Tuesday, July 29, 2008

Royalty-Free's Decline, and Jupiter Images' Demise

Paul Melcher's blog - Thoughts of a Bohemian -Jupiter is Not Responding, talks about the decline in the Royalty-Free market:

Without significant numbers, it is hard to figure out why Jupiter is having such a hard time. Guess is that they are suffering from the same effect as Getty Images : a declining rights manage market, a suffering traditional RF demand, and a microstock division not covering for the losses.
And that got me to thinking that it might be time to dust-off an old perspective that needs to be re-visited.
(Continued after the Jump)

Simply put - if you need a photograph of a man waving a flag with fireworks behind him, and I sell it to you for one time, or a limited rights package, when you need it again, you'll pay me again - and likely pass that expense on to the client. If, instead, I sell it to you once, for an unlimted amount of time and uses, I only get paid that once (and often a fraction of the charge of the first time) and you can use it forever - still likely to pass the "standard rights-managed charge" to the client - obstensively for "access to your image library" (of RF images.)

What flunkie accountant didn't see that this well would eventually run dry? Lots of up-front one-time CD sales for $249 with 100 images, organized by theme - all you can eat/use. There's no back-end resales of those images to that client - ever.

In the quest for Wall Street appeasement, Getty rolled-up many smaller companies, and slashed and burned their way through the industry. Jupiter Images (Nasdaq: JUPM) has watched a similar fate appear. Meckler points to the chart below (a 68% decline in 6 months, and heck, a year ago it was $8.14, now it's down to $1.20), and it sure looks like Getty's chart:

Should we be surprised? Nope.

Fortunately, things can begin anew, without the Gettys and Jupiters of the world (in their current form), once they're gone. The images of people using cell phones will become dated, so too people with cars, hairstyles, clothing styles, and other things that make a photo look old. When was the last time a stock image of a CRT television was used? In a few short years, the image to show was a flat-screen TV, and with the 2009 shift to digital by the broadcasters, CRT televisions are done and gone for - so to images that include them. A Motorola flip-phone? So 90's!

August 7th, when much of New York is vacationing in the Hamptons, Jupiter will have their 2Q financial results (MarketWatch reports here), and Meckler suggests they're reveal there a slashing of upwards of 100 employees. When you run into once of these employees, remind them that the historical excuse for why they were attempting to devalue the business by selling microstock/Royalty-Free - "I was just doing my job", or "I was just following orders", just doesn't excuse their behavior.

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