Just a few days ago Getty Images bought PicScout. A service designed to assist customers to legally license images and on the other hand a great tool to chase down copyright infringers.

Why Getty bought PicScout is not quite clear from a strategic perspective. My instinct tells me that their investors needed to see some movement and buying something always adds value. They had hoped for a quick turnaround and sale to a media conglomerate like Google or Time Warner or Turner which has not materialized. They are sitting like a lame duck since the acquisition. Taking Getty Images private hasn’t really done much for the bottom line. Since, the business has continued to deteriorate. Much of it is due to Getty’s own strategy by buying iStockphoto. Which effectively took the bottom out from underneath the pricing grid in the stock industry.

In all fairness let’s not say that this may not have happened if it wasn’t for Getty. Someone else would have as iStockphoto was growing like weeds. Customers wanted it and that makes it a viable business and the acquisition makes sense. Better someone from within our industry than from the outside.

The PicScout thing is a bit different. At first glance it appears to be a desperate attempt to add more value to a value shrinking portfolio as I just outlined. However the data of who uses what and where can once again give Getty Images a significant competitive advantage especially if you use the date in a not so ethical way. Meaning you do what you do with only one goal in mind, your own personal gain. So somewhere between here and there must lay the strategy for Getty and I’d be lying if I’d say I have my finger on this one quite yet. Do I believe that Getty will take the PicScout business really big – not really. Why? Because absolutely every competitor of Getty (meaning every company under contract) will run screaming from the PicScout deal because it gives Getty proprietary data of their businesses. What are their motives then? Perhaps the price. At $20 mill this is a no-brainer.

Some insiders say that PicScout was not a money making operation and not nearly as successful as they appeared to be. A buying price of $20 mill suggests something along those lines. But, no bashing of PicScout here. I really like these guys, Offir is a Gentleman and honorable businessman and Marketing genius Mrs. Amy Love one of the smartest women I have come accross.

Moving over to the Photolibrary. It’s been a know fact that Photolibrary has been paying their contributors very slowly. Rumors of their lack of financial stability have long circulated. This may be a godsend for them and their salvation.  Just like everyone else in the stock industry they had to face this issue and what better than to go out with a bang. If you already had troubles before the market tanked there was little to no chance of recovery as prices deteriorated further.

Will this move indeed get Getty a better competitive advantage in the Asia Pacific region? To a certain degree as they now have offices and can flood these markets with their content. Nothing they couldn’t have done through their existing strategies but  it’s always easier to go in through established channels and relationships versus starting from scratch. That’s not Getty’s strategy anyway. They are not creators, they are maximizers.

What is the issue in all of this for you? Couple of things. Corbis better be getting their act together as they are now leading the middle market. The gap to Getty Images is most likely growing. And there is not much left in the middle: Masterfile who I think is a great company and one to watch and Superstock is also an option but some money needs to go behind them. Blend still going pretty strong. Other than that? It’s thin air over here.

Why do you need to know this? BECAUSE at the end of this it goes down to creativity and subject matter knowledge. Walk away from generalization and become the best in a very narrowly defined niche. This will be the only way to make money at this moment in time with stock. Or you can still go the Microstock route which is also getting harder to get into. In case you don’t know Jack Hollingsworth and I did an entire product on this subject. Click here if you are interested.

What’s next? Free images. Just wait. And I can hear you screaming already.

What are your thoughts on these acquisitions? Please share your speculations or insider points, would love to hear from you. Nothing like a spirited discussion.

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