I listened over the internet to the Getty Images Inc. (GYI) presentation at the Thomas Weisel Partners Conference. If you are at all interested in Getty Images, I recommend listening to the conference yourself. For the next several days, you can find the relevant links on the Getty Images Investor website.
Most of the information was generic in nature. While the generic information was helpful, I was listening intently for how Getty Images differentiates itself and how it is building a moat to protect its business in the future. Most of what I heard was that Getty Images is the largest and most reputable stock agency, and thus it is best able to serve the needs of its customers. Moreover, the company discussed that by revamping its sales force, the company has improved significantly. And the company discussed that it has processes and procedures in place to ensure that the archived media has the proper documentation in place—that is, model, building, and other releases. That information is all well and good, but it did not fully address how the company will be able to thwart off new entrants.
As I mentioned recently, Flick could become a new entrant and cause considerable chaos in the stock photo market industry. Before Flickr could enter that market, however, it would need to educate its users on the use of various releases and to ensure that the users accepted the responsibility for the releases. Because the digital photography is exploding with new content—lots of new enthusiasts with different digital cameras and Adobe Photoshop—my belief is that there will be continued pressure on the photo stock agencies. How do they differentiate themselves and add significant value?
For example, if a customer wants a picture related to dentists or dentistry, Flickr has about 10,000 photos related to dentistry. I am sure that only a small percentage have the required releases, but if users were able to readily derive income from their photos, I suspect that many users would obtain the necessary releases.
In summary, I did not learn of a compelling argument for a strong valuation of Getty Images. Instead, I got the impression that Getty Images was working its way through some transitory issues—revamping its sales force, for example—and was focused on purchasing those companies that could add more arrows to its quiver. I remain cautious because I think a new entrant, such as Flickr, could change the entire game for everyone. Or perhaps it will be Google Inc. (GOOG) with its image indexing that will be a game changer. Although I do not know how the industry will change in the future, I am not confident that simply having a large library of images guarantees future success. It is interesting to note that on a day when the S&P does extremely well, up about 1.55%, Getty Images was down $0.43 to $50.62, for a loss of about 0.8%.
Incidentally, another excellent weblog for the stock photography business is StockPhotoTalk | Special Interest Blog by Andy Goetze.
Disclosure: I hold no positions in Getty Images.
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