The microstock photography business is growing out of nothing. The leader in the market, iStockphoto, is projecting $200 million in revenues this year. When iStockphoto was bought by Getty Images February, 2006 for $50 million, its revenues that for year were about $23 million, according to COO Kelly Thompson. In 2007, revenues were $72 million, and the company never disclosed 2008 revenues. (Update: Thompson says 2008 revenues were around $150 million). Thompson says iStockPhoto has been profitable since before the acquisition and now represents a “significant chunk” of . (Getty Images is owned by the private equity firm Hellman & Friedman and does not break out revenues formally via audited statements).
The demand for affordable images for use on Websites and in print is catching on and iStockphoto is the main beneficiary. It sells a photo, illustration, or video every second, and pays out $1.2 million a week to the photographers and artists who upload images to the site. There are nearly 80,000 artists in total represented on the site and 5 million images. “Definitely the print side is declining and we are seeing lots of Web usage,” reports Thompson.
But iStockphoto is not without competitors. Rival Fotolia is trying to catch up and recently received a massive cash infusion from TA Associates. It has about the same number of images and recently launched a completely free stock image service called PhotoXpress (which competes against Getty-owned Stock.xchng). Fotolia also has about 6 million images and roughly 90,000 contributors.
The battle, though, is now going to be around quality and price. iStockphoto is trying to go upmarket by exposing some of its top photographers to Getty clients. And today it just launched its Vetta Collection, which is comprised of about 35,000 higher-quality photos which are more produced than the typical stock image (the space farmer image above is one from Vetta). The Vetta images start at around $20 each, compared to regular images, which start at about $1.
Thompson says it is all part of iStock’s strategy to move customers up the chain to buy more expensive images:
Almost every industry has a free component, everyone gives away free samples. That is what we are doing. Even when it is free, it needs a license around it. Once people get used to using images like that, they move up to buying more expensive images. Even the traffic from iStock to Getty is more than we originally expected.
Image search is another area where the iStock needs to win. People need to find the images they want before they can buy them. iStock relies on photographers and artists to tag and title their own photos, but they don’t always do such a great job. After all, they tend to be more visually-oriented. So instead, iStock has been collecting data on which images people hover over and click on after they do a keyword search, and those now are ranked higher in results starting today. By August, the results will be fine-tuned by language and country of origin as well. But if you want to search only for Vetta images, you have to do that in advanced search right now (by tomorrow, you should be able to do it directly on the Vetta portion of the site).