Getty Images buys Digital Vision. . .

Stock Asylum Staff Report

In a move that could lead to creation of a new subscription image licensing service, Getty Images has announced that it has acquired Digital Vision, a London-based royalty-free photography supplier.

The company said the $165 million acquisition will add significantly to Getty's bottom line because Digital Vision owns much of its own content. It is the biggest acquisition Getty has made in five years.

Getty CEO Jonathan Klein said " . . . this transaction gives us a wealth of wholly-owned content, which allows us to explore innovative offerings such as subscription licensing models and content for emerging broadband-enabled platforms such as wireless."

Klein did not commit Getty to starting a commercial subscription service, but told industry analysts that "It is not unnatural for us to be interested in other licensing models to service our clients."

In other developments, Getty has announced it will offer a new digital asset management service and said it has started using PicScout to track unauthorized use of all 450,000 rights-managed images on the Getty web site.

Named Getty Images Media Manager, the new asset management service provides users a secure, searchable, password protected library of their digital media, according to Getty Images. The company said subscribers can access their libraries over the internet from anywhere in the world, 24 hours a day. Seventeen languages are supported.

The service is available in a "WorkGroup Edition," for small groups or companies with limited needs, and an "Enterprise Edition," for larger companies managing big collections.

Using PicScout provides Getty a powerful tool in fighting unauthorized use of rights-managed stock images. PicScout ( See our recent article ) uses sophisticated software to find copyright-protected images on web sites across the internet. The software can often locate images even when altered, cropped or colorized, according to PicScout officials.

A number of smaller distributors have been very pleased with PicScout's service. The distributors say they are collecting significant fees from infringers. In some of the worst cases, the stock photo companies are charging several times what would have been charged for a legitimate license.

The Getty announcement comes after PicScout and StockArtistsAlliance, a professional organization of rights-managed stock photographers, conducted an extensive experiment showing widespread misuse of Getty's image collection.

The PicScout approach is effective in finding rights-managed infringements because distributors like Getty keep detailed records of all such transactions, allowing them to compare PicScout's finding with their own records. Distributors keep little information about royalty-free transactions, making services like PicScout's useless against abuse of this product.

Subscription services like the one Getty is considering let image buyers download and use large numbers of images for a single (usually monthly) fee.

Klein said his company's market research found a lot of interest in high quality commercial subscription photography.

"I think you know enough about us to know that if we do supply a subscription product it will be of very high quality," Klein said.

He said a Getty subscription service would not be like some others that provide what he called "crap." He said some services offer large numbers of images but reach those numbers by supplying a lot of similar images from the same shoots.

He noted that Getty already has an editorial subscription product.

In a conference call with industry analysts, Klein said the Digital Vision acquisition should also help Getty position itself to take advantage of the expected growth in European royalty-free sales. European image users have not accepted royalty-free as quickly as their U.S. counterparts. Klein said European designers are now embracing royalty-free.

Getty expects European buyers to eventually purchase about the same percentages of royalty-free and rights managed as U.S. buyers -- about 75 percent royalty-free and 25 percent rights managed.

The Getty CEO said that, overall, royalty-free has been a growth area for the company. He told analysts, "The growth in royalty-free has certainly brought a smile to our faces. I hope it does the same for you."

Klein noted that the average price of a single royalty-free transaction has recently jumped to a record $229 for Getty.

Much Digital Vision photography is already on the Getty web site through a partnership program. Getty licenses content of other suppliers through the program. Klein said Digital Vision has been Getty's top image partner in terms of revenue.

The royalty-free company claims some 50,000 images, 3,000 film clips and an unknown number of musical pieces. Assuming that, as in previous Getty acquisitions, this company will cease to exist as an independent entity, simple math makes each image, clip and musical selection apparently worth something more than $3,000 to Getty.

Klein said Digital Vision currently has 135 to 140 employees. That number will be trimmed to less than 30 when the royalty-free supplier is integrated into Getty Images, Klein noted. At the same time, he said, Getty will spend some $5 million to create more wholly-owned royalty-free photography.

Though Klein says demand for royalty-free has been especially strong this year, the company apparently feels pressure from the emergence of subscription services, such as those offered by rival Jupitermedia.

Jupiterimages, Jupitermedia's stock photography division, operates some of the most popular subscription services, including Photos.com, Liquidlibrary, and PhotoObjects.net. The company also owns several regular royalty-free brands.

Jupitermedia Chairman and CEO Alan M. Meckler recently told analysts that his company would do everything necessary to defend its dominance over the subscription end of the market.

Commenting shortly after the Getty announcement, Meckler claimed to be unconcerned about the prospect of a competing Getty subscription service.

"What they did today validates everything we started out to do two years ago," said Meckler. He noted that emphasis on subscription sales and wholly-owned content have been the mainstays of Jupitermedia's strategy from the beginning.

"We're not worried about it," said Meckler, "It is a big enough market and our business model is unassailable."

Jupitermedia emerged as a major player in stock photography when it purchased Comstock about a year ago. Since then, it has acquired several stock companies, including Creatas, LLC, owner of the Picturequest, Creatas and Liquidlibrary web sites.

Meckler said Jupitermedia was not asked to bid on Digital Vision. He said his company would not have been interested because, "Most of Digital Vision's money comes from Getty distribution."

In fact, Meckler wondered if the acquisition will really improve Getty's bottom line.

"Getty already gets the lion's share of distribution, now they have to run the company," Meckler said.

While Getty absorbs one image partner, it has added another in Workbook Stock, a Los Angeles supplier of high-end photography. Getty will sell images from Workbook Stock's rights-managed collection. Workbook Stock recently started selling royalty-free stock along with right-managed from its own web site.

Getty has also reported net earnings of $34.1 million for the first quarter of this year, up 31 percent from the same quarter last year. Revenue for the quarter was $178.1 million, up from $156.5 million last year.

 

 

Getty Images can be found at: http://www.gettyimages.com

Jupiterimages is at: http://www.jupiterimages.com

Workbook Stock is at: http://www.workbookstock.com