The Growth of an Empire Getty Images by Pat Hunt, Maureen Meech, Robyn Wolf and Julie Zurowski

Photography Getty Images was built by two partners, Mark Getty, grandson by Mark Hunt / of J. Paul Getty, and Jonathan Klein, cofounder and CEO. What began as an analog film-based agency serving the needs Huntstock, Inc. / of photographic artists became a corporate empire, spanning GettyImages.com the globe and absorbing more than half of the world’s market share in the commercial media industry. With prescience, Getty Images’ initiative was born out of the “creative destruction” of an industry that was built on film, chemicals and analog . !e founders foresaw the power of the burgeoning internet and digital technology. Getty absorbed the content of major stock photo agencies and media companies and commanded market share with a combination of quality product, clever marketing and lightning swift moves into complementing business models that built on its strengths and added value for its customers.

The Picture Professional 37 Getty Images describes itself as Getty Images foresaw the power Friedman and Getty Images] the world’s “leading creator and was required to be adopted by distributor of still imagery, footage of the burgeoning internet and the holders of the majority of the and multimedia products, as well shares of the company’s common as a recognized provider of other digital technology. stock outstanding on the record forms of premium digital content, date of May 20, 2008. Holders of including music.” !e company approximately 75 percent of these targets three customer segments: shares voted in favor of the adoption agency (advertising, marketing and graphic design firms), of the merger agreement, representing 96 percent of the votes corporate (in-house communications, advertising, marketing cast.” and graphic design) and media (newspapers, broadcast television, Note the meteoric rise of Getty Images over the past decade. film, magazines and online publishers). Mark Getty and Jonathan Klein negotiated the market demands for profits and return on share value. A constant array of new and Hellman & Freidman LLC and Getty Images appropriate product lines tapped into the growing demands of Earlier this year, Getty Images stockholders voted to adopt a commercial clients worldwide—the continued technical updates merger agreement with affiliates of Hellman & Friedman LLC to improve image search, the varied pricing models that reached the for a price of $2.4 billion. needs of new budgets, the Hellman & Freidman swift expansion into news, LLC is an investment sports, entertainment, firm with offices in San music and footage, all while Francisco, New York and grabbing market share London. Among its many from competitors. !e investments, it focuses company also budgeted on industries specializing its money allowing it to in media and marketing acquire major companies services, financial services, with a name and a product information services and line on which it could others. The firm has build its branding and managed more than quality. $16 billion in capital. H a v i n g a b s o r b e d According to the financial between one and seven releases, “Under Delaware companies each year, law, the merger agreement Getty Images commands [between Hellman & approximately half the

Acquisitions & Highlights

1995: Getty Images Communications takes 80 percent stake May 2000: Twenty percent of Getty business is coming from in Tony Stone Images, setting its course in the industry. new customers. Getty Images launches a system to handle 1996: Getty Images acquires Hulton Deutsch Collection— digital asset management for others who want to move nineteenth- and twentieth-century historic work that allowed images on the internet. Getty Images to compete with Corbis. 2000: !e acquisition of Visual Communications Group was 1997: Getty Images acquires Liaison, gaining a foothold in financed using the proceeds of a $250 million, 5 percent contemporary news and . convertible subordinated note offering due 2007, which 1998: Getty Images acquires PhotoDisc—an investment of closed on March 6, 2000. !is left Getty Images with foresight into a “royalty free” business model about to take excess cash over and above the $220 million purchase price. off. !e continued acceleration of Getty’s e-commerce revenue 1998: Getty buys Allsport (sports imagery). growth (which increased to more than 160 percent in 1999) February 1999: Getty’s e-commerce sales reach 15 percent validated its business strategy. of total sales, working toward an effort to segue from analog January 2001: In order to make the business profitable at a to digital, as commercial clients upgrade their systems to level that will satisfy investors, Getty needs to cut costs. Its accommodate these moves. biggest payout is to suppliers—the . Getty 1999: Getty Images acquires !e Image Bank from Eastman needs new images, but a large percentage of its suppliers are Kodak—contemporary and archival photos and film. waiting for a satisfactory new contract before submitting 1999: Getty Images acquires Art.com in an attempt to enter new images. the art and consumer business.

40 Issue 4, 2008 market and continues to large volume purchasing grow. It has managed and has continued to to integrate intellectual threaten the whole image property in the media media empire that has genre as varied as been constructed on the film, music, sound strength of the internet and still photography, over the last decade. not to mention asset Now Getty Images m a n a g e m e n t a n d can chase that growing assignment photography. but sometimes elusive It has enjoyed economies of consumer market that its scale by quickly integrating competitors have been its product lines into major trying to lure for a decade. branding campaigns Getty can do it without and eliminating any answering to share value staff and office that was and public scrutiny. It redundant. can create market share Getty Images pioneered that never existed. It can the digital age by funding the scanning and online ecommerce continue to build its global empire. of all of its early acquisitions. !e company made excellent To date, Getty Images has not suffered opposition as a result use of the complementary resources its mergers offered. New of antitrust laws, and it enjoys a new direction under the “private management teams, more knowledgeable in corporate finance, equity partnership” label. According to Brealey, Myers and Allen replaced old ones, and each merger created additional “economic in Principles of Corporate Finance, “Perhaps going private avoids rents,” whether financing with stock, debt or cash. public investors’ ‘short-termism’ and makes it easier to invest for Getty Images gobbled up market share, not only by becoming the long run.” the biggest, but also by purchasing any business that held the share it needed. !en, in 2006, it made its biggest leap into the modern age in order to head off another era of “creative destruction” by Pat Hunt is the managing director of Huntstock, Inc. Julie purchasing iStockphoto, the “crowdsourcing” business model Zurowski is the director of Technology Services at Curry College that is changing every pricing model formerly common in the Business School. Maureen Meech is the controller at Nelco Products, industry, tapping into a new body of imagery fostered by amateurs Inc. Robyn Wolf is with Human Resources at Massachusetts and semi-pros, and offering a modern and fresh approach to Institute of Technology. image search. !is highly discounted business model demands

October 2001: Stock photo industry is in the U.S. recession. licensing subscription imagery, catering to price-conscious Even before September 11, sales are off for the year compared clients. to 2000. 2006: Getty Images buys iStockphoto.com, one of the 2002: Getty Images lists on the . companies that pioneered microstock for $1 per image. February 2002: !e Comeback: Getty reports better than 2006: Getty Images acquires Ireland-based Images expected fourth-quarter revenues and 61 percent of sales are Holdings (Stockdisc and Stockbyte, Getty’s largest image from e-commerce. Gross margins improve because Getty partner). gets its image inventory on more favorable terms. January 2007: Stock price rises. Royalty-free business model February 2003: Turning a Corner on Profits: For years Getty grows 132 percent and micro business grows. Innovations invested in growth with a loss. Now the company reports include new products, footage, multimedia, entertainment income. Achievements: completed digital migration, video and mobile application developers. reinvigorated major brands and initiated unification strategy, 2007: Getty Images acquires celebrity photo distributor enhanced news and sports coverage, and initiated third-party WireImage (including Media Vast, Film Magic and Contour distribution strategy. Photos). 2003: Getty Images acquires ImageDirect, Inc., a 2007: Getty Images acquires U.K. “citizen journalism” agency premiere provider of music, entertainment and fashion Scoopt. photography. 2007: Getty buys Pump Audio music licensing company. 2005: Getty Images acquires Photonica and Iconica, U.S. 2008: Form 10-Q shows the Getty Images quarterly 2008 and European operations of leading Japanese online photo net income to be $23,864,000. Stockholders vote to adopt stock company Amana. a merger agreement with affiliates of the private equity firm August 2005: Getty launches a radical new business model of Hellman & Friedman LLC. Price: $2.4 billion.

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