Common Cents Column On The Cost of Doing Business
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Portions of this column were originally written for the April 2015 edition of News Photographer Magazine.
Mark Loundy is a media producer and consultant based in San Jose, California. Full bio.
The opinions in this article are those of the author alone and do not necessarily represent the official views of the National Press Photographers Association.
April 2015, Volume 136
By Mark Loundy
"Schadenfreude: Enjoyment obtained from the suffering of others."
It's tough to separate the view of Getty Images as a classic "bad guy," from the company employing well-intentioned people trying to run a business. For two decades the company has lead the trend toward commoditizing and reducing the value of imagery and diminishing the role of photographers as creative professionals. What's not to love?
Founded in 1995, the company spent the next 16 years buying-up its competition. Getty's buying spree netted it leading competitors such as AllSport, The Bettmann Archive, iStockPhoto and many others. Photographers who were once courted by competing agencies consequently had fewer choices and far less negotiating leverage. The once-ubiquitous 50-50 licensing-fee split was now harder to get. Photographers' incomes dropped.
In a conventional nuts-and-bolts industry a well-run company can profit from reduced competition by eliminating redundant employees and raising prices. But image licensing was not a conventional industry and Getty was far from well run.
Getty was formed during the boom days of print publication and large editorial and advertising budgets. It was also formed at the dawn of the digital photography era and the beginning of the World Wide Web. The resulting explosion of easily created and distributed imagery meant Getty's high-margin business model was unworkable.
The company's conventionally thinking leadership could only think in terms of volume sales. But the bottom of the image market was dropping even faster than the company's licensing fees while the costs of creating original imagery remained high. It was like the old vaudeville joke, "We lose money on every sale, but we make up for it in volume."
Photographers have reported plunging licensing-check amounts for years, but the trend has accelerated recently. Sports photographer Brad Mangin tweeted in March, "Last Feb. I earned $1,000 in monthly royalties from @GettyImages. This Feb? $115.61. I have over 50,000 images up there. #fuckme #itsover"
As its business viability faded through the years, Getty went from a publicly held company, to ownership by a series of closely held investment firms and leveraged by increasing amounts of debt. The debt, which is traded on the public bond markets, has been downgraded to so-called "junk" status. This means that Getty has to pay more and more for the money it borrows even as its revenue and the value of its properties shrink and its owners see their investments evaporate.
In the last three months of 2014, according to Bloomberg Business, it burned through a third of its remaining cash. Terms of its debt dictate that the company cannot draw any more of its revolving line of credit until it raises its earnings.
It doesn't take an economist to see where this is headed.
In March, founding CEO Jonathan Klein "stepped down" (read: "was forced out.") into the role of non-executive chairman. No successor was immediately named.
In happier times, Klein wrote in a company press release, "Mark Getty and I created Getty Images because we believe that imagery has the power to change the world." In the end, it was a changing world that held the upper hand with Getty Images.
(Disclaimer: I briefly worked for AllSport, several years prior to its acquisition by Getty.)
The Good, The Bad & The Ugly will return next month. Please let me know of any particularly good, bad or ugly dealings that you have had with clients recently. I will use the client's name, but I won't use your name if you don't want me to. Anonymous submissions will not be considered. Please include contact information for yourself and for the client.Leftovers
Jim Gordon, the late editor emeritus of News Photographer, was the person who thought of this column and invited me to write it. He was also my friend and I will miss knowing that he is in this world. Thank you, Jim.
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