By Scott Martin
PhotoShelter has quietly secured an investment that will help it join a growing army of Internet startups taking aim at the $2.5-billion professional photo marketplace dominated by groups such as Corbis and Getty Images.
The photo service’s parent, BitShelter, has picked up $4.2 million in first-round funding from General Catalyst Partners. BitShelter hasn’t announced the funding, but it was confirmed by a source familiar with the matter. The deal means yet another startup is coming out swinging at the giants of the professional photo market.
“There is a thought that the Gettys can be overrun by the much smaller players,” JupiterResearch analyst Peter Sargent said.
New York-based PhotoShelter is a web site for amateur and pro photographers to store and sell photos. The company is hardly alone among this category of so-called “microstock” startups, which are developing sites where individual photographers can sell their photos.
Popular sites such as Fotolia, Shutterstock, and Dreamstime are gunning for Corbis, Getty, and Jupiter Images, which stock millions of photos taken by professional photographers.
The startups, in contrast, offer libraries packed with cheaper photos taken by masses of amateur photographers. On Wednesday another startup, Digital Railroad, became the latest entrant to compete against the massive photo libraries.
At stake is a piece of the estimated $2.5-billion digital photo market. Concern over emerging competition has taken a toll on the incumbents, which have seen their shares plunge. Getty stock fell 40 percent between March and September 2006, while Jupiter Images shares plummeted 60 percent in the same period.
“It certainly has had an effect on their stock prices over the past few months,” Mr. Sargent said.
The availability of cheaper photos from microstock sites has already forced Getty to change its business model. It has not necessarily reduced prices on all photos, but it has set aside a portion of its library for use on better terms. This, said Mr. Sargent, was their initial response to the low-cost photo insurgency.
“There’s definitely been a reaction,” he said. “The Gettys may build simpler, cheaper models—cheaper is certainly in the cards.”