Underexposed

SAN JOSE, Calif.--iStockphoto, which helped pioneer the "microstock" market for inexpensive, royalty-free imagery, plans to launch an audio-licensing business Wednesday.

The Getty Images subsidiary already offers photography, illustrations, Flash animations, and video. iStockaudio was a natural extension--one the company's customers had sought, iStock Chief Executive Bruce Livingstone said in a speech here at the User-Generated Content Conference and Expo.

iStockphoto CEO and founder Bruce Livingstone

(Credit: Stephen Shankland/CNET Networks)

"We're introducing iStockaudio on Wednesday this week," Livingstone said. The company announced the iStockaudio plan last May, but the actual arrival was delayed by a suddenly necessary overhaul to the site's search system, he said.

Initially, the audio service--think background music or the sound of a shattering window--will be available through public beta testing. Interface changes are possible before the final launch, scheduled for the South by Southwest conference that begins March 13.

So far, there are about 10,000 audio clips at the site, Chief Operating Officer Kelly Thompson said in an interview. "There's a lot of pent-up demand," he added.

Disruptive
iStockphoto, and the microstock industry in general, is an example of what can be done to harness the power of large numbers of people. Many in the traditional stock art business have been displeased that a bunch of amateurs willing to see their work sold for less than $1 a pop are eroding their business. But the hard economic reality is that microstock companies have put images on the market from photographers who are good enough to sell a few images now and again, even if not good enough--or devoted enough--to quit their day jobs.

iStockphoto now has about 65,000 photographers contributing to the site. Because Getty Images went private last year, the company won't reveal its 2008 financial results. The results were better, though, than in 2007, when the company garnered $71 million in revenue and paid contributors more than $21 million for their work.

The company is, of course, a technological phenomenon. It uses the Internet not only to connect large numbers of buyers and sellers, but also to help them view and distribute digital photography. "When iStock really started to take off is when the Canon Rebel came out," making it "affordable to shoot really good digital," Livingstone said.

Getty Images, which has a more traditional rights-managed image-licensing business, has a program to try to recruit new photographers from Yahoo's Flickr photo-sharing site, a partnership Livingstone helped set up.

Ups and downs
Thompson and Livingstone shared some of the ups and downs of their business' history at the conference. The lesson for companies such as iStockphoto that rely on user-generated content: pay close attention to what users and customers are asking for. They were asking for video, for example, and that now accounts for 10 percent of the subsidiary's revenue.

iStockphoto plans to launch its new audio clip-licensing site Wednesday.

(Credit: iStockphoto)

The flip side is launching something people haven't asked for. Livingstone had the iStock Forumeter idea, for example. It let people label forum contributors as grouchy crabs, helpful superheroes, comedic clowns, and unconstructive trolls.

"The problem with this is, the community didn't ask for it, didn't want it, and it was too accurate," Livingstone said. "People didn't really want to know how they were seen in the forums. It was a flop. We got rid of it in about 30 days."

Another bad idea: the Buy Request program for setting up custom photography shoots. In the company's core business, "99.99 percent of our sales are done unassisted. This little brainchild was the exact opposite. We had to help customers 99.99 percent of the time. It just didn't work," Thompson said.

The company also has struggled to keep up with growth of its computing infrastructure.

"It's important to be wrong as often as you are right, as long as you learn from the mistakes," Livingstone said. And when things go wrong, it's important to tell your users you're sorry. "Sometimes, the community needs to hear you acknowledge that there was a problem and apologize for it."

Once, the site went down after a truck cut the fiber line to the company's headquarters in Calgary, Alberta. "We did manage to get a check out of the company that supplied the fiber optics. Instead of keeping it, we decided to disburse to the community--the people who would have sold photos. It wasn't a lot--maybe $45,000--but I think people really appreciated the gesture," Livingstone said.

Growth strains
"Mostly, we plan for a reasonable amount of growth. Too much bandwidth is costly, but not enough is a disaster, and we know," Thompson said. "Early in our life, we got a bit behind the curve, and it was tough to catch up."

The company pushes what the MySQL database software can do, but this year, it concluded that it just couldn't handle the site's search operation. So in what was something of an emergency, it rewrote it in the C programming language.

"Our search was failing. We had to put everything on hold, surgically extract search from our Web site, and put it back in," Livingstone said.

Now, though, instead of 30 overtaxed search servers, the company has a single machine handling the chore, with four backup machines to handle potential problems.

The company hopes that new software called Dexter, which lets customers license images directly without using the Web site, will offer further help. A Mac OS X version is in private testing with people who license many images now, and a version running on Adobe's AIR software foundation is under development.

In one of the larger consolidation moves that have been sweeping the stock art business, Getty Images has agreed to acquire Jupiterimages, a subsidiary of Jupitermedia, for $96 million in cash, the companies said.

Getty will keep the Jupiterimages brand and will augment its collection of imagery with Getty stock, the company said. It's unclear, though, what will come of the two companies' royalty-free microstock sites, iStockphoto and Stockxpert.

"We'll be able to discuss questions like that when the deal closes," said Kelly Thompson, iStockphoto's chief operating officer, in a forum posting after the acquisition plan was announced.

The consolidation reflects tough times sweeping the stock-art business--times that led Getty to go private earlier this year in a $2.4 billion acquisition by Hellman & Friedman.

And the times aren't getting any easier. Gary Shenk, chief executive of Getty's top rival, Corbis, said Saturday at the PhotoPlus Expo that it will cut the royalty rate it pays photographers for rights-managed images, according to Photo District News.

For the first time, iStockphoto has revealed how much money it pulled in by licensing large numbers of photos, videos, and other imagery for relatively small fees, and how much it paid out to the producers of that content.

In a forum posting Tuesday, iStockphoto head honcho Bruce Livingstone said the Getty Images subsidiary had 2007 revenue of $71.9 million, and it paid $20.9 million to those who contributed the imagery it licenses.

That's a pretty interesting illustration of what user-generated content can sell for, at least in one context.

"We are now selling an image every 1.4 seconds through this industry-changing marketplace," Livingstone said in the posting.

Getty is in the process of going private in a $2.4 billion deal announced in February.

"One thing we've always had to keep close to our chest is our financials. Maybe it's our Canadian background, but we've always found it a bit cheeky and rude to discuss money," Livingstone said. "With the recent announcement that Getty Images is going to be a private company owned by management, employees, and Hellman & Friedman, you'll see lots of numbers floating around about iStock's financials."

A Rebekka Guðleifsdóttir self-portrait

(Credit: Rebekka Guðleifsdóttir)

Update 4:15 p.m. PST: I added a comment from Guðleifsdóttir and corrected that the earlier incident involved selling eight individual photos.

An Icelandic photographer has for a second time encountered the ugly side of Internet photo sharing, finding photos she published at Yahoo's Flickr site being sold by somebody else through the iStockphoto Web site.

Rebekka Guðleifsdóttir, a professional photographer, found a picture she took of three frolicking horses on iStockphoto, a "microstock" site that licenses images for relatively low prices.

"I mean for crying out loud, out of 31 images this particular user has on his 'portfolio,' 25 of them are mine, and at least 3 are of me," she said in the caption for a screenshot of the iStockphoto page.

iStockphoto, a division of Getty Images, removed the photo and the user, named "vulcanacar."

"As soon as we get a report of something like that, we investigate right away," said iStockphoto Executive Vice President Kelly Thompson. "We have a compliance officer right here. It's important, and we have to do it." Usually the shoe is on the other foot, he added: iStockphoto sends several takedown notices per week to go after unauthorized use of iStockphoto images.

As for justice, Thompson said it would be tough to pursue this particular iStockphoto user. "He is in a country where it would be very difficult to do too much to him, which is unfortunate," Thompson said.

And on Guðleifsdóttir's side of the equation, "iStock will strive to make the situation right...We'll have to talk with Rebekka and see what needs to be done," potentially including paying her royalties.

iStockphoto did indeed get in touch, Guðleifsdóttir said. "I have been contacted by the CEO of iStockphoto, and the matter will be handled in an appropriate way, I'm sure," Guðleifsdóttir said, though she declined to comment on specifics.

This is the second time Guðleifsdóttir has found images she posted on Flickr for sale elsewhere. In 2007, she discovered a company selling eight landscape pictures. She complained about the incident on Flickr only to have her image and the discussion below it deleted because, Flickr told her, "Flickr is not a venue for you to harass, abuse, impersonate, or intimidate others."

Flickr co-founder Stewart Butterfield later issued an apology; Guðleifsdóttir decided to restrict her Flickr uploads to a maximum width of 800 pixels.

Thompson said it's "very, very, very rare" for iStockphoto to sell photos that have been uploaded without the copyright holder's permission, but given that the site has "almost 3 million images" available, it's also inevitable.

"We usually catch these way before the images are even sold," not the few months that happened in this case, Thompson said. "The community is pretty amazing at finding things like this. And our inspectors are usually pretty good at it too."

(Via Thomas Hawk)

Eugene Berman's plug-in lets Lightroom users export photos directly to iStockphoto.

(Credit: Eugene Berman)

Photographer and programmer Eugene Berman has released version 1.0 of a Lightroom plug-in that enables photographers to export pictures directly to iStockphoto, a "microstock" Web site that sells images for relatively low cost.

Adobe Systems' Lightroom is gaining in popularity as a way to edit and catalog the unprocessed "raw" images from higher-end digital cameras, and Adobe in 2007 released a beta version of a software developer kit (SDK) that lets anyone write plug-ins for exporting photos.

Other Lightroom plug-ins also exist that permit uploads to Flickr, Picasa, Zenfolio, and SmugMug.

Exporting to iStockphoto is a different matter, though. Photographers might be more inclined to take their shots on a trip through Photoshop for more careful noise reduction, edge sharpening, or selective editing not possible in Lightroom.

The plug-in provides the ability to enter keywords, upload multiple photos, and include model releases, Berman said.

However, Lightroom expert Sean McCormack rightly gripes that it would be improved if it exported the photo's title from the metadata title field rather than the filename, which is more likely to be something obscure such as DSC7893.jpg.

(Via Lightroom News.)

Whether this is good news or bad news depends on whether you're buying or selling photos at iStockphoto, but the Getty Images subsidiary's prices will go up in 2008.

According to the new fee schedule, the cheapest image will still cost 1 credit, or $1.30, though that price diminishes when credits are purchased in larger quantities. However, a small image increases from 2 to 3 credits, a medium from 4 to 5, a large from 6 to 10, an extra large from 10 to 15, and an extra extra large from 15 to 20. In addition, credits purchased in modest quantities cost slightly more. (Size is based on the pixel dimensions of the image. For example, an extra small is up to 300x400 pixels, and an extra extra large is 3300x4900.)

For the microstock company's other licensing options, the intermediate grades of vector illustrations--moderate, detailed, and complex--also increased in price, but videos stayed the same.

Setting prices is a balancing of the needs of photographers who upload their photos, videos, and graphics and customers who pay to use that content. Both have the choice of taking their business elsewhere--there are many competing "microstocks" that also license images to customers for a small one-time fee.

"At iStock, we seek to maintain the appropriate price/royalty ratio that will keep our contributors happy and satisfied while balancing the needs of our clients," iStockphoto Excecutive Vice President Kelly Thompson said in a statement Wednesday. "We last raised image prices a year ago and will still have the best price/quality ratio in the industry come January."

Raising prices also is necessary to support iStockphoto's growing computer infrastructure need, Thompson said. The company's Web site traffic increased 86 percent from September 2006 to the same month this year, and part of that expansion involves offering photos to customers in more countries.