01 Jan 2016 Everything that Happened in Microstock in 2015

Sometimes we feel that the industry moves slowly, but when you look at everything that happens in a single year, you realize that’s not the case.

2015 saw huge news dominated by Adobe bursting onto the scene, as well as innovation in business models and some new entrants in the market.

Here’s the highlights:

Fotolia / Adobe

By far the biggest year in Fotolia’s history, and among the biggest changes to the microstock industry since it began, 2015 saw Fotolia’s content exposed to the massive Adobe customer base – an integration that’s continually improving.

• Adobe’s entrance to the market, by way of purchasing Fotolia, was announced in December 2014 but completed in February 2015
• In March, Fotolia launched a new website with improved design and search functionality
• In June we saw the launch of Adobe Stock, Adobe’s implementation of the Fotolia acquisition, answering all our questions about what Adobe was going to do, most importantly the details of the royalty program being a flat 33%
• In July they announced a major coup, hiring Scott Braut, Shutterstock’s former VP of Content, as the Adobe Head of Content in charge of directing Adobe Stock’s strategy
• In October they deepened the integration with updates for Creative Cloud and added Extended Licenses and video
• Video was fully integrated into Creative Cloud on December 1st, paying 35% to contributors below Emerald level and 40% to those above

Shutterstock

2015 was a huge year for Shutterstock. They faced up to the single largest challenge in the history of the company, which was reflected in the share price, ending the year with less than half the valuation they had at the start of the year.

Not only did Adobe, a company 40 times their valuation at the time – now 80 times -, enter their market by buying one of their closest competitors, but they also replicated Shutterstock’s primary product (the $250/month subscription) and then subsidized it with a 40% discount to their own customers.

Knowing they couldn’t win a price war with Adobe, Shutterstock’s response was to double-down on diversification. They got deeper into editorial, entered music, invested more into the already-successful premium Offset brand and Enterprise service, and finally started moving into the online design space.

Here’s the specifics:

• Acquired Rex Features in January to expand company’s reach in editorial market. In the same month, they also bought PremiumBeat, focusing in royalty-free music
• In March, they modified the subscription terms, going from daily to monthly download limits. They also updated the licensing terms, including more rights in the Standard license to match the rest of the agencies’ offer.
• Later in July they also changed the contributor Terms of Service. They lowered the payout threshold, introduced a possible commercial use of editorial images and stated the agency would handle any misuse claims from then on.
• In August they suffered a sudden drop in shares price, down 30% overnight on news of CFO Tim Bixby joining the rapidly growing list of departing senior executives, and falling slightly short of earnings projections
• They closed some interesting distribution partnerships: In June they signed Penske Media, in line with their strategy for deeper penetration into Getty-dominated celebrity & entertainment editorial market. In October, they became exclusive distributors of Red Bull Media House videos starting in 2016. And finally in November they closed a deal with Flixel to source Shutterstock’s incipient cinemagraph collection.
• In early December they modified their entry-level exam terms, lowering the acceptance bar from 7 to 1 out of 10 submissions approved, seemingly keen to grow their collection faster but not keen on maintaining quality levels
• And to round out the year they released an in-browser photo editing tool, a dipping of the toe in the water of online design where Canva is getting a lot of attention

500px

500px has featured heavily in the news calendar this year. As a recent entrant into stock, their getting themselves organised is being done in a very public way.

Getting into stock requires two parts: the content and the customers. Getting the content these days is free and instant with APIs and content partnerships. Getting the customers is the difficult part.

So 500px had their work cut out for them in stock, having lots of original content and large, active community of photographers, but no buyers. And their style of content – at least for which they are known – is not exactly what anyone calls ‘commercial stock’ – being much closer to the art end of the scale and better suited to hanging on walls.

But while there are no externally visible signs of success or lack thereof in selling a meaningful quantity of licenses, the company is achieving great success getting themselves set up with staff, partnerships and funding:

• In July they announced a $13M series B raise along with a partnership with lead investor Visual China Group (VCG) to consolidate their position in stock business and extend their global reach –starting in Asia.
• A month later they re-structured the marketplace, dividing their only collection in two, curated by quality and versatility. While the higher quality collection kept the original prices, the new ‘budget’ selection offers a lower price point.
• In mid October they launched beta version of a new 500px Chinese mirror site through their partnership with VCG. Contributors weren’t happy with the watermark and requested an opt-in facility, so the site came down the same day and relaunched a week later with the requested functions.
• In November they rolled out several distribution partnerships aimed at expanding their reach in international markets like Europe, Middle East, Asia and South America.
• The company has been recruiting a lot of industry expertise: former iStock’s General Manager, Ellen Desmarais, joining in September as VP and Head of Marketing; in November Kelly Thompson –iStock/Getty’s former SVP– as Head of Marketplace at 500px.

Videoblocks

As the originator of the hybrid marketplace + unlimited subscription business model, Videoblocks has the attention of everyone in the market.

• In April they released the crowd-sourced marketplace, accessible only to subscribers of their unlimited downloads subscription, paying contributors 100% royalties, and slightly undercutting market license fee rates
• Nine months after launching the marketplace they’ve amassed 900K clips
• A few days ago, in the last week of December, they announced a new distribution partnership with the Discovery Channel, who will be selling a large collection of footage through Videoblocks’ marketplace, making them likely reach the 1M clips milestone within their first year.

EyeEm

In the mobile stock photo space where nobody is sure where it’s going and nobody is making any meaningful money, EyeEm is by far the most active and most exciting:

• In March they launched their own marketplace, in the US alongside their distribution deal with Getty Images
• In April they announced an $18M Series B round
• A month later they launched the marketplace in the UK and Ireland
• In July the marketplace expanded to other important Western Europe markets, with South America and Asia in their upcoming expansion plans

Depositphotos

Depositphotos had always been seen as very successful for being so late to the market, yet things have been very quiet the last few years, with only financial news in 2015:

• In August Depositphotos increased prices and dropped royalties in order to “maintain their position in the market”, meaning they couldn’t hold their ground at the current profitability level
• Just a couple weeks ago in mid December, they announced a $5M raise from a new and a previous investor. The capital is said to be used in expanding the company’s Ukraine base and global operations

Dreamstime

Noted lately for its lack of activity, Dreamstime is verifiably coasting:

• Dreamstime started the year with the latest Google deal, presumably the only agency crazy enough to sell unlimited usage by all Google Display Ads customers for a flat $2 royalty. That I can find, nothing further has been announced now that the initial 12 month period is coming to an end
• In June they followed the rest of the industry and removed daily download limits in their subscriptions

Canva

Initially interpreted within the industry as just a novel idea to sell a few photo licenses, our two-year-old Sydney startup, Canva, spent 2015 hinting at the scale of our ambitions:

• Canva for Work, the first non-image product, aimed at businesses and teams, was announced in May, along with a $6M round and hitting 2.3 million users
• Then in August Canva for Work was launched, with an updated user count of 4 million
• Then in October, with 5 million users, we announced a $15M in series A raise

New Players

• Meashots, focused in Middle East themed imagery, steps into competition with Fotoarabia, and with macro agency ArabianEye
• Blackstock, specialising in authentic and more accurately representative images of people of color and their culture
• StockPotImages, dedicated to modern, non-stereotyped imagery of marijuana and its consumers
• GoPro, the action camera maker company launched a restricted access RM marketplace for video licensing, sourcing GoPro-shot action, sports and wildlife footage from professional athletes and videographers
• Dashmote, a young innovative startup based out of Amsterdam, begun as a cross-agency search engine and evolved into a one-stop stock photo marketplace reselling content from various other agencies

Notable Absences

Pond5 had a very quiet year despite the massive $61M funding they received in 2014.  I wonder if those investors aren’t getting a little impatient with the lack of new initiatives, especially given all the press Videoblocks and Shutterstock are getting.  2016 will need to be a big year for them!