Music Ally’s Stuart Dredge reports on the MidemNet session featuring Getty Images CEO Jonathan Klein and Sulake/Habbo chairman Mika Salmi…
Ralph Simon started the session by asking Klein about how he’d describe Getty Images as a business. “Quite simply, we are the world’s largest – by a factor of four – creator and distributor of still and moving imagery to businesses. We’re a massive distributor of content.” The company also has what Klein describes as a “very small” music division.
Its customers are advertising agencies, broadcasters, publishers – any business looking to license photo and video content. Moderator Ralph Simon asked about the comparison between Getty Images when it launched 15 years ago, and the music business today.
“It was faced by a massive advancement of technology, and the technology was enormously frightening to people within the industry,” said Klein. Getty chose to embrace the technology and disruptive business models, according to Klein. “We were the first people in the world to sell an image online,” he said, noting that from that point, piracy was an issue.
Klein said that wasn’t a problem – and that it only stepped in to battle “flagrant, commercial violations” of Getty’s content. The company sold 23 million images last year, so it’s not doing too badly out of its strategy. Last week, its iStockPhoto subsidiary had three days in which it did more than $1 million in sales.
“Don’t stand in the way of technology, and in the way of what the customer wants,” was his advice to the music industry. “Make it easy.”
At this point, Simon turned the conversation to Sulake and its Habbo Hotel virtual world. It started in 1999, and then started becoming popular in 2001. People could make avatars and meet other users in the virtual hotel, while owning their own virtual rooms.
It now has offices in 17 companies, with the fastest growing areas being Brazil and other Latin countries. It made 50 million euros of revenues last year, of which 70% was virtual items. The world’s young users pay via SMS, credit or debit cards, PayPal or one-time use cards bought in stores. “They figured out how to get teens to buy stuff, essentially,” says Salmi.
He talked about what the company has been doing with its virtual pets recently – last Autumn, the company made the pets much more interactive than they had be, including selling more items to customise them – and it’s now become a “massive revenue stream”, compared to the so-so revenues the pets were generating before.
The site gets 15 million active users a month, and 300 million avatars have been created in the lifetime of the world. Salmi admitted that the challenge is that people tend to grow out of Habbo in a couple of years – “the challenge is what do you give them when they turn 15 or 16?”. Sulake is apparently working on this – new worlds that users can migrate to.
The conversation moved back to Klein, who talked about how Getty Images responds to news events – most recently the death of Teddy Prendergast – pulling images and video together for its business customers to use. However, the company is also trying to make money from user-generated content on iStockPhoto.
“You can’t be too precious about yourselves,” he said, pointing out that Getty is as happy to license content from amateurs as from professional, award-winning photographers. He also stressed that the right licensing has to be put around all this content.
“On iStockPhoto, we sell an image every second, and we upload about 40,000 images a week,” he said. The company inspects every single one through its community – everything is done online. Which is why Getty is interested in the music licensing business.
Simon turned back to Salmi at this point, and asked about social games on Facebook, and how a company needs to evolve to operate in that space. Salmi talked about the move to services and cloud models, where companies don’t just sell products – they maintain a relationship with customers instead.
Social games really surprised the games industry, said Salmi – he used to work in it. He cited games from social publishers like Zynga and Playfish that exist entirely in Facebook and other social networks, and which are currently being tweaked and modified in response to what users are doing.
“This idea of being in touch with your consumer on an ongoing basis,” he said. “I believe that [music]artists and their managers truly understand this.” But he pointed out that for a long time, labels had little or no direct communication channels to music fans.
“The problem has been that the artists have limited influence on what their label can provide,” he said. “In this age of real-time communication and everything moving towards a service model, music has had elements of that, but they need to take it to the next step.”
Klein chipped in at this point, saying that the stickiest websites in the world are fan-based sites – for example college sports – but that when it comes to music, the key is that fans “have got to be able to get something there that they can’t get anywhere else”, and also get a certain level of engagement with the content (or rather the artist).
He admitted that some artists don’t want to connect with their fans, “but those who can and do, will be in a fundamentally better position… you have to embrace that, for in connecting, you’ve got to have greater transparency.”
Klein talked about how Getty approaches this. Getty Images doesn’t own the copyright on its photos. “Why do you need to own the copyrights? You only need the distribution rights,” he said. “All of our artists are on the same deal. Our ‘John Legend’ has the same percentage as our ‘never-heard-of-him’. Our top folks get the same percentage split as the folk coming in the door. It’s fair, it’s transparent.”
He suggested that record labels need to go back to the core of what music is, “it’s the artist and it’s the distribution – don’t try to be all things to all people”.
How about Habbo? Salmi says Sulake could do more on the transparency front. “The more you let go, the more things come back to you,” he said. Klein jumped in: “Even if you don’t like it, what are you going to do about it?!”