While it is always tempting to point the finger at AI, the current Big Bad of the creative industry is less to blame for Getty Images bankruptcy than the hubris of its attempted Shutterstock deal.
One of the most storied names in photography, Getty Images, has announced a prepackaged Chapter 11 restructuring and plans to delist from the stock market. It will still trade, it will still pay contributors and charge clients for access to its extensive library of premium images, but it will do all that as a private company rather than as a listed one.
Plus ça change. For those that use it, it’s not the worst that can happen.
How the company got into this position indicates the actual worst that can. For those that want to read the ins and outs of the financial shenanigans, you can start at the Getty Images press release and go from there.
In short though, in trying to fulfill the late stage capitalism goal of always maximizing shareholder value, it tried to buy its main rival Shutterstock.
The UK regulator, the CMA, would only clear that $3.7 billion deal if Shutterstock sold off its editorial business, and Getty scrapped the merger rather than accept that. The merger and legal costs, piled on top of ever-pricier debt, left it with interest payments it can’t sustain: net interest expense has climbed from $131 million to $156 million, and then to $198 million over the last 12 months.
Yes, AI is part of this, in that it is eroding the low end of the market. The company’s iStock business has been hit badly, as has anything that relies on generic imagery. Now that it has got over its six-finger problem, AI is pretty good at generating generic images as long as the end user is not too fussy. Revenues in that part of the business were down, but AI is a headwind, and debt is what pushed Getty over the edge.
Where revenues are up is in the editorial side of things: the premium photos from the red carpet, the high-profile sports events, the 24/7 rolling news agenda, the historical archive. It is natural to expect a newly private Getty to lean on that strength, although the press release does not say so. The restructuring is expected to complete around the turn of the year.
The irony here is that this is precisely the market the UK regulator was trying to protect when it said it would only green light the failed merger if Shutterstock sold off its editorial business. Chalk one up to the CMA.
And the whole thing makes Getty Images potentially stronger and longer-lasting as a brand. With investors still frenetically chasing AI riches in a gold rush for the ages, more and more tech companies are being punished if they are not seen to be pushing the technology hard or fast enough. Getty can now do its own thing and plot its own course through the potential rapids ahead.
The quotes in its press release tend to reference “trust” and “authenticity” a fair deal, which in the age of AI is a definite position to take. “Under the Plan, vendors will be unaffected and paid in full in the ordinary course of business,” it concludes. “There is no anticipated impact on content contributors, partners, customers, or employees across the Company’s worldwide network.”