Getty buys Jupiter for a song

Naturally, the buzz at the PACA International Conference in NYC this past week-end centered on the bomb that dropped on the industry last Thursday when Getty announced it had reached a deal to purchase Jupiter for $96MM.  The most common question: What does it all mean?  I see a number of angles from which to approach the subject.
The Getty Angle:  Getty Images has rid itself of its second-largest competitor and it has done so for about a third of price it almost paid for Jupiter less than two years ago.  Unconfirmed reports indicate that the earlier deal fell through when Getty offered $300MM and Jupiter CEO Alan Meckler refused to take anything less than $350MM.  In addition, Getty gets Jupiter’s high-end subscription business, an image licensing model Getty has yet to develop extensively on its own.  Getty has also purchased a potentially huge head-ache for itself.  Jupiter seemed never to have managed a complete and efficient integration of all its acquisitions.  Getty will now face the daunting task of disentangling the mess.  In the past, Getty has proved far more agile than Jupiter or Corbis at absorbing acquisitions. Given the size and complexity of Jupiter, however, this situation will present Getty with its greatest integration challenge yet.Getty will also have to address the matter of branding.  How will Getty approach the problem of integrating the Jupiter brand into its established three-legged stool of Getty Images, Punchstock and iStockphoto?  My money’s on the Jupiter name going away entirely as each component of the Jupiter business is absorbed into its counterpart at Getty.  As for Getty’s return on investment, my informal and entirely unscientific poll of seasoned (read “old”) industry insiders at the PACA Conference tells us Getty will recover the $96MM from revenue generated by the Jupiter collections over a period of one to two years. Not bad!The Photographer Angle:  It comes as news to no-one that times are tough for professional photographers.  Other than the photographer/entrepreneurs whose companies Jupiter purchased, the company can hardly have helped its contributors make more money.  In several cases, the contributors to companies purchased by Jupiter complained that their commissions dropped while Jupiter wrestled with integration.  That these shooters will now face yet another revenue stream disruption, at least in the short-term, seems inevitable.  The extent to which Jupiter submitters’ lots will benefit in the long term from their forced switch to Getty remains to be seen.  One can only expect Getty will pare down the Jupiter RM files.  The results will be mixed but will favor those exceptional photographers whose work fills gaps in Getty’s RM archives. To a large extent, the RF collections distributed by the two companies overlap.  The fortunes of the Jupiter RF suppliers, then, will depend on Getty’s ability to retain those Jupiter customers Getty doesn’t already have.(No doubt, my friend and fellow industry observer, Jim Pickerell, will have better analytical insight into how this acquisition will play out for photographers. I recommend photographers pay attention to his newsletter.)  The Rest-of-the-Industry Angle:  Insofar as Getty has eliminated a competitor for itself, it has done so for the rest of the companies in the industry as well.  In addition, if Getty becomes mired in integration problems—not a given but certainly a possibility—this would also help those still standing.  The competitor likely to benefit the most from the event is Getty’s Seattle neighbor, Corbis.  Most clients perfer to have choices.  Corbis will inevitably experience a “bump” from Jupiter clients looking to maintain diverse sources of imagery.The Meckler Angle: Veni, vidi… sed non vici!  Jupiter’s outspoken CEO, Alan Meckler, entered the market with a lot of cash and a lot of bravado.  He now leaves the stock photo industry in a diminished state on both counts.  He follows an illustrious group of industry outsiders with successes under their belts in other areas but who came, saw, yet did not conquer in the stock photo realm. Most prominent among them; Bahar Gidwani of Index Stock, Evan Nisselson of Digital Railroad and the executives behind the failed Adobe Stock Photos.  A quick review of the companies Meckler purchased along the way and, where available, how much he paid for them:When   Who    How MuchApril, 2004   Comstock   $  20,850,000February, 2005  Creatas/DG  $  38,000,000May, 2005   GoodShoot   $    9,800,000July, 2005   PictureArts   $  63,200,000October, 2005  BananaStock  $  19,000,000December, 2005  Animation Factory $    9,350,000February 2, 2006 Stock Image  $  11,100,000        ===========Total (we know about):   $171,300,000Getty’s Purchase Price for Jupiter:   $  96,000,000Loss:        -$  75,300,000Meckler also made numerous acquisitions for amounts that did not reach the threshold of materiality needed for public disclosure.  We can assume, then, they represent low purchase prices, individually.  Ironically, as the micro-stock business he championed shows, many small transactions can add up to a lot of cash.  Add to that the amount spent on trying to integrate all of these companies under one roof, as well as further investment in infrastructure and we know the total lost far exceeds the $75.3MM shown here.*****  In the not too distant future, I suspect we’ll look back at the Jupiter era as a time when an outsider with a lot of cash to spend came in and created a stir by competing with the established big players for acquisitions.  I have no doubt that the acquisition fury that took place while Meckler was throwing cash around would not have occurred had he never shown up. Several folks made a fair amount of money (in some cases, a ton of money) either directly or indirectly thanks to Meckler upping the ante.  Our small industry had been dominated by two big players, was temporarily dominated by three big players, and will soon be back to two big players.  Many of us wondered “What does he know that we don’t that he can justify the prices he’s paying for these stock photo companies?” Now we know the answer.

Related: JupiterMedia selling JupiterImages content licensing business to Getty for $96 million (Oct 23, 2008)

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