Moving Pictures

Getty Images revolutionized the stock image business. Now the industry is shifting again, is the giant's future in jeopardy?

by Cliff Kuang

Say you work at Design Army, in Washington, D.C., and you need a photo. If you asked your co-workers for help, they'd probably trill, "Just Getty it." "Same as when some people say, 'Just Google it,'" explains Pum Lefebure, the design firm's co-owner. "We use the photos, but we also browse Getty for inspiration." When Design Army needed photos of bamboo shoots for a Ringling Bros. installation, Getty had more high-quality images than anywhere else. If the firm is hunting for images that inspire the tone for a piece of branding, Getty has the richest cache of pictures, all a single keyword away on one of the industry's most comprehensive, user-friendly websites. When it comes to visuals, Getty is Wal-Mart and the New York Public Library rolled into one.

Lefebure's remark sums up the trend among many design firms like hers. Over the past few years, Getty has gobbled up so many smaller stock houses that it now owns 40 percent of the market, large enough to have become the subject of the kind of regulatory, pre-merger antitrust investigations usually associated with banks and airlines. In recent months, the U.S. Department of Justice finished its review of Getty's proposed buyout of MediaVast, which owns the party-picture agency WireImage. Stock has become big business in a remarkably short time. But that status seems precarious—and Getty and its photographers are straining to adapt.

Getty was founded in 1993 by two investment bankers: Jonathan Klein and Mark Getty, an heir to the Getty oil fortune. At that time, the stock photo market overflowed with small agencies—a classic opportunity for an industry "roll up," in business school parlance. Getty Images was formed to buy up those mom-and-pop companies and digitize all their collections.

It's a story that has unfolded again and again in other fields: Some emerging player, on the wings of a new technology or business practice, becomes dominant by scooping up small enterprises. Size pays: Photographers who might once have gained better fees in a more competitive marketplace now find themselves with limited leverage against a monolithic negotiating partner.

It's no wonder that photographers and stock buyers gripe that Getty grabs profits where it can, leaving everyone else a skinny slice. A number of art directors and stock buyers contacted for this article—many of whom asked to remain anonymous—pointed out that Getty has much more rigid pricing than its predecessors. Says a former Getty agent who now works at a smaller photo agency, "[Getty is] very strict with licenses. I left because my relationships with clients became just processing orders." Carol*, an art buyer for an established New York firm, bears witness to that shift: "Agents used to take into account the little details about how you were using an image, but not Getty."

Photographers have felt Getty's influence in the way they work and in how much money they take home. "There are a lot of strong-arm tactics involved in getting lower fees from photographers," says Lucy, a photo producer who works alongside her husband, a veteran stock photographer. Partly as a result of Getty's increased bargaining power, the money photographers make from rights-managed photographs—which give a buyer exclusive image rights—has dwindled. "The industry standard cut for photographers used to be 50 percent," Lucy adds. "It's now 20 to 40 percent. People sign with market leaders like Getty to make it up in volume." For rights-managed images, the average commission at Getty is now closer to 33 percent, according to the company's latest annual report.

Not surprisingly, Getty resists being characterized as an industry heavy that slashes fees at will. "There is a misconception that Getty Images controls the stock industry," says Andrew Saunders, Getty's vice president of imagery. "We are the market leader, but there are far bigger forces at play. With digital photography, it's now possible for many more photographers to get involved in selling stock images, making the industry far more competitive."