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Digitization and the paradox of informational reach in stock photography Evidence from Germany Johannes Glückler, Ams PowerPoint Presentation
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Digitization and the paradox of informational reach in stock photography Evidence from Germany Johannes Glückler, Amsterdam, 26 January 2006 The market challenge in stock photography Shrinking budget, increasing demand Consolidation and market concentration

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Digitization and the paradox of informational reach in stock photographyEvidence from GermanyJohannes Glückler, Amsterdam, 26 January 2006

the market challenge in stock photography
The market challenge in stock photography
  • Shrinking budget, increasing demand
  • Consolidation and market concentration
  • Digitization, digital photography & e-commerce
  • royalty-free photography

Annual reports, Form 10K, press, own research, * Zefa was aquired by Corbis in 2005.

agenda
AGENDA
  • shifting the informational trade-off in stock photography
  • Case study Munich: Reorganization of the supply chain
  • Questions for future research
richness and reach in information economics

Personal trust

Personal recommendation

(reputation network)

Public information

Richness and reach in information economics

Richness =

Depth, validity, precision, reliability and relevance of information

Richness

Reach = Number of people who receive a certain information

Reach

shift of the trade off through technological innovation
Shift of the trade-off through technological innovation

Richness

technological Innovation

Reach

a new trade off through digitization

Share of e-commerce in overall sales at Getty Images

Source: Getty Annual Reports

A new trade-off through digitization

“But the perennial problem for the user is how to access the many thousands of images available. Library researchers do their best to interpret and satisfy phone and fax briefs. But most encourage personal visits. Ultimately, the best approach is for clients to come in and search themselves. They have something in mind about what they are looking for, and ‘the search may spark off other ideas too,’ says Harold Harris, director of Zefa. … ‘When people choose pictures themselves they tend to use them,’ says Kate Pink, library manager at The Hutchison Library” (Purdom 1994).

Richness

“I can't understand why any picture library can consider going on-line“ (Sal Shuel, BAPLA 1995)

traditional

Picture library

Online-Databank

(e. g. Getty Images)

Picture agency

(e.g. The Image Bank)

Reach

royalty free virtualizing the customer relationship
Royalty free – virtualizing the customer relationship
  • Royalty Free
    • Once-for-all purchase of a licence without future limitation at a fixed price
  • Organizational innovation
    • Adoption from the music industrie at the beginning of the 1990s
    • PhotoDisc pioneered this business model in Seattle
  • Dissemination
    • 7% in Europe, 15% in the USA (2000)
    • Getty Images grows increasingly with RF

Getty Images, Annual Report 2003

photo agencies in germany 2005
Photo Agencies in Germany, 2005

Number of stock photo agencies, 2004

Source: own research based on BVPA-Membership directory and additional research

geographic concentration of media industries in munich
Geographic concentration of media industries in Munich
  • Munich continues to be Germany‘s leading location for the media sectors. Despite the recent economic downturn, the business sector experienced absolute employment growth over the last 5 years.

Number of firms out of the TOP 50 (*30) firms in each market segment in Germany

www.wuv.de

reorganization 1 specialization between agencies
Reorganization 1: Specialization between agencies
  • The production agency
    • The ‚collection‘ as value proposition
    • Market screening, strategic planning and production of new image collections
    • Sales partnerships increasingly also at national level (up to 70% of sales through partner agencies)
  • The sales agency
    • Market access as value proposition
    • customer access, market visibility and large photo stockare key objectives
    • Supply-partnerships with production agencies
    •  Redundant image supply on the market
reorganization 2 margins for navigators
Reorganization 2: Margins for navigators
  • Internet portals
    • Agencies use prominent portals to enjoy higher visibility for the customer.
    • Different organizational designs: search engines, portals (e.g. Alamy), subscription systems (APIS)
    • Pluralization of sales channels
  • Picture Research Service
    • Value proposition: compilation of photo selections from the global picture supply
    • No service charge for customers, agencies pay commission fees
    • Many agencies and customers in Munich the Hamburg based service
technical and organizational innovation in the picture supply
Technical and organizational innovation in the picture supply

Richness

Picture Research

Service

traditional

Picture library

Online-Databank

(e.g. Getty Images)

Picture agency

(e.g. The Image Bank)

Portal

(e.g. Alamy)

Reach

conclusion from production to navigation of information
Conclusion: From production to navigation of information
  • Absolute profit losses for photographers
    • No significant growth of market revenues
    • Shrinking fees
    • More intermediary distributors divide up the fee
    • Increasing production risk for photographers
  • Profit losses for picture agencies
    • Commission fees shift from customers to suppliers
    • Navigators act in favor of the customers
    • No more fees for administration
  • Profit gains for navigators and technology providers
questions does digitization ease global informational reach
Questions: Does digitization ease global informational reach?
  • Increasing internationalization
    • Expansion of market leaders through M&A
    • Sales partnerships
  • Barriers to internationalization
    • Violation of intellectual property rights by customers and sales partners
    • Language barriers (caption and keywording)
    • Different image styles
  • Service offshoring
    • Outsourcing of scanning, keywording and picture manipulation
    • Examples for offshore-activities in East Europe and China
question is spatial proximity necessary to ensure informational richness
Question: Is spatial proximity necessary to ensure informational richness?
  • New problem of digitization
    • Increasing reach creates information overflow
    • Increasing demand for navigation services
  • Still-not-solved problem
    • Reach cannot be extended infinitely for all sorts of information (and knowledge)
  • Organizational production of richness
    • Traditionally: spatial proximity
    • Today: organizational proximity, trade fairs, conferences and professional navigators
    • Geographic disembedding of customer relationship

„Well, [this agency] is based in Frankfurt or Cologne. Anyway, it doesn‘t matter, the only thing that matters is the picture.“ (Interview 41).

question will urban photography clusters dissolve
Question: Will urban photography clusters dissolve?
  • Effects of decreasing distribution costs
    • Service offshoring: sourcing out routine jobs to the low labor cost periphery
    • Urbanization advantages of non-routine transactions (creativity, innovation, lobbying)
    • The lower the distribution costs, the stronger become centripetal effects on firm location in a few metropolitan super-clusters
  • Counter effect against global concentration
    • Diseconomies of agglomeration
    • Low entry barriers increase niche options for secondary centers
  • What about the agglomeration dynamics in stock photography?

Scott (2000, 2001), Leamer and Storper (2001)

firm age and size by eployment
Firm age and size by eployment

Year of firm foundation

Number of employees

slide35

RM 1990

RM 1995

RM 2005

RM 2000

method and case study group
Method and case study group
  • Semi-structured interviews at all levels of the value chain
  • Total of 48 interviews with photographers, photographer agents, picture agencies and customers

# interviewees by primary activity