How to lose a billion? The impact of the Internet on industries

The theme throughout is the shift of power to the consumer and away from the seller, who used to control supply, distribution, and “marcom” (marketing message).

Getty Images (GYI) — minus 33% ($1 billion) in 10 days

- supply replacement – vast online collections of photos and microstock collections serve as alternatives to traditional stock agency offerings (given a choice of thousands of rose pictures, a $1 rose picture will probably be perfectly sufficient for a buyer’s needs, versus a rose picture that comes with much more complex license terms or is more costly.

- demand displacement – new use cases, better findability, greater ease of use, more flexible license terms, and lower cost shift demand away from traditional stock agency offerings; so while the number of photos that are licensed and used may skyrocket (everyone can add photos to blog posts), the dollar value of the overall market “pie” will shrink when the average price per photo approaches $0.00 (free). And market share will also scatter away from traditional dominant players to the multitude of smaller alternative players.

Blockbuster (BBI) — minus 42% ($0.7 billion) in about 4 months

- demand displacement — the same supply of “entertainment content” made easier to access and view by online rental services (e.g. NetFlix), on-demand cable, bite-sized downloads (e.g. Apple iTunes), and distributed sharing technology (e.g. BitTorrent).

Newspapers (Classifieds industry)

- better timeliness of Craigslist postings mean users could get their apartment rented even before the listing hits print

Telecom (Long distance charges)

- calling over the internet has been around for years, but now practically every instant-message program has “voice” features and voice-over-IP providers are routing voice data over internet pipes and avoiding the tolls charged by traditional telecom companies

Music (distribution of plastic discs and promotion of selected artists)

- the world did not fill up overnight with music-pirating grandmas or cats (RIAA sued someone’s cat); rather, the shift of power towards the consumer is manifesting itself in the evaporation of demand of plastic discs — consumers don’t want to buy a CD with 16 tracks on it when they only want 1 track; consumers want to use the music they did purchase on the devices of their choice; consumers balk at the mental “cost” of DRM; and consumers want music that is actually good and original, not music that has been heavily promoted and in heavy rotation on radio because of such promotion.

Getty goes multimedia, acquires smaller firm

Stock-art seller branches into video and multimedia, acquires PunchStock for more imagery. var exURL = encodeURIComponent(“http://news.com.com/Getty+goes+multimedia%2C+acquires+smaller+firm/2100-1025_3-6180746.html”); var exHed = ”; exHed += “Getty goes multimedia, acquires smaller firm”; exHed = encodeURIComponent(exHed+’ – CNET News.com’).replace(/\’/g,’%27′); Element.cleanWhitespace(‘storyDekDiv’); var exDek = encodeURIComponent($(‘storyDekDiv’).innerHTML.stripTags().replace(/\s+/g,’ ‘).replace(/^\s*/,”)).replace(/\’/g,’%27′);

By Stephen Shankland

Stock photo seller Getty Images launched a new division Monday for selling licenses to footage and multimedia content, then on Tuesday announced the latest in a series of acquisitions, PunchStock.

Leading the multimedia group is Craig Peters, who joined Getty through its acquisition last week of MediaVast and its subsidiary WireImage, which licenses video content. Peters was senior vice president of new media at MediaVast.

PunchStock, based in Madison, Wis., adds a third stock image unit to the company, supplementing Getty’s core business and the newer iStockphoto acquired in 2006. PunchStock offers simpler licensing and search, Getty said.

Getty has been reshaping its business through recent acquisitions. In March, Getty acquired Scoopt, a site that sells amateur photos to the news media. “Citizen journalism is 2,000 years old,” Getty CEO Jonathan Klein said in an interview earlier this week, arguing that amateurs can supplement professional coverage and that Getty can assure media outlets using that content that its provenance is sound.

Getty announced the PunchStock acquisition along with its financial results for the quarter ended March 31. The Seattle-based company’s revenue increased 6 percent to $213 million compared with the year earlier, and net income was $38 million, or 63 cents per share.

The company also announced it’s restating financial results from 1998 through the first half of 2006 to deal with errors in its stock-based compensation. To correct the situation, the company expects to take a noncash charge of $28 million to $32 million, 95 percent of which involves finances in 2002 and earlier years.

A special committee investigating the stock situation concluded in April that the evidence “did not establish any intentional wrongdoing by current employees, officers or directors of the company, and the special committee continues to have confidence in the integrity of current management.”

(thanks, Owen)