Beware of the platform that is not.
Wednesday - August 06, 2008
Let’s look at photography (my hobby), arguably the most important purchasing-driver of computers (after the ability to access the internet) by consumers. Media management (yes, on the desktop) remains more than a Billion dollar market opportunity.
Case in point: new announcements of Adobe Lightroom and Apple Aperture tout enhanced interoperability with third party plugins to manage and edit your photographs. Don’t you feel good about that warm open-source-like karma of interoperability?
I don’t. Both vendors have deployed their next trick to customer imprisonment. And plenty of uninformed customers will fall for it. Here is why you shouldn’t:
1/ There is no need for an additional platform for photo management.
Photo editing capabilites of both applications are mediocre (no layer based editing, no advanced local editing etc.) and their asset management capabilities are little more than a replica of file system capabilities (even photographic attributes such as exposure, aperture and other attributes are maintained by the file-system metadata today). So, except for making nice photo albums and calendars, why else would you slug thousands of photographs in a proprietary asset management format that is less reliable than the underlying file-system and requires seperate backup and archiving strategies to maintain.
2/ Plugins have worked for years on file-system based photographs.
The announcement of the interoperability with plugins is really old news as those third party applications have been working with file-system based photographs for years. This is a platform on top of a platform, designed to milk more money out of customers and locks them into a proprietary technology stack. A prison with the windows open is still a prison.
3/ The operating system needs-to and will evolve faster.
The pace of meaningful innovation of the Personal Computer OS is deplorable. Microsoft has not made the PC operating system significantly smarter over the last ten years and that has opened the window of opportunity for Apple to surpass Microsoft in usability (rather than functionality). The ability to easily create and manage user-generated content such as, Photography and Video, has now become important adoption drivers to the platform, OS-vendors have yet to respond to. Photographic capabilities should be built-in (not priced-on). These days the unique media experience of the platform is the differentiation that sells the computer (since they all do internet quite well).
As a consumer, buying into seperate photography management siloes will cost you significant time and money (as the former CEO of a photo software company, researching the alternatives, I tried). My advice is to wait until an agile vendor steps up and turns media management into a core competency of the computing experience.
In the words of Ray Lane (partner at KPCB and former COO of Oracle) who once said customers are better off skipping some steps of innovation (in his case to skip client-server for three-tier internet architecture), I have just presented you with my reasoning to skip-over Adobe Lightroom and Apple Aperture. Not because I don’t like some of its functionality, but because it is strategically a dead-end street.
The next evolution of media management will soon eradicate the old one and deliver lasting differentiation to the vendor that owns it and provides a much, much better media experience to the consumer.
I am planning on having something to do with that.
Getty Images sold for $2.1B; did Grandpa posthumously bail them out?
Monday - February 25, 2008
By Georges van Hoegaerden
Getty-Images pulled it off as we indicated would happen, and sold itself to private equity group Hellman & Friedman LLC in San Francisco (and the "network of the private equity group" which apparently includes the Getty empire) for a little over 2x revenues, assuming also an additional $300M in debt. Someone clearly felt that was an accurate price for its organic growth business: "Wall Street was paying more attention to the stagnating core business than to its emerging segments."
Indeed, non-organic growth is hardly ever a sustainable endeavor, lacks core competency and focus and often hides many skeletons in the closet. Now the fun part of discovering its real value starts, although the company does not forecast a lot of changes according to this interview with Jonathan Klein, Getty-Images' CEO and PDN. We could suggest a few fundamental changes along the lines of my blogs and then some.
But anyway you cut it, this will turn out to be good for photographers and the market. New competitors will spring up and VCs will now perhaps see the value in supporting imaging marketplaces. So for that, we need to congratulate Getty-Images.
Getty-Images pulled it off as we indicated would happen, and sold itself to private equity group Hellman & Friedman LLC in San Francisco (and the "network of the private equity group" which apparently includes the Getty empire) for a little over 2x revenues, assuming also an additional $300M in debt. Someone clearly felt that was an accurate price for its organic growth business: "Wall Street was paying more attention to the stagnating core business than to its emerging segments."
Indeed, non-organic growth is hardly ever a sustainable endeavor, lacks core competency and focus and often hides many skeletons in the closet. Now the fun part of discovering its real value starts, although the company does not forecast a lot of changes according to this interview with Jonathan Klein, Getty-Images' CEO and PDN. We could suggest a few fundamental changes along the lines of my blogs and then some.
But anyway you cut it, this will turn out to be good for photographers and the market. New competitors will spring up and VCs will now perhaps see the value in supporting imaging marketplaces. So for that, we need to congratulate Getty-Images.
Loving Apple TV even more
Sunday - February 24, 2008
I bought the Apple TV the moment it came out about 9 months or so ago. Initially surprised by the tethering requirement to a computer running iTunes, I used it quite a bit as a giant picture frame (showing off on a 50" plasma), playing music during parties and watching kids shows with my daughter. Now, with Take 2, Apple has stepped it up and provides HD quality movies (and 5.1 Dolby Digital audio) and, less talked about, removed the need for a separate Airport Express to stream any iTunes audio through your Entertainment center.
But very interesting to see is how a technology called Bonjour (formerly Rendezvous - 13 year old Apple technology, first available in AppleTalk) automatically finds and connects iTunes capable devices on the network and staving off the need for central media management. And it does so quite well and transparently. Movies, music purchased on the Apple TV show up on the iTunes on your laptop and vice versa. When Comcast showed off a central media server for the home at CES 2007 that could stream content to any of your cable connected devices, I thought it was going to give Apple a run for its money on the movie rental business. But more than one year past and still product from Comcast in sight. Don't even start about the current Comcast DVR mess, possibly the worst UI experience I've ever encountered (the Tivo deal may ease the pain a little, but the early news is not encouraging). With Apple TV, no more runs to Blockbuster, or mailing DVDs to and from Netflix, just sit at home and watch whatever you want.
What I admire most about Apple is its ability to not just create new products but that it adjust its business and operating model so those products can succeed. That is a gift bigger companies like Oracle (my former employer) and Microsoft can learn from. Media and content are the new Consumer Packaged Goods of this century and if technology vendors don't invest in the ecosystem around it their technology solutions will continue to yield mediocre user experiences and sub-par adoption.
In converging media markets, the new leaders are going to be the ones that build disruptive business models first and great technology products to support that, second.
Can't wait for Apple to strike a deal with Comcast and similar to the iPhone strategy, replace the Comcast DVR with an Apple TV capable of receiving regular broadcasts as well as tap into the power of iTunes. All Apple needs to do is use its cash war-chest to "threaten" ComCast to go at it alone, just like it "convinced" AT&T it would be better for AT&T not to let Apple become a Mobile Virtual Network Operator.
Puff, puff, puff, puff ........... poof
Thursday - February 07, 2008
By Georges van Hoegaerden
So, if you've read my blogs on the imaging market here .... why would you plunk down $1.5B to acquire an Image Super Store like Getty-Images (alias Getty).
Consider this:
1/ Non-agency images are always owned by photographers not by Getty
2/ Getty's assets can vaporize quickly, photographers can switch their assets to a better marketplace instantly
3/ The vast majority of images in the world are not transacted through Getty
4/ Getty qualifies premium photographers not premium images
5/ Getty needs to cannibalize its business model in order to meet the Long Tail market requirements
6/ Getty is diluting focus to higher margin media like film and music, fat chance
7/ Getty has the expensive overhead of an agency, with declining image ASPs
8/ Hundreds of new and competing sites indicate Getty's non-supremacy
There is value in Getty-Images, as an agency or as an image store, but I would not put two diametrically opposing business models on the same P&L. Neither one is worth $1.5B. The imaging Puffer Fish is about to deflate.
So, if you've read my blogs on the imaging market here .... why would you plunk down $1.5B to acquire an Image Super Store like Getty-Images (alias Getty).
Consider this:
1/ Non-agency images are always owned by photographers not by Getty
2/ Getty's assets can vaporize quickly, photographers can switch their assets to a better marketplace instantly
3/ The vast majority of images in the world are not transacted through Getty
4/ Getty qualifies premium photographers not premium images
5/ Getty needs to cannibalize its business model in order to meet the Long Tail market requirements
6/ Getty is diluting focus to higher margin media like film and music, fat chance
7/ Getty has the expensive overhead of an agency, with declining image ASPs
8/ Hundreds of new and competing sites indicate Getty's non-supremacy
There is value in Getty-Images, as an agency or as an image store, but I would not put two diametrically opposing business models on the same P&L. Neither one is worth $1.5B. The imaging Puffer Fish is about to deflate.
Fleeting assets of the imaging Puffer Fish
Thursday - February 07, 2008
By Georges van Hoegaerden
The Puffer Fish of the imaging market, as described in my previous blog have large volumes of fleeting image assets. Yes, dear Wall-street analyst, they may have been experiencing double-digit growth temporarily but we believe that originates from non-organic growth and growth attributable to the incorporation of that non-organic supply into the global brand, in Getty-Images' case for example. If you keep buying stock photography companies you delight existing buyers with an ever increasing supply, but the novelty of that supply wears off real fast. In the end that apparent growth comes at a high cost. So witnessed by the most recent disappointing earnings reports.
Jupiter-images is literally pursueing an image super-store strategy, a copy of Getty-Images' strategy. They too have been buying stock companies. Stock companies strike deals with photographers to create a good looking selection. Yet most images have a value that is completely photographer agnostic. The value is in the photograph, not the photographer. So, a super-store of images by definition contains a small amount of sellable images.
But the real interesting fact about the imaging industry (and many related to it) is that all images have fleeting value, especially after they have been sold for the first time. Photography is the ultimate Long Tail market, with a very, very long tail and a tiny body. A great reason why any player with a "premium" imaging strategy is relegated to selling to very small and concentrated set of buyers.
Not unlike the music industry where we are used to buying music collections on CDs, a large part of the stock photography market still sells collections of photographs to artificially increase the number of images sold and the average sales price (ASP) per image. As a result, investors may think the ASP is somewhat stable and predictable and the value of the super-store may not be as grim as it seems. But Super-stores will never contain enough image variations to meet Long Tail demand. As a result, commissioned photography is still going strong.
Most photographers that produce sellable images still sell their images offline and commissioned. The ones that do sell online, literally use a total of hundreds of photo-sites today to tap into a Long Tail demand. All these factors are hardly evidence that Getty Images is indeed meeting the needs of the photography market.
On a side note: MacNN reported this week that Adobe has halted its stock photo library, perhaps it is getting ready to buy Getty-Images? I think they are smarter than that.
The Puffer Fish of the imaging market, as described in my previous blog have large volumes of fleeting image assets. Yes, dear Wall-street analyst, they may have been experiencing double-digit growth temporarily but we believe that originates from non-organic growth and growth attributable to the incorporation of that non-organic supply into the global brand, in Getty-Images' case for example. If you keep buying stock photography companies you delight existing buyers with an ever increasing supply, but the novelty of that supply wears off real fast. In the end that apparent growth comes at a high cost. So witnessed by the most recent disappointing earnings reports.
Jupiter-images is literally pursueing an image super-store strategy, a copy of Getty-Images' strategy. They too have been buying stock companies. Stock companies strike deals with photographers to create a good looking selection. Yet most images have a value that is completely photographer agnostic. The value is in the photograph, not the photographer. So, a super-store of images by definition contains a small amount of sellable images.
But the real interesting fact about the imaging industry (and many related to it) is that all images have fleeting value, especially after they have been sold for the first time. Photography is the ultimate Long Tail market, with a very, very long tail and a tiny body. A great reason why any player with a "premium" imaging strategy is relegated to selling to very small and concentrated set of buyers.
Not unlike the music industry where we are used to buying music collections on CDs, a large part of the stock photography market still sells collections of photographs to artificially increase the number of images sold and the average sales price (ASP) per image. As a result, investors may think the ASP is somewhat stable and predictable and the value of the super-store may not be as grim as it seems. But Super-stores will never contain enough image variations to meet Long Tail demand. As a result, commissioned photography is still going strong.
Most photographers that produce sellable images still sell their images offline and commissioned. The ones that do sell online, literally use a total of hundreds of photo-sites today to tap into a Long Tail demand. All these factors are hardly evidence that Getty Images is indeed meeting the needs of the photography market.
On a side note: MacNN reported this week that Adobe has halted its stock photo library, perhaps it is getting ready to buy Getty-Images? I think they are smarter than that.
Diving deep with imaging Puffer Fish
Tuesday - January 29, 2008
I have recieved a lot of inquiries from Wall-street personalities and companies due to the gracious blog posting in PE Week Wire on the imaging marketplace, so I wanted to dive deeper to clarify beyond just the financials.
1/ Getty-Images does not clearly distinguish between total addressable market and "market", probably to puff itself up as the owner of the imaging marketplace. More than 50% of (traceable corporate) images produced (by about 17,000 commercial Photography companies in the US) are generated by suppliers making less than $5M in revenues and have less than 10 employees. Very few of those (less than 1%) use Getty-Images as their distribution channel. In fact the majority of images sold in the world are traded offline, yes, offline (Getty-Images started its online presence in 2000, after going public on NASDAQ in July of 1996 and re-listing on NYSE in 1998). In addition, the peer-to-peer exchange of digital images, we estimate, is at least twice the size of the traceable exchange. It is quite irrelevant if Getty-Images is performing better than its peers, but Getty-Images by no means owns more than 10% of the addressable market. The risk for Getty is that a new kid on the block will be more successful in emptying out the market with a new business model, rather than outperform the existing players.
2/ Getty-Images is not a marketplace, it is a Super-Store in the economic sense of those definitions. A large part of the images in their store are produced by their own photographers (organic and non-organic) and sold to their existing, primarily agency customers. But the real definition of a "free-market" marketplace is that customer own their product which they sell, un-arbitrated and completely transparent, to buyers. Getty-Images charges exorbitant commissions (known to be in the range of 60%), which can't hardly be considered a marketplace transaction fee. It is suggested on the internet that Getty-Images plays unfair, even include changing photographs and forcing the original photographers to hand Getty-Images an additional 100% of the delta. True or not, that is not the kind of trust that makes anyone believe that Getty-Images will become a true marketplace.
3/ The photo acronyms are meaningless. Stock photography does not exist. It is an artificial definition, used mostly to identify a low priced photograph. But a "stock" photograph can be sold rights-managed, royalty free or exclusive and in the new world of publishing even be published as editorial. And therefor, being the leader in stock photography means absolutely NOTHING. Did you know an exclusive photograph is really not exclusive (it is only exclusive to a certain usage), that a buyer has no guarantee that the photo does not show up somewhere else. So, the only measure of success is how many photographs the company has sold and how many times over.
4/ Getty-Images has very restrictive policies to let users participate in their Super-Store, another sign it does not meet a true marketplace definition. WIth dSLR sales growing last year at 60% rate and 9B images produced on those cameras (18B cumulative dSLR images since 2003), Getty-Images is clearly not successful in monetizing the exchange of those images (even if you argue the majority of images have no re-sale value). The number of professional photographers is estimated to be around 36,000 according to PPA and D&B numbers. We believe Getty-Images falls short on counting the majority of those as their suppliers. We believe the unincorporated semi-pros that produce at least one sellable image to be much, much larger (cumulative roughly around 9M dSLR have been sold since 2003).
So, regardless from which angle you slice the business, Getty-Images by no means, has amassed critical penetration in the Total Addressable Market of image exchange. But if you artificially constrict the size of the market by calling it stock, rights-managed, royalty free, editorial or creative, perhaps you can swing it. Undoubtedly someone will buy into it.
The Puffer Fish of the imaging market
Sunday - January 27, 2008
A Puffer Fish is a fish that blows itself up to dramatically change its appearance and size: not unlike Getty-Images (GYI), Corbis and Jupiter-Images (JUPM) in the imaging market. All three have hybrid business models that disguise the money they really make in the exchange of digital photography. But we know better, we've analyzed empirical data and studied their reports carefully.
That does not mean these "Three Bandits" are failures: Getty-Images is very successful as a photography agency (doing about $805M in revenues per year), Corbis is a very rich catalog of historic photographs stashed away in a bunker in Pennsylvania, slowly being digitized at a cost of about $25 per photograph (revenues around $250M). Jupiter-Images is the division of JupiterMedia, formerly a magazine publishing and events company, now morphing into a content acquisition company.
But they are not a successes either. Organic growth of these companies is well below the growth of the image exchange market and their combined market share is less than 10% of the image exchange addressable market. So, while the $1.5B asking price for Getty-Images doesn't sound outrageous (less than 2x revenues), what you're buying is an outsourced photography agency. Getty-Images is in essence a people factory with ever eroding profit margins.
Twenty years ago Getty-Images started with a $20M investment from grandpa Getty and has continued to purchased a wide array of photo agencies (hence the Puffer Fish) and large libraries of photographs that over time become stale rather than increase in value. The average sales price of those, primarily editorial, photographs is declining steadily (more so than creative photography), leaving the company with a large family of complacent celebrity photographers and mainstream content only the a select few publishing agencies are interested in.
With publishers (of all kind) looking for original content, the imaging Super Store approach (as described here) from the Three Bandits is fundamentally flawed. But the reason why we don't believe in the longevity of their business models (and their asking price) is that they ignore and suppress the massive influx of new digital photographers that create phenomenal high quality and original content most publishers would be dying to get their hands on.
So anyone buying these companies will soon find out how small Puffer Fish really are.
Imaging sales market broken from the top
Wednesday - January 23, 2008
By Georges van Hoegaerden
I have received quite a few comments on my previous post (like this) on the imaging marketplace and I am making an attempt to clarify my condensed writing.
The market of selling photographs is fundamentally different than that of selling music, books or other goods. Rather than selling "premium" supply as defined by the number of people that buy the same product, the value of a photograph is defined by how little it sells (just like art). Fundamentally a photography superstore (like Getty Images, Corbis, Jupiter Images and even Digital Railroad) that sell the same image the way Amazon sells books yields the wrong value to the buyer.
A buyer doesn't want the photograph he is about to purchase see appear in deep circulation, yet a reader of a book makes a buying decision based on popular opinion (Oprah, iTunes) and purchases it too. Selling images (and art) requires an inverted superstore that derives its value from the massive distinctive images it sells. Coincidentally the imaging marketplace has changed dramatically from a monolithic market (between agency and pro-photographer) to a Long Tail of supply and demand (between anyone and anyone).
A fantastic opportunity lies ahead to create a new marketplace for photography that caters to new and high growth audiences. Don't get discouraged by the puffer fish of the imaging industry, that portray they own the market. They don't.
I have received quite a few comments on my previous post (like this) on the imaging marketplace and I am making an attempt to clarify my condensed writing.
The market of selling photographs is fundamentally different than that of selling music, books or other goods. Rather than selling "premium" supply as defined by the number of people that buy the same product, the value of a photograph is defined by how little it sells (just like art). Fundamentally a photography superstore (like Getty Images, Corbis, Jupiter Images and even Digital Railroad) that sell the same image the way Amazon sells books yields the wrong value to the buyer.
A buyer doesn't want the photograph he is about to purchase see appear in deep circulation, yet a reader of a book makes a buying decision based on popular opinion (Oprah, iTunes) and purchases it too. Selling images (and art) requires an inverted superstore that derives its value from the massive distinctive images it sells. Coincidentally the imaging marketplace has changed dramatically from a monolithic market (between agency and pro-photographer) to a Long Tail of supply and demand (between anyone and anyone).
A fantastic opportunity lies ahead to create a new marketplace for photography that caters to new and high growth audiences. Don't get discouraged by the puffer fish of the imaging industry, that portray they own the market. They don't.
Image catalogs in peril
Monday - January 21, 2008
Two weeks ago Digital Railroad (a private digital photo aggregator, funded by Venrock and Morgenthaler) announced it was restructuring, cutting half of its employees and repositioning the company into a photo marketplace. Today Getty Images (GYI) is said to be looking for a buyer at around $1.5B, after its stock price is unable to recover for more than two years. And Corbis, well -- Corbis is being kept afloat by Bill Gates. Swallowing stock photography companies as fast as it can is Jupiter Images' attempt to boost its potential acquisition price, a strategy that didn't work so well for Getty Images. So, why are these companies not growing organically while the dSLR market that produces those images is growing 60% YTY and GMV of the image market is north of $22B.
Here is my take: the imaging markets consists of demi-cartels that produce "premium" supply that does not meet the requirements of an ever growing and changing market of buyers. No longer is the size of the buyer's market dictated by agencies nor is the new seller's market defined by the old definition of pro-photographers. As a result sell side content does not find enough buyers and the only way to make money is to make sellers believe that if their work is good enough, it will sell.....nice promise. Out of desperation most photographers post their images on multiple websites to get maximum visibility, a true testament of an inefficient market.
Getty Images is really a hybrid business, it has about 3,000 photographers on staff and does editorial projects for its main customers and in armored trucks if it needs to, providing news worthy photography on location. The side-business of Getty is the stock photography business which yields ever declining average sales prices for royalty free and rights managed photography. So, in essence, Getty Images was trying to become a "record" company with its own supply while on the side playing the independent party with a transparent image store; i.e. the "free-market" supply is competing with Getty's core business model. Over the years, many photographers have complained of unfair practices that gives better treatment to Getty's images than to the supply from individual photographers.
The Digital Photography market is in the same state as the music industry (albeit condensed in time) , premium supply doesn't turn out to be premium, demand has changed and the "record" companies in this space have no other option but to erode their premier status business model. I was right three years ago, let that be noted.
As for Digital Railroad, I doubt that they'll develop the macro-economic strategies that determine the success of any real "free-market" marketplace at this point. It would take a sizable investment in technology to turn a super-store into a "free-market". Adobe is rumored to be working on an image marketplace, but here too, the devil is in the details.
We don't need another Amazon.com of the photography business but a real free-market in which YOU the photographer and buyer make decisions on what transactions you want to engage in.
The new photo-editing era, a me-too service
Tuesday - September 18, 2007
By Georges van Hoegaerden
Photo-editing today is still an art form, a specialized and necessary art - and "endured" by prosumers. The great photography you see hanging on walls, on websites or in magazines, all have been edited digitally. Not necessarily to create some outrageous creative effect but because not a single camera accurately captures what your eyes see. Not since the invention of photography in 1870.
Camera vendors promise better results when their customers purchase a more expensive dSLR (digital Single Lens Reflex) camera, a better lens, a solid tripod, a new filter, and, while we’re selling: a new photo bag. Yet, none of those products do anything to change the fundamental difference between what your eyes see and what the camera produces. With a healthy growth of more than 60% worldwide in dSLR sales (according to new 2007 numbers from CIPA), most camera vendors are not in a hurry to out-innovate themselves as their current stance is feeding their business so well. So, the problem remains, camera output is far from ideal.
So today, the great results photographers strive for can really only be achieved through editing, reproducing what you tried to capture. That editing today happens primarily on the desktop (less than 10% of the whole photography market edits online) and by digital SLR users with a great sense of quality and aesthetics. Products are plentiful, such as Adobe Photoshop, Adobe Lightroom, Apple Aperture and my favorite: LightZone. Yet none of those products completely hide photographic complexity to its new users; the massive numbers of dSLR buyers that just want to create great photographs.
Photo-editing should work like a car, simply put the key in the ignition and drive (without having to worry about how the engine and the transmission works). The editing tool of the future should embed the photographic knowledge and make decisions or recommendations for you, rather than requiring its users to become proficient in the minutiae of color and light. Just like a car, photo editing should be able to go where others have gone before, enriching the experience of new users on a continuous basis. New editing techniques should be sharable through a language we all understand, a photograph. In short: edit "like-Mike" and me-too editing is born.
I believe photo-editing will move away from what it is today, a basket full of technology tools to a service through which the sharing of editing techniques will enable the new "language" of photo-editing. That dramatically simplified language will subsequently enable editing for the long-tail of the photography market, the massive market of point-and-shooters. New technologies such as Pixenate, Picnik, Adobe Photoshop Express already rush to deliver a new basket of tools for the consumer market. And many others will follow.
Today, plenty of opportunities remain in the prosumer editing space in which no vendor has amassed even close to 30% penetration. New editing capabilities are bound to drive the marketplace in which monetization of photographs and, eventually a free-market for photography can flourish.
What's left for the innovative camera vendor is to build a proprietary imaging pipeline that dramatically reduces the need to edit. With 90% of dSLR vendors using the same imaging pipeline (behind the sensor) the time is right to change the way a camera captures data before it reaches the sensor. In the same way your eyes do very smart tricks before light hits the retina.
Photo-editing today is still an art form, a specialized and necessary art - and "endured" by prosumers. The great photography you see hanging on walls, on websites or in magazines, all have been edited digitally. Not necessarily to create some outrageous creative effect but because not a single camera accurately captures what your eyes see. Not since the invention of photography in 1870.
Camera vendors promise better results when their customers purchase a more expensive dSLR (digital Single Lens Reflex) camera, a better lens, a solid tripod, a new filter, and, while we’re selling: a new photo bag. Yet, none of those products do anything to change the fundamental difference between what your eyes see and what the camera produces. With a healthy growth of more than 60% worldwide in dSLR sales (according to new 2007 numbers from CIPA), most camera vendors are not in a hurry to out-innovate themselves as their current stance is feeding their business so well. So, the problem remains, camera output is far from ideal.
So today, the great results photographers strive for can really only be achieved through editing, reproducing what you tried to capture. That editing today happens primarily on the desktop (less than 10% of the whole photography market edits online) and by digital SLR users with a great sense of quality and aesthetics. Products are plentiful, such as Adobe Photoshop, Adobe Lightroom, Apple Aperture and my favorite: LightZone. Yet none of those products completely hide photographic complexity to its new users; the massive numbers of dSLR buyers that just want to create great photographs.
Photo-editing should work like a car, simply put the key in the ignition and drive (without having to worry about how the engine and the transmission works). The editing tool of the future should embed the photographic knowledge and make decisions or recommendations for you, rather than requiring its users to become proficient in the minutiae of color and light. Just like a car, photo editing should be able to go where others have gone before, enriching the experience of new users on a continuous basis. New editing techniques should be sharable through a language we all understand, a photograph. In short: edit "like-Mike" and me-too editing is born.
I believe photo-editing will move away from what it is today, a basket full of technology tools to a service through which the sharing of editing techniques will enable the new "language" of photo-editing. That dramatically simplified language will subsequently enable editing for the long-tail of the photography market, the massive market of point-and-shooters. New technologies such as Pixenate, Picnik, Adobe Photoshop Express already rush to deliver a new basket of tools for the consumer market. And many others will follow.
Today, plenty of opportunities remain in the prosumer editing space in which no vendor has amassed even close to 30% penetration. New editing capabilities are bound to drive the marketplace in which monetization of photographs and, eventually a free-market for photography can flourish.
What's left for the innovative camera vendor is to build a proprietary imaging pipeline that dramatically reduces the need to edit. With 90% of dSLR vendors using the same imaging pipeline (behind the sensor) the time is right to change the way a camera captures data before it reaches the sensor. In the same way your eyes do very smart tricks before light hits the retina.
New opportunities in gaming
Sunday - January 07, 2007
By Georges van Hoegaerden
While Sony, Microsoft and Nintendo show impressive results from a console perspective the game-play market today appeals to a very narrow demographic. Consoles are purchased by an age group 25-40 years old. While that demographic may be most capable of purchasing these consoles, we know from the types of games sold at roughly $50 per game that daddy plays more games than his children.
One could also argue that the most playful age range in our lives is from age 2 to 16 years old, yet the games and platforms provided do not meet that demographic. Fewer than 40% of teenage girls play any games, feeble attempts to turn existing games pink did not yield more sales, according to an executive at Electronic Arts.
So, rather than a deep dive in the existing game-play demographic, with even better graphics of game consoles, vendors should focus on a game-play experience that meets real market demand, removes the negative and vegetative connotation of gaming and instead exercises mind and body.
Nintendo has taken the first step of targeting a new game-play demographic and quite successfully so. Robbie Bach, president at Microsoft (who I recently spoke to) described his initial XBOX objective as building the best performing gaming experience. Sorry Robbie, wrong business objective. Sony is by far the leader in console gaming and has great opportunity; to lose or bolster its lead. Execution will be key, Jack Tretton will have his hands full on that one, but Sony's powerful assets in home entertainment should help.
While the console vendors battle it out on price and performance, we are seeing new entrants prepare themselves to enter the home entertainment demographic with new "game-play" propositions. The console vendors will see competition at a different level, Apple is just one of them.
While Sony, Microsoft and Nintendo show impressive results from a console perspective the game-play market today appeals to a very narrow demographic. Consoles are purchased by an age group 25-40 years old. While that demographic may be most capable of purchasing these consoles, we know from the types of games sold at roughly $50 per game that daddy plays more games than his children.
One could also argue that the most playful age range in our lives is from age 2 to 16 years old, yet the games and platforms provided do not meet that demographic. Fewer than 40% of teenage girls play any games, feeble attempts to turn existing games pink did not yield more sales, according to an executive at Electronic Arts.
So, rather than a deep dive in the existing game-play demographic, with even better graphics of game consoles, vendors should focus on a game-play experience that meets real market demand, removes the negative and vegetative connotation of gaming and instead exercises mind and body.
Nintendo has taken the first step of targeting a new game-play demographic and quite successfully so. Robbie Bach, president at Microsoft (who I recently spoke to) described his initial XBOX objective as building the best performing gaming experience. Sorry Robbie, wrong business objective. Sony is by far the leader in console gaming and has great opportunity; to lose or bolster its lead. Execution will be key, Jack Tretton will have his hands full on that one, but Sony's powerful assets in home entertainment should help.
While the console vendors battle it out on price and performance, we are seeing new entrants prepare themselves to enter the home entertainment demographic with new "game-play" propositions. The console vendors will see competition at a different level, Apple is just one of them.
Quality is important
Sunday - November 12, 2006
To quote Walt Mossberg of the Wall Street Journal at Consumer Technology Ventures last week, quality is an important pillar of success for consumer products and I couldn't agree more. Many times products are hyped with incredible promise (marketing) but the product either doesn't work as advertised, requires other services to be activated or simply is not ready (does Zune ring a bell).
From that perspective I am less happy that Apple (the only PC platform I have ever bought), is gaining popularity. Price pressure and popularity does not always do wonders to quality.
I currently use a 2-year old Powerbook G4 1.5Ghz of which the fan (right after the one year warranty expired) makes a noise like a sawing machine, and I had to reduce the speed of the processor to keep the fans from cooling. For work I purchased a $999 23-inch Apple flat-panel that produces stunning image quality and brightness, yet the ghosting of images on this expensive piece of equipment allows me to see which window was there 5 minutes ago. I expect the best from Apple and I am willing to pay a premium, but I am not willing to pay a premium for under-par quality.
Now, I am not picking on Apple because it is the worst performer in the consumer space, quite the opposite. Apple undoubtedly is the best performer in the business, but given that, Walt's comments make even more sense to me. Switching off of Apple is not an option for me, but griping is.
Update:
After unscrewing at least 20 screws on my out-of-warranty Powerbook G4 (directions courtesy of iFixit), I discovered that the reason why I had reduced the processor speed on my laptop for over one year and avoid the fan from coming on was created by, get this: a quality control sticker in the fan compartment that had come loose and was spinning along with the fan. A simple removal of the sticker solved the issue.
Web 2.0: a technology foundation for free-markets
Monday - July 10, 2006
Many times the question comes up, what exactly is Web 2.0? Although we are not great supporters of buzzwords that have little real meaning, we are - just this time - tempted to put our big-thinking in the mix.
We believe it describes a set of technologies to support the immense popularity and growth characteristics of free-markets.
Free markets have been in existence at least since 1637, when dutch growers imported Tulips from Turkey and engaged in heavy bidding wars with buyers at the onset of the flower markets. [In the interest of "full-disclosure"; I grew up in Holland].
The Dutch auction (also referred to as "The Essence of Fairness" with respect to IPO markets) was created when ample supply was met with equally impressive demand, and a unique trading mechanism was developed. Apart from the details of the trading options (which eBay has adopted), we want to focus here on the dynamics of the market that are so different from the technology industry in its current incarnation.
The technology industry (still in an immature state) has built success around companies that identify and carve out a one-to-many relationship with customers. Successful companies like Microsoft, Oracle, Cisco etc. staved off early competition and now act as the single asset owner of the technology they sell to many customers, fearing little organic competition. We call them what they are; demi-cartels. A great position to be in and very profitable, but the technology market is about to get a shakeup, not dissimilar to what happened in the flower markets.
The creation and composition of technology assets, whether those assets are applications, databases, code or new media content, is emerging from the hands of specialists into the realm of a much broader set of providers.
technology taxonomy in
motion], it has to. Oracle loses a big customer
because it refuses to put up with fat margins,
exorbitant pricing and 20% support fees and
makes the switch to a little vendor called
MySQL. New online capabilities enable Craigslist, where posting
classified ads is free of charge, to hasten the
demise of traditional newspaper classified
advertising. MySpace takes the need for people
to express themselves out of the hands of the
specialists.
New many-to-many market models arise and dramatically impact the old rules of the game. New content establishes micro-celebrities that drive the popularity of a free-market technology platform. The Pareto principle is dead (well, not really - its amplitude will change).
So, Web 2.0 is a platform strategy (rather than a proprietary stack) that enables many-to-many relationships between buyers and sellers of electronic assets. When transparency and integrity are key objectives in the creation of these marketplaces, Web2.0, with whatever technologies that represents, actually has a chance of becoming a buzzword we can speak fondly about.
Broadcast Media unleashed
Tuesday - August 09, 2005
By Georges van Hoegaerden
Traditional Broadcast Media is about to get a major overhaul. Traditionally the demi-cartels, consisting of the networks (like ABC, NBC, CBS or in radio Clear Channel, Vivendi etc.) have a stronghold over content production and distribution. Control of these segments is under tremendous new pressure.
1/ Content stronghold
For less than the average cost it takes to setup a restaurant, no more than $50,000, a professional video content production company can be created to produce top quality 1080p HD content (radio can be produced at a fraction of that cost using podcasting technology). Imagine a world in which the number of content production firms rivals the number of restaurants in your town (and not just Al Gore's new Current Network). Soon we will embrace new anchors and fresh programming throughout the whole season, instead of the four seasons of repetitive programming mix we have been forced to swallow for so long.
2/ Distribution stronghold
Most networks own the stations. Up-and-coming content producers are forced to do business with and, obey to the rules of distribution players to get exposure. Now with the advent of IP Television, Podcasting and upcoming convergence technologies from Tivo and Netflix and others, diverse content will be brought to anybody with an internet connection. The judgement of good content will finally rest in the hands of the viewers.
Two major factors play a role in the accelleration of change:
1/ The slowdown: The FCC is working at its own pace to change the 40-year old rules of broadcasting through governmental processes and buy-in.
2/ The speedup: The unstoppable adoption of the Internet will create new broadcast heros and "networks" that reach a broadcast and market hungry audience; our youth.
Networks better get their act together, build their own internet distribution delivery strategy, determine what people really want to watch, use real (not analytical or statistical) popularity data to up-sell popular internet programs to network television. It is not too late for networks to respond, but their time is running out.
Let the games begin.
Traditional Broadcast Media is about to get a major overhaul. Traditionally the demi-cartels, consisting of the networks (like ABC, NBC, CBS or in radio Clear Channel, Vivendi etc.) have a stronghold over content production and distribution. Control of these segments is under tremendous new pressure.
1/ Content stronghold
For less than the average cost it takes to setup a restaurant, no more than $50,000, a professional video content production company can be created to produce top quality 1080p HD content (radio can be produced at a fraction of that cost using podcasting technology). Imagine a world in which the number of content production firms rivals the number of restaurants in your town (and not just Al Gore's new Current Network). Soon we will embrace new anchors and fresh programming throughout the whole season, instead of the four seasons of repetitive programming mix we have been forced to swallow for so long.
2/ Distribution stronghold
Most networks own the stations. Up-and-coming content producers are forced to do business with and, obey to the rules of distribution players to get exposure. Now with the advent of IP Television, Podcasting and upcoming convergence technologies from Tivo and Netflix and others, diverse content will be brought to anybody with an internet connection. The judgement of good content will finally rest in the hands of the viewers.
Two major factors play a role in the accelleration of change:
1/ The slowdown: The FCC is working at its own pace to change the 40-year old rules of broadcasting through governmental processes and buy-in.
2/ The speedup: The unstoppable adoption of the Internet will create new broadcast heros and "networks" that reach a broadcast and market hungry audience; our youth.
Networks better get their act together, build their own internet distribution delivery strategy, determine what people really want to watch, use real (not analytical or statistical) popularity data to up-sell popular internet programs to network television. It is not too late for networks to respond, but their time is running out.
Let the games begin.
The Long Tail Continues
Thursday - July 21, 2005
By Georges van Hoegaerden
At The Long Tail Churchill Club event this morning Chris Anderson (Wired Editor in Chief and writer for the Economist), who claims ownership of the term, discussed his research and his upcoming book about The Long Tail. His speech reiterated some well understood findings at Amazon, Netflix, Rhapsody (all of which have been mentioned here before) as well as some esoteric analytical findings in which academia make an attempt to approximate the outcome of Long Tail markets with formulas. The Q&A session lead us into some of the business impacts of Long Tail markets. First he agreed with us, no business should create a Long Tail without a Torso. Second, new search technology customized to every individual usage (vertical search) is essential. Third, new "Taste-makers" of the world or micro-celebrities, vocalized by blogging about niche expertise, will fuel and direct the trust in The Long Tail. Meritocracy with democratic production. Interesting example mentioned was Lego, the toy company that changed its conservative marketing strategy (Pareto based) into a community marketing strategy, realizing better segmentation and margins can be derived from its very loyal community that continues to grow.
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
At The Long Tail Churchill Club event this morning Chris Anderson (Wired Editor in Chief and writer for the Economist), who claims ownership of the term, discussed his research and his upcoming book about The Long Tail. His speech reiterated some well understood findings at Amazon, Netflix, Rhapsody (all of which have been mentioned here before) as well as some esoteric analytical findings in which academia make an attempt to approximate the outcome of Long Tail markets with formulas. The Q&A session lead us into some of the business impacts of Long Tail markets. First he agreed with us, no business should create a Long Tail without a Torso. Second, new search technology customized to every individual usage (vertical search) is essential. Third, new "Taste-makers" of the world or micro-celebrities, vocalized by blogging about niche expertise, will fuel and direct the trust in The Long Tail. Meritocracy with democratic production. Interesting example mentioned was Lego, the toy company that changed its conservative marketing strategy (Pareto based) into a community marketing strategy, realizing better segmentation and margins can be derived from its very loyal community that continues to grow.
Our stance: Long Tail markets can succeed if:
1) The Torso exists and is successful in drawing the crowd
2) Long Tail demand is fed through Long Tail supply, creating a free-market
3) Arbitration is "owned" by the marketplace (not the company)
4) The marketplace offers sufficient transparency, to allow for discovery, not just search
5) The business behind the marketplace makes money on distribution (not aggregation)
6) The marketplace offers integrity, in pricing, use and abuse prevention
Read on for more information on The Long Tail in this blog series...
Podcasting; a new free market by Apple
Tuesday - June 28, 2005
By Georges van Hoegaerden
Radio is about to get a major overhaul. With iTunes, record companies are losing their arbitration, no longer are we forced to buy collections (CDs) in order to enjoy that one favorite song. In the near future that power will be diminished even further. Musicians will post their music without intervention and arbitration of a record company, giving buyers the ultimate selection of music they want to enjoy. Pod-casts is the technology that allows you to pick which radio segment you'd like to listen to (instead of a whole program), and deliver it to you at whatever time is convenient. More exciting is that the creation of pod-casts is open to everyone, allowing anyone to get on the soapbox and speak their mind to the world. Independent reporting from the trenches is only minutes away. New music stations will spring up and deliver music from all corners, to all corners of the globe. Welcome to a free world.
Radio is about to get a major overhaul. With iTunes, record companies are losing their arbitration, no longer are we forced to buy collections (CDs) in order to enjoy that one favorite song. In the near future that power will be diminished even further. Musicians will post their music without intervention and arbitration of a record company, giving buyers the ultimate selection of music they want to enjoy. Pod-casts is the technology that allows you to pick which radio segment you'd like to listen to (instead of a whole program), and deliver it to you at whatever time is convenient. More exciting is that the creation of pod-casts is open to everyone, allowing anyone to get on the soapbox and speak their mind to the world. Independent reporting from the trenches is only minutes away. New music stations will spring up and deliver music from all corners, to all corners of the globe. Welcome to a free world.
No Long Tail without a Torso
Friday - June 24, 2005
By Georges van Hoegaerden
Investors are getting flooded with Long Tail startups. The Long Tail is the well documented phenomenon in which Amazon.com makes more money in selling books that are not(!) in the top 10,000 and creates controversy about traditional sales principles. Hundreds of examples exist before the introduction of the internet. But the Long Tail really only exists when there is a body attached to it. You go to Amazon because you find the most well known books, then you'll explore its creative variety. The body represents the highly targeted top quality that draws in the audience in the first place. So stop pitching Long Tails, where you rely on some undefined creative variety. Focus on making your numbers in the identifiable market, then benefit from the Long Tail to expand your selection beyond the traditional and constricted marketplace. More on the Long Tail here.
Investors are getting flooded with Long Tail startups. The Long Tail is the well documented phenomenon in which Amazon.com makes more money in selling books that are not(!) in the top 10,000 and creates controversy about traditional sales principles. Hundreds of examples exist before the introduction of the internet. But the Long Tail really only exists when there is a body attached to it. You go to Amazon because you find the most well known books, then you'll explore its creative variety. The body represents the highly targeted top quality that draws in the audience in the first place. So stop pitching Long Tails, where you rely on some undefined creative variety. Focus on making your numbers in the identifiable market, then benefit from the Long Tail to expand your selection beyond the traditional and constricted marketplace. More on the Long Tail here.
Seismic changes in Digital Entertainment
Friday - May 06, 2005
By Georges van Hoegaerden
Attended the Churchill Club seminar under the same name. Interesting speakers were Chuck D (Public Enemy), Roger McNamee (Integral Capital Partners, Silver Lake Partners, Elevation Partners) and Blake Ross (Firefox creator). It is becoming clear that the old rules of how to create or tap into large media markets have changed. To own these markets one must provide a large selection. MP3 music sharing has given listeners a taste of virtually unlimited supply they are not willing to give up on. The Long Tail roars its head yet again. Tivo1, Mike Ramsay added that 50% of programs recorded on Tivo are non-popular programs. Roger quoted the Death of the Pareto principle. The Palo Alto library has known this for many years, more than 75% of its purchasing budget is for non-popular selection. Mobility and locality were mentioned as important side effects of Long Tail markets. The ability to serve up that wide selection on a wide variety of devices is crucial. Arbitration of content (the way record companies enforce The Pareto principle) is no longer accepted by buyers. Buyers want to find any creative material they are interested in, and in some cases, want to have the ability to get in touch with the artist directly. New search capabilities become important to weed through large selections, Google capabilities were considered insufficient. Scanning type search, "I know it when I see it", provides interesting new browse capabilities for buyers. Blake added that as a technology industry we have the responsibility to make things easier to use before we move on to another golden opportunity. We agree with Roger that media should become the new Consumer Packaged Goods.
Getty Images; the image demi-cartel
Monday - March 28, 2005
By Georges van Hoegaerden
Getty Images, the self proclaimed market leader in the $7B stock photography market, recently posted an impressive $622M in 2004 revenues. Our in-depth analysis of the market actually shows a 2004 decline in Royalty Free and Rights Managed images sold compared to 2003 and Getty making it up by increasing ASPs significantly and a small increase in editorial sales. Royalty free images were sold at an ASP of $210 compared to $150, Rights Managed images moved up to $585 from $560 in 2003. While the company boasts an impressive 70M images on file, our analysis shows Getty Images sold no more than 1.5M images in 2003, a 3.5% market share of 43M images sold each year in the stock imagery market. Hardly a gorilla, want to know what are they are really selling?
Our opinion: Agency & distribution model are in conflict, restricting organic growth.
Getty Images, the self proclaimed market leader in the $7B stock photography market, recently posted an impressive $622M in 2004 revenues. Our in-depth analysis of the market actually shows a 2004 decline in Royalty Free and Rights Managed images sold compared to 2003 and Getty making it up by increasing ASPs significantly and a small increase in editorial sales. Royalty free images were sold at an ASP of $210 compared to $150, Rights Managed images moved up to $585 from $560 in 2003. While the company boasts an impressive 70M images on file, our analysis shows Getty Images sold no more than 1.5M images in 2003, a 3.5% market share of 43M images sold each year in the stock imagery market. Hardly a gorilla, want to know what are they are really selling?
Our opinion: Agency & distribution model are in conflict, restricting organic growth.