Shutterstock IPO Prospectus Reveals Market Value of Stock Photos

Microstock photo agency Shutterstock has filed a business prospectus with the Securities and Exchange Commission, announcing its intention to sell shares through an initial public offering “as soon as practicable.” The filing sheds light on Shutterstock’s revenues, and the surprisingly low average price for the millions of photos in its database.

The business prospectus is incomplete, so Shutterstock has not yet specified the number of shares it intends to sell or the price. But for the purposes of its filing the company estimated it would raise no more than $115 million.

Founded eight years ago by CEO (and majority shareholder) Jonathan Oringer, Shutterstock was one of the first microstock agencies to offer subscription-based pricing. That allows users to download up to 25 images per day for a flat fee of $250 per month, or $2559 per year. Users can also license image on demand, for prices starting at about $10 per image.

Last year, Shutterstock’s total sales revenues were $120 million, a 45 percent increase over 2010 revenues of $83 million and nearly double the 2009 revenues of $61 million. The average price users paid per image download last year was $2.05, according to Shutterstock’s SEC filing.

Meanwhile, net income–which is income after administrative, marketing, and research and development costs are subtracted from total revenues–has hovered around $20 million for the past three years. Income has remained relatively flat despite the rise in revenues because Shutterstock’s operating costs have increased by about 50 percent per year since 2009. Operating costs were $97 million last year.

The company says it plans to use the IPO money for operations. Shutterstock says it plans to invest in new technology, and in its sales and marketing efforts to attract more contributors and customers. Most customers are small and medium-sized businesses, but Shutterstock says it hasn’t fully tapped that market. It also wants to increase revenues from large businesses, which currently account for just 10 percent of its revenues.

Shutterstock claims an image database of more than 19 million photos and illustrations and 500,000 video clips, provided by more than 35,000 contributors. The vast majority of contributors are amateur photographers.

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4 Responses to “Shutterstock IPO Prospectus Reveals Market Value of Stock Photos”

  1. Jim Johnston Says:

    Stock eats itself

  2. Gunnar Says:

    Funny, I am actually working on this deal as a printer. Being an (amateur) photographer it’s good to work on something I have a personal interest in. Seems to be a better mass option than Getty for an image database model.

  3. Edward C. Greenberg Says:

    The fact that this company offers subscription-based pricing which allows users to “download up to 25 images per day for a flat fee of $250 per month”, demonstrates why the numbers of professional photographers continues to dwindle. Shooters have lowered their fees to the point where they have hastened their own extinction.

    Use of a professional photo for a gross fee of $10?! The creator nets after taxes and expenses enough to maybe afford to buy 1/2 gallon of gasoline.

    Casinos offer all you can eat buffets with fine foods at a price point where they either break even or make a very slight profit. They can do so even as a loss leader because buffets bring people into the building where they will gamble, shop, buy drinks and see a show. Conversely stock agencies license imagery on the very same all you can eat basis, because photographers have permitted them to license their work for peanut shells.

    This model is not sustainable if professional photographers are needed on a going forward basis as no professional can support him/herself on these “royalties”. The agencies are using more and more amateurs and “wanna be’s”. Real photographers have only themselves to blame as they hasten their own demise.

  4. MyNameHere Says:

    “Shooters have lowered their fees to the point where they have hastened their own extinction.”

    Or maybe the market is telling us the true value of a commodity that has been heretofore overpriced.

    “Real photographers have only themselves to blame as they hasten their own demise.”

    I disagree. Maybe there are too many photographers, and the media, schools and trade associations that sold this as a glamorous career should be blamed. The truly good photographers who can create a unique image have no trouble making a living.

    The ones selling generic imagery are the ones being affected. If someone with little experience and a smart phone can create the same image as the “pro,” that pro should be looking for a new career.

    Maybe this will hasten the removal of thousands of generic pros, making it easier for the next generation of real image creators to survive in a smaller pool.