Getty Images (GYI)

The image licensing industry operates on continually decreasing margins. Each day, with new internet and digital camera technology, it becomes easier for an amateur photographer or independent distributor to post images on the web. Thousands of sites sell low quality images at low cost, or even for free, and image searches on engines like Google and Yahoo allow easy access to these collections. This has driven the price of copyrighted images down, but it has not lowered the costs to Getty, notably royalties to photographers. The firm is struggling to maintain a profitable business model, and operating margin decreased in both 2006 and 2007. This does not bode well for the future of the firm or the stock photography business.

Getty Images is counting on success in industries where it has no proven track record. The Getty name was built through stock photography and distribution of images to newspapers, advertising agencies, magazines, and numerous media outlets. The firm has not proven it can succeed at the licensing of music, and has limited experience with licensed film footage, two areas into which it has recently expanded. Getty's business model has proven to be successful in distributing images over the internet, but this model has no history of success in the music business, and it is too early to tell if it can produce large revenues in footage distribution. Getty has spread itself thin with its recent acquisitions, and in focusing on such a diverse collection of media it risks losing focus on stock photography, its most important and successful product.