The Titanic was the largest passenger cruise ship to sail the ocean. As such, it relied on the captain to steer the ship in a responsible manner in an effort to avoid a catastrophe. The captain failed, hit an iceberg and ultimately sank the vessel. But only after failing to realize the enormity of the disaster.
Has GettyMart, more commonly known as Getty Images, been under similar stewardship? Has Jonathan Klein steered the largest online archive into an iceberg?
It came with little surprise when Bloomberg announced that GettyMart is struggling financially under a suffocating burden of debt, has credit access concerns and is under increased competition from low cost stock providers. Why should it be a surprise? The only surprise is how the business world, in particular the Carlyle Group, a private investment company that owns GettyMart, are not calling for the heads of CEO Jonathan Klein and other top executives at the world’s largest online archive. After all, they’re steering the ship, right?
An MBA from a Ivy League school is not required to see the disaster GettyMart has become. A tried and true business plan that has been executed by the likes of Walmart predicated on driving prices to unsustainable levels in a attempt to take over a segment of the market by driving competitors to extinction has failed. Yes, that’s right, GettyMart is failing. Yet the privately owned company seems content with the numbers that are alarming analysts who are downgrading the company’s debt. Why are we not hearing about a change in management in an attempt to plug the hole in the sinking ship? Have no doubt about it, GettyMart and their pathetic management team are responsible for steering the ship into the iceberg.
Is it arrogance? Does GettyMart have an answer to the very mess that they created from their own business model? Klein and company have done little in the past year that would lead anyone in the stock photography arena, myself included, to think they have any clue that the race to the bottom approach is a unmitigated disaster. Economics 101 teaches you that if you price a product lower than what is needed to create profit, you will eventually fail as you run out of cash and credit to sustain your business. Does the GettyMart management team think they have a open spigot of money, or will it eventually dawn on them that they need to charge more for the use of images? Of course, by then it’s likely too late to reverse course.
One of the basic tenets for any business is to combine a great product with great value and outstanding customer service. When your product becomes diluted with mediocrity or, even worse, duplicated by competitors engaged in the race to the bottom, the value of the product falls. So instead of reevaluating their high volume, low fee (Walmart) approach, GettyMart continues to flood the market with mostly mediocre images at insanely low prices in a never ending hope that the volume will compensate for the pathetic licensing fees and result in a profit. Good luck with that. It might even work if GettyMart wasn’t burdened with nearly $2.5 billion in debt and likely suffering from Prozac overload due to the notes maturing in 2020. But it’s not working, and it won’t work in the future either. So who’s to blame? Shutterstock, Alamy, Fotolia?
GettyMart need not look far in the blame game. In fact, they need not look outside their Seattle headquarters. I’ve written before about GettyMart’s decision a little over a year ago to allow 35 million images to be embedded for free, non-commercial use by anyone. GettyMart spun the move as a way to combat infringement by linking the photos back to the GettyMart archive for potential licensing, but few in the profession bought the spin. After all, who pays for an image they can get for free? What GettyMart was after was clearly the data mined from those using the embedded images. That data, when packaged and polished, is worth more to GettyMart than the images because the data can be sold or leveraged to advertisers willing to pay more than the pathetic value of a GettyMart licensed photograph. My guess is that venture is failing too, but it’s a guess because GettyMart is under no obligation as a privately held company to break out figures for analysis. Aside from the actual numbers, though, is the fact that GettyMart set a HUGE precedent by devaluing the very company assets it depends on to earn revenue. When a market is flooded with free products, the market responds by driving prices down. Once again, Economics 101. What happens when OPEC floods the market with cheap oil? You guessed it! Gas prices plummet. Did GettyMart and their illustrious management team think their move to place 35 million free images in the market would only hurt their competitors and not themselves?
GettyMart has been poking holes in their own ship for years. No one I know is surprised that the profession’s version of the Titanic is sinking. The only question is, when does it finally pitch violently upward before disappearing for good?