Getty needs to cannibalize itself

by Mathew on October 25, 2006 · 10 comments

I was interested in the stuff that Robert Scoble and Thomas Hawk have posted about meeting with Getty Images, the giant stock photography company, but not necessarily because I’m all that interested in photography (although I am). The interesting thing for me is how Getty — like a lot of other companies in different industries — is trying to find a way of transitioning its business from one model to another, effectively cannibalizing itself before others can do it.

Scoble mentions how people such as Thomas (or whatever his real name is) and services such as Flickr and Zooomr are a threat to Getty, and they are — although not so immediate a threat that you can draw a direct line between the disappointing financial results the company reported and the rise of consumer photo-sharing sites. And Getty essentially tried to build a bridge between its old business and a new one by acquiring Calgary-based iStockphoto, one of the largest Web-based stock photo services out there (it recently added video as well).

getty images

Getty’s business, like that of competitor Corbis (owned by Bill Gates) consists mostly of high-quality, hard-to-come-by photos of celebrities and events, used in glossy, high-quality magazines, and for those the company gets paid anywhere from hundreds to thousands of dollars, depending on use. iStockphoto.com, by contrast, sells photos for as little as $1. And it does big business with small and medium-sized publications, Web sites and so on, with photos for $10 or $50 or $100.

In effect, Getty is hoping that owning iStockphoto can expand its business rapidly enough that it can counterbalance the decline in those hundred or thousand-dollar photo jobs, and prevent the recent financial pressure from becoming a sustained downturn. Other companies will have to find ways of doing the same in their industries, as James Robertson points out.

  • Pingback: craigbellamy.net

  • http://www.thebloggingtimes.com Chartreuse

    The idea of destroying yourself before others do was a strategy perfected by Madonna and the ideal move for companies facing collapse in the internet age.

    Getty Images real problem though is Photoshop. Folks stealing images and removing watermarks. They don’t need iStockPhoto as much a they need to make a deal with the Adobes of the world for content protection.

  • Mathew Ingram

    That’s a good point, Chartreuse — although I’m pretty sure that Getty uses fairly sophisticated tracking software that can identify copyrighted images regardless of where they appear, even if the watermark has been removed — I’ve seen some demos of that kind of technology and it’s pretty amazing.

  • Mathew Ingram

    That’s a good point, Chartreuse — although I’m pretty sure that Getty uses fairly sophisticated tracking software that can identify copyrighted images regardless of where they appear, even if the watermark has been removed — I’ve seen some demos of that kind of technology and it’s pretty amazing.

  • Mathew Ingram

    That’s a good point, Chartreuse — although I’m pretty sure that Getty uses fairly sophisticated tracking software that can identify copyrighted images regardless of where they appear, even if the watermark has been removed — I’ve seen some demos of that kind of technology and it’s pretty amazing.

  • Pingback: Starked SF, Unforgiving News from the Bay » Blog Archive » Talk of the Town: Thursday

  • Pingback: The Post Money Value: Common Sense Cannibalization

  • http://www.OnDisruption.com Michael Urlocker

    Mathew:

    I think you are right in how you look at the risks Getty Images faces from new disruptive market entrants like flickr etc. It is not a surprise to see Getty try to acquire an entry into the disruptive business model by buying iStockphoto.

    The trend of disruption tends to follow a similar pattern across many industries, whether it is PCs vs large computer systems, iTunes vs CD sales or a free commuter newspapers vs established newspaper giants. Cramming some aspect of the new disruptive thing into the current business model is a common response. (Newspapers did this with their online strategy for most of the past five years. Doesn’t work.)

    The very difficult challenge for Getty Images, or any other company in this position, is to balance these two conflicting corporate goals:
    * Support the current business and its customers;
    * Grow new business opportunities which potentially cannibalize the current business;

    There is a method to do this, but it is certainly not easy.

    Separate strategic business questions into three files
    1)Revitalizing the current business;
    2)Abandoning processes, products and services that customers no longer value or can’t earn their keep;
    3)Creating new opportunities for the future.

    Details on how this technique would apply in the newspaper industry are discussed in the link below. It would seem to apply to Getty’s business as well:

    http://www.ondisruption.com/my_weblog/2006/10/fivews_for_fixi.html

  • http://peterdawson.typepad.com /pd

    Nick Evan-Lombe of Getty is surely knows what he’s doing,. their main competitor is Juipterimages.. !!

    ” Flickr and Zooomr are a threat to Getty” is just a perception of threat…. !!

    Whats the Revenue take for Getty ? 773M /yr and that of Flickr and zoomr ?? Who has more purchasing power ??

    Technology can be bought and sold.. the ones with the big pockets are where hawk eyes need to be trained onto and IMHO its JuipterIamges, whch has deep pockets too :)-

    http://www.jupitermedia.com/corporate/releases/06.10.26-JI_CoverImagesAcquisition.html

  • Pingback: Getty images: a photo business under pressure « Scobleizer - Tech Geek Blogger

Older post:

Newer post: