Two days ago, we got word about the demise of the Photoshelter collection marketplace. Not surprising because Photoshelter was not a marketplace. Technologists tend to slap the marketplace label on anything they build without understanding what it truly means.
Marketplace models, criteria, funding, and execution are fundamentally different from premium market models. Photoshelter was really nothing more than a replica of Getty Images without Getty’s money to buy inorganic growth.
Here is how Photoshelter failed to meet marketplace rules:
Marketplace violation 1: Photoshelter artificially arbitrated supply through a lengthy subjective sign-up process in which Photoshelter arbitrators determine whether you get to play.
Marketplace violation 2: Photoshelter artificially arbitrated demand, as it aimed to sell it to “the industry’s top buyers,” not to everyone.
Marketplace violation 3: Photoshelter gave preference to images they liked, rather than simply connecting any supply with any demand.
Marketplace violation 4: Photoshelter deployed a sales-force (from Getty and other photo agencies) that promoted a premium market model, like any sales-force driven by quotas would.
But CEO Allen Murabayashi makes a few damaging statements in his blog on why they failed and tries to blame that on the market as a whole:
“Licensing photography is fraught with clearance issues”
150 Years of photography exchange has resolved the fundamental issues of rights management quite effectively. Getty-Images, Corbis, and others have gone through a well-defined process to clear rights in their move from analog to digital exchange. Photoshelter has relied too much on a model that requires people intervention. At the same time, the majority of rights and enforcement can be embedded in and enforced by technology and made the asset owner’s responsibility. In the same way eBay sellers are responsible for the fulfillment of transactions. That enforcement guarded by a true meritocracy will quickly weed out bad behavior (that plagues any marketplace).
“Stock photography is a slow-growing market dominated by a single player”
Nonsense, the term stock photography, is an artificial classification (made up by its current participants) that bears no value. Today $22B of photography is exchanged of which less than 10% is transacted electronically. Growth through the premium market model of Photoshelter is limited because the photography market requires a free-market.
“Research Requests move too quickly for individuals to react in a timely fashion”
Perhaps they do in the “top buyer” segment, but certainly not in all. Since Photoshelter artificially limited the demand characteristics, any market traction and behavior assessment should be taken with a grain of salt.
“Buyers desire more diversity, but convenience (aka subscription deals) triumphs this desire”
Absolutely, buyers deserve diversity, and buyers should be presented with the ultimate experience (subscriptions are not the answer). What has fundamentally changed in a 150-year-old analog photography market is that demand does not come from a few buyers but a highly fragmented buyer market that will want to use an image for any purpose (not just for your average advertising purposes).
“A crowd-sourced model for stock will likely never work”
Absolutely disagree. Photoshelter deployed a premium market model on a market that requires free-market principles. It failed for the same reason Getty Images fails to become a market leader in the un-arbitrated exchange of digital photography (identified by roughly 30% market ownership). Getty Images grew by inorganic growth and acquiring other photo agencies with staff photographers that create the majority of images it sells (less than 7% come out of third-party supply according to a statement by its CEO in 2006).
Photoshelter, as lovers of photography, seemed to have their hearts in the right place but not their execution. And they neglected to respond to our offer for help one year ago when we saw their demise coming.