed for a totally different use usually to a totally different customer. The figure includes all RM images where the fee is based on usage and includes all RF imagery licensed as single images, CDs, DVDs, virtual CDs, by subscription or micropayment.
In the vast majority of cases the image producer has no direct contact with the eventual customer and uses the services of an agent, distributor or portal that consolidates the work of many producers and makes it available to potential customers.
This figure does not include revenue from assignments. Photographers who do work on assignment are for the most part sole proprietors who are contacted directly by the eventual user of the image. Many of these individuals do assignment work on a part time basis, although there are also a significant number of full time assignment shooters. No one has devised a way to make an accurate estimate of the number of assignment shooters in the U.S. or the world, or to make any type of accurate estimate of the revenue generated in these endeavors.
When I made an estimate in May 2004 (Story 635) I addressed the lack of hard facts necessary to make an industry estimate. There is still a lot we don't know, but the consolidation of sellers in the last three years has provided additional information that makes it much easier to estimate the gross industry revenue today. Others may disagree with some of the assumptions I've made to arrived at my $1.8 billion number. But, in planning for the future it is useful for producers and sellers of stock photography to have some idea of market size and trends.
To arrive at this number I first looked at the information supplied by the publicly traded companies and Corbis who, although not required by law, has chosen to supply some detail concerning their operations. The figures below are in millions of dollars.
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Gross Revenue
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Stills Revenue
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Percent Stills
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Commercial
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Editorial
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|
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for 2006
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for 2006
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Images
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Images
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Getty
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$807.3
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$733.2
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91%
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$634
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$99
|
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Corbis
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$251
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$210
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83%
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$125
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$85
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Jupiter
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$137.53
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$106.636
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77%
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$80
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$27
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a21
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$19.633
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$11.976
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61%
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$9
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$3
|
|
|
|
|
|
|
|
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Totals
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$1,215.463
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$1,061.812
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$848
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$214
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The gross revenue of $1.215 billion includes a number of lines of business other than the licensing of stock photography in which these companies are involved. They include: footage, rights clearance, fine art print sales, trade shows, database management, photographic assignments and others. The revenue from these operations is not included in my $1.8 billion figure. In some cases these other lines of business are the company's biggest growth areas. The stock photography divisions tend to experience much less growth than the overall company figures might indicate.
Looking at the amount of revenue from just four companies and considering the number of companies involved in the stock photo industry worldwide one might think that certainly gross industry revenue is much higher than $1.8 billion. But, given the acquisitions that have taken place in the last few years there are very few companies of any significant size left in the market. (See article 564 for some of the larger players in the industry). Amana, Masterfile, Mauritius, Photolibrary, Image Source, Fotosearch, Alamy and AGE are important independent players. But even with some of these, part of their revenue is included in the current gross figures of the big three.
Editorial
Next we need to look at the large editorial suppliers such as Associated Press, European Picture Association (EPA), Reuters, Bloomberg, Agence France Presse (AFP), Newscom, etc. A large percentage of the images these companies supply are produced to fulfill subscriptions, and thus it might be argued are more like assignments than stock. Nevertheless, I have chosen to lump their photo revenue into the stock category. Some of these companies and publicly owned, but in those cases their picture licensing revenue is a small part of their total revenue and not broken out in their reporting. Thus, it has been necessary to make an estimate of this revenue based on conversations with senior people in this segment of the industry. I estimate the combined gross revenue of all these editorial sellers to be approximately $250 million.
Preliminary Summary
Thus, I have accounted for $1.312 billion in revenue (See chart below) meaning that combined all the rest of the companies in the industry generate only $488 million if the total revenue is $1.8 billion. Many might say that the combined gross revenue of all these other companies must be more than $488 million, but there is one other factor we must take into consideration.
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Gross Stock Revenue
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4 With Public Figures
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$1,062
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Editorial
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$250
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Other
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$488
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|
|
|
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Totals
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$1,800
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Double Counting
Virtually, every major image supplier is generating some of its revenue, and in some cases a significant part, from licensing rights to images supplied by other agencies. Even Getty Images receives some portion of its revenue from distributors who represent part of Getty's collection.
In these cases the initial licensor of the image records 100% of the revenue on its books and then pays a significant portion of that revenue to the agency that supplied them with the image. This percentage can vary from 20% to 80% of the gross sale price depending on the relationship between the image supplier and image seller. For example, a distributor who licenses rights to one of Getty's Photodisc images for $200 reports that as gross revenue, but the company also pays maybe 50% of that amount, or $100 back to Getty. Thus the $200 sale has shown up as $300 in total revenue on the combined books of both companies even though the customer only paid $200.
(Keep in mind that when I used the words "image supplier" here I am not talking about the actual image producer, but the agency or organization representing that producer. The producer gets another cut of what the supplier gets.)
In a survey of its member stock agencies in 2003 (Picture Archive Council of America) PACA asked one question that attempted to get at this number. The results indicated that 17% of the gross revenue of the agencies responding came from sub-agents or distributors. However, given the relatively small response rate to this survey, and based on observation of what is happening in the industry, I believe it is entirely possible that the overall figure for the industry worldwide might be quite a bit higher. I also believe the percentage is rising as more and more sales are made by portals and distributors.
I estimate that at a minimum 20% of the total actually charged customers for the use of imagery is double counted. Thus, if we were able to total the gross revenue that all the distributors and image suppliers in the world report as income each year it might come to an annual figure of $2.16 billion, even though image buyers had only paid $1.8 billion. The number could easily be higher, but at this level the total revenue for the "Other" category would be $848 million. I think that is very reasonable estimate of what the smaller suppliers generate. I would suggest you look again at the list of agencies in Story 564 and consider the total of what they might be generating. I believe this is a comprehensive list of all the agencies in the world that report gross sales of over $1 million annually. Of the hundreds of agencies not on this list a significant percent of them have annual earnings of less than $500,000 and many much less.
Individual Photographers Selling Directly
Once I have dealt with double counting, what about all the photographers who are licensing rights to images from their personal stock files direct to customers? I believe that the Internet has made it so much easier for customers to find an image they can use in large databases and quickly complete the transaction that the number of direct sales from photographer to customer has dropped dramatically from what it was 10 to 15 years ago. While there are certainly some sales of this type I believe they currently represent a very small portion of total industry revenue and are covered in my $848 figure.
Footage
While the major thrust of this report is still images and illustrations it is useful to also consider footage. A recent survey (reported in Story 963) estimated that the worldwide market for footage is $282 million. Getty is the unchallenged leader in supplying stock footage and did $43.19 million in business in 2006. Given this fact, and the survey's estimate that only six companies gross more than $5 million annually from footage I think $282 million may be too high, but I have also talked to footage suppliers who think the number is too low. Thus, I will accept this number until it is possible to get better data. There is also some degree of double counting in this industry,
Royalty Free
It is also useful to the degree possible to take a more granular look at the $1.8 billion and make some estimates of the size of various market segments. The fastest growing segment of the business is Royalty Free, which includes single image sales at traditional RF prices, CDs, DVDs, virtual CDs, subscription and, micropayment. I estimate total revenue from RF at about $500 million with subscription making up about $35 million, micropayment about $50 million and the remaining $415 million coming from a combination of single images, CDs, DVDs and virtual CDs with the vast majority of this coming from single image sales. Over 60% of the total 2006 RF revenue showed up on Getty Images balance sheet and some of those images were licensed by distributors meaning that significantly more than 60% of the RF images licensed were controlled by Getty Images.
Jonathan Klein, CEO of Getty Images has said that of all the Creative imagery (RM and traditional RF) licensed in the U.S. in 2006 about 70% was RF. In Europe the percentage was about 60%, up from the 46% in 2004. Klein expects the number of RF units licensed in Europe to reach 70% of total units in the near future.
Based on the figures Getty provided at the end of 2006 about one-third of their total units licensed worldwide were RM and 2/3rds were RF. These percentages have remained relatively stable for at least three years. Beginning in 2007 Getty will no longer provide figures necessary to do this calculation.
Taking all the other producers and suppliers worldwide into account, about 60% of all the units of Commercial/Creative imagery licensed are RF and 40% RM. Given the different price points the revenue generated by each of these two segments is different from the percentage of images used. This does not include the RM or RF images that are used editorially.
Micropayment sales have been growing much faster than any of the other types of RF. In 2005 iStockphoto licensed rights to about 5 million images. In 2006 they licensed rights to about 11 million images at probably double the 2005 average price per image. There is every reason to believe that all the other companies offering images at micropayment prices are growing at a similar pace. (By way of comparison the total number of RM and RF images Getty licensed in 2006 on the Creative section of its site was about 1.6 million.)
As Micropayment sales grow the number of traditional RF units seem to be on a slight decline although certainly not anything like a one-for-one ratio. We can already begin to see the effect it is having on Getty. Total RF revenue in 2005 was $272.91 million. Total in 2006 -- counting micropayment -- was $308.17 million. iStock probably contributed at least $20 million to the total RF revenue in 2006 so if we were to remove that from Getty's bottom line total traditional RF revenue would have been about $288 million. That's about 5.5% growth in RF for 2006. However, Getty acquired Stockbyte in 2006 and that should have been responsible for some of the RF growth. Many observers believe that absent the Stockbyte benefit, Getty's traditional RF revenue actually fell in 2006.
Compare Getty's 2006 RF results with those of a year earlier. Total 2005 RF revenue was $272.91 up from $204.53 in 2004 making 2005 growth 33% over 2004. While not yet in negative territory the 2006 RF results were certainly a major decline. Don't be surprised if RF sales for 2007 are less than the $308.17 million for 2006.
Subdivisions Of The Market
I think we can divide the market for still stock imagery into four segments: Commercial RM, Commercial RF, Breaking News and Secondary Editorial. The charts below show the approximate revenue I believe the Majors plus a21, Alamy and the wire services generate from each of these segments. Some of these numbers are extrapolations based on the publicly available numbers and many are my best guess of how the business breaks out.
Thus a little over $1.1 billion of the total revenue is for commercial use and a little under $700 million for editorial use. According to the PACA survey a few years ago about 28% of U.S. agency revenue comes from editorial uses and the remainder from commercial uses. In Europe the reverse was true when CEPIC did a survey of its members several years age. CEPIC found that 63% of all revenue comes from editorial uses and the rest from commercial uses.
The RM and RF sections are obvious, but I have broken editorial into "Breaking News" and "Secondary Editorial Use". The Secondary uses are for long lead time publications, specialist niche publications, and books. For these uses the images needed are more feature oriented and illustrate points that have no direct tie to any breaking news. Gary Shenk, CEO of Corbis, has estimated that the Secondary Use segment of the market is larger than the breaking news segment.
Alamy is included in this chart because the eclectic nature of its collection makes it a serious competitor in the "Secondary Editorial Uses" segment of the market.
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Getty
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Corbis
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Jupiter
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a21
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Alamy
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Wires
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Total
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Commercial RM
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$296
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$90
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$15
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$6
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$5
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$412
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Commercial RF
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$298
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$35
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$80
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$4
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$4
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$421
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Breaking News
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$89
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$20
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|
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$175
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$284
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Secondary Editorial
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$50
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$65
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$11
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$1
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$18
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$75
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$220
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|
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Total Market
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Majors Share
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% Majors Share
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Commercial RM
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$625
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$412
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$65%
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Commercial RF
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$500
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$421
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83%
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Breaking News
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$325
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$284
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87%
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Secondary Editorial
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$350
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$220
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62%
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This chart demonstrates that the two areas where there appears to be the greatest opportunity for other sellers in the market are Secondary Editorial and Commercial RM.
However if the use of RF, particularly Subscription and Micropayment ,continues to grow this could begin to eat into the RM segment of the market as well. It appears that overall the market at traditional price points is not growing. Thus if there is a growth in one segment it is likely to take share from a different segment. The principle growth in usage is entirely in the low priced Micropayment area.
World Distribution
I believe about 43% of the world market is in the Americas, 48% in Europe and the Middle East and 9% in Asia. In Europe the editorial market is quite a bit larger than the commercial and in North America the reverse is true.