How To Flip-Flop A Puffer Fish

Getty Images is on the chopping block again, according to the Financial Times. This time for a purported $4B by sale or IPO. Amazing, considering we first wrote in 2005 that the company’s stronghold on the sale of digital images is not nearly as solid as the company has portrayed it to be, and we appropriately named it the pufferfish of the imaging market (referring that a blown-up pufferfish does not have more meat on the bone). And that Hellman & Friedman (with the Getty empire as a shareholder) took it off the public exchange, turned it private by buying it in 2008 for $2.4B regardless.

Getty Images plays a traditional game many so-called market leaders play:

  1. Define your own market (forgetting comfortably that markets don’t exist),
  2. Fog it with convoluted definitions (an image is an image, regardless of how you sell it),
  3. Describe how you own your niche (discard that 80% of image transactions are offline),
  4. Sell it to clueless analysts on Wall Street and off you go (the public will not find out until it is too late).

But who cares, few are true experts in the imaging business to understand that Getty’s real share of the total addressable market is mediocre, that it has used artificial definitions to portray market dominance, that the agency and exchange business models are in conflict with each other, which in essence makes the company its own worst enemy to achieve growth.

We also have very strong reasons to believe Getty Images is misrepresenting revenues (when we had access to their numbers as a public company), in that it is applying the agency model of revenue reporting to the image exchange part of their business to which they yield only a commission. The devil of Getty Images’ performance is in the detail; the detail many betting on its value will not have.

Let’s repeat our findings from 2007:

  1. Non-agency images are always owned by photographers, not by Getty
  2. Getty’s assets can vaporize quickly; photographers can switch their assets to a better marketplace instantly
  3. The vast majority of images in the world are not transacted through Getty
  4. Getty qualifies premium photographers not premium images
  5. Getty needs to cannibalize its business model to meet the Long Tail market requirements
  6. Getty is diluting focus to higher-margin media like film and music, fat chance
  7. Getty has the expensive overhead of an agency, with declining image ASPs
  8. Hundreds of new and competing sites indicate Getty’s non-supremacy

Exercise your right to become informed (these open as external links):
Getty Images: the image demi-cartel
Image catalogs in peril
Imaging sales market broken from the top
The puffer fish of the imaging market
Diving deep with imaging puffer fish
Fleeting assets of the imaging puffer fish
Puff, puff, pufff, puff…..poof
What’s next for Getty Images?
Getty Images: the king is dead, long live…
Getty Images: Q4FY07 earnings call fog
Getty Images sold for $2.1B; did grandpa posthumously bail them out?
Photoshelter, another one bites the dust
Digital Railroad in trouble?
Demise of image super store continues

Getty Images is the example of why we need stringent financial reform that will change the definition of a private company. Private should mean non-investable by the public (yet), but every private company should be forced to report revenues, so the public has plenty of time to act as its own whistleblower before the IPO occurs. Otherwise, the public is poised to be fooled once again.


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