It is time to revise previous estimates of industry revenues based on what has happened in the past year. For several years, we have estimated the size of the worldwide market for still images and illustrations at about $1.8 billion. We have also maintained that overall, this is a no-growth industry, despite the fact that some companies and individuals could point to growth.
For 2009, expect gross sales to decline to, at best, $1.45 billion, dipping about 20% below 2008. (This is a stills-only estimate and does not include revenue from footage, rights clearance, music, assignment photography, database management, or any of the other lines of business common to many image sellers.) About 60% of the revenue will come from creative stock, while the remaining 40% will be generated by editorial imagery, with little crossover between these two broad market segments.
| Table 1. Estimated share of 2009 still-image licensing revenue by business line |
| Business line |
Share of revenue |
| Creative stock |
|
| Major advertising |
? 8% |
| Graphic design, local advertising |
? 30% |
| Corporate work |
10% |
| Fine art, retail items, and other specialty items |
2% |
| Personal use |
10% |
| Editorial stock |
|
| News (mostly wire service) |
20% |
| Books, education |
18% |
| Misc. |
2% |
In Table 1, "major advertising" stands for uses where customers pay more than $1,000 to license a single image. Such uses are few and far between and may represent a lot less than 8% of total revenue. It is often difficult to distinguish between a personal use and local advertising or promotional use, but it is clear that, with the growth of microstock, personal use has become a significant category.
Total microstock sales in 2009 are estimated at $350 million to $400 million-approximately 25% of total industry revenues. Since most microstock images are sold into the creative side of the business, microstock sales could represent in excess of 40% of all creative stock sales.
What is the basis for these figures?The only company in the industry reporting specific figures is Alamy, which had almost $32 million in sales in 2008. Comparing the first half of 2009 with that of 2008, Alamy's revenue was down by 30%. It appears that most of that was from a drop in pricing, not a drop in the number of units licensed. As might be expected, the fourth quarter of 2008 was also bad for the company. Comparing the sum of Q4 2008, Q1 2009 and Q2 2009 revenues with the sum of the same three quarters a year earlier, Alamy sales went down by 25%.
According to a reliable source, who talked to senior staffers at Getty Images in February, Getty's sales were down by 30%. Given the unsubstantiated nature of this information, it does not carry a lot of weight by itself. However, a number of Getty's top producing photographers say that this degree of drop would not surprise them; some shooters report earnings declines of 50% and more.
iStockphoto has been Getty's shining star. In 2007, iStock grew 75% in terms of number of units licensed compared to 2006. In 2008, the microstock had an estimated 42% growth in units licensed. In early 2009, we were able to begin tracking the number of units licensed by 124 of the top 150 iStock image sellers, who together represent about a fifth of iStock sales. The units sold in April 2009 were down 20% from the number sold in March. May was an improvement over April, but it was still 13% below March. After the May figures became available, iStock changed the way it reports photographer sales, making it much harder to make precise estimates of the number of images downloaded. Still, it appears that sales have been relatively flat throughout the summer, and iStock may not license rights to many more images in 2009 than they did in 2008. The explosive growth could finally be leveling out.
iStock has reported that it expects to generate more than $200 million in revenue in 2009, up from an estimated $162 million in 2008. However, it is believed that most of that growth is due to price increases, not units licensed.
Units licensed may not be declining on the traditional side either. Indications from Alamy are that this year's sales volume has remained level with 2008. The drop in revenue is attributed almost entirely to the lowering of the average price per image licensed as Alamy does what it can to hang onto its existing customers. This same trend is occurring at every other major seller. One of Getty's image partners reports that a full third of his company's sales through Getty last month were for an average price of $2 per sale. Others have said that 20% or more of their Getty sales were for prices that are lower than those for most microstock uses. One would hope that when the economy improves, prices would go back to at least their old levels, but previous experience suggests that prices do not recover once down.
Not only are we seeing decline in gross revenue, we are also seeing a dramatic increase in the number of available images. Thus, the odds that an image will be chosen for use are falling at an even more rapid pace than revenue.