The unlikely story of a company that built a business selling the recent torrent of digital photos.
The stock photo company Shutterstock has grown tremendously as companies of all sorts realize that they're in the media business. And if you're in the media business, you need visuals. The incumbents in the stock photo space, like Corbis and Getty Images, get expensive if you need to illustrate hundreds of pages on a website.
So, Shutterstock came along with an all-you-can-eat subscription model and said, "Here, use tons of photos from this library of 19 million images." Some of the images are cheesy, but they serve the role that clipart used to: filling a space that you know needs an image with something vaguely topical (see above).
Now, after doubling revenue growth over the last two years, the company is preparing for an IPO.
It's an interesting game that Shutterstock is playing. Individual customers pay an average of about $3 per image. That's dirt cheap, but they make up for it on volume, bringing in $120 million of revenue in 2011. On the producer side, my read of their SEC filing is that they paid out $39.3 million in royalties to 35,000 contributors. So the mean contributor is making something like $1,100 a year by posting their work on the site. (I don't know exactly what the distribution looks like; we only know that no entity received more than 10 percent of the royalties paid out.)