Entrepreneur Association of Tokyo
"Creating Opportunities for Crowdsourcing"

Sean Mooney is the representative director of Getty Images (Japan), the largest provider of digital stills and video in the world with some 70 million still images and over 300,000 hours of film. Japan is very important for Getty, as it is the second largest ad market in the world. Sean joined Getty Images three years ago to help the company launch their Japan activities.

Bruce Livingstone is the founder and CEO of iStockphoto, the pioneer in $1 imagery and the leading micropayment stock photo and film website. Bruce is a self-taught graphic designer and serial entrepreneur who dropped out of university to follow his idea of starting iStockphoto.

Sean Mooney
Recently, there have been very exciting changes in the industry. Especially now that it is digital. Therefore you can’t take time to think, you must be able to react immediately. Following this, one of Getty’s reactions to up-coming and competing micro-payment web sites was to purchase IStockphoto photo last year for 50 million US dollars.


Bruce Livingstone
Bruce grew up in Calgary, Alberta, Canada, a city which he says has a strong pioneering spirit. Bruce began showing his creative side from an early age by making ingenious and original toys with cardboard boxes and tape. Bruce carried this with him and built his first computer from a cardboard box and component parts when he was 11 years old and then went on to start eight companies since 1996.

Bruce had the idea for iStockphoto while working for Image Club Graphics, which was one of the first companies to put clip art on CD ROM. When his job was phased out, Bruce was given the chance to create a job for himself within the company and had 30 days to pitch his idea. Bruce designed an e-commerce system to buy fonts or clipart, but the idea was rejected, causing Bruce to quit on the spot and to start thinking about how he could do it for himself. His life changed with this idea because he knew it would be successful.

To get things started Bruce began researching and writing business plans, but soon realized he had a draft business plan, but hadn’t been to university in two weeks. The choice soon became clear that he had to drop out of university to pursue his iStockphoto idea. Within two months he had secured a $50,000 small business loan which he used to start five companies. Three of these are still thriving with 150 people employed.

iStockphoto's business and culture
iStockphoto was started in 2000. It is the number one stock photography website in the world and the 225th most visited website in the world according to Alexa rankings (www.alexa.com). In the last quarter of 2006, iStockphoto sold 3.5 million images. iStockphoto's photos come from 35,000 photographers, illustrators and videographers around the world. From this pool about 2000 contributors are exclusive to iStockphoto, and make up around 40% of content which accounts for roughly 60% of sales.

iStockphoto has 1.5 million customers who buy images and video. Prices for still images range from $1 to $15. Downloaded images are royalty-free and for perpetual use, but should not be used to create other products for sale. Many of iStockphoto’s customers are small businesses, design firms, churches, TV shows, non-profit organizations and even Fortune 500 companies. The images are used for marketing, brochures, websites and presentations, you name it!

iStockphoto has also changed the landscape of professional photography. Some people have accused it of destroying the industry acting as a negative force to professional photography. Bruce argues that it has changed and improved the industry for the better, and that people need to change with the new technology. Moreover, many previously unknown photographers now have a platform to exhibit and sell their photos and assets. The top iStockphoto photographer will make around $300,000 this year.

At iStockphoto’s headquarters in Calgary there are 50 employees. iStock also contracts with 76 image inspectors around the globe who adjudicate on the quality and legalities of each image. These people are trained in matters of quality, law and good taste so only shots good enough to sell will make it onto the site. Images are rotated and low-selling images are put into a sale bin or taken off the site.

On the job, Bruce is very approachable and positions his desk in the middle of the office. It is a very open and ‘start up’ environment with eight dogs that come to the office every day. This is important because a great deal of talent lies in the 12 web developers who create, test and launch changes and ideas. With an image or video downloaded every 2.5 seconds on iStockphoto.com, the office is always busy.

Crowdsourcing and the long tail
Crowdsourcing is the outsourcing of specialized labor to a group of individuals with similar interests. In relation to the Internet it means that artists create digital assets which a website then sells for them to into a channel that they wouldn’t normally have access to. By doing this, products that are low in demand can exceed or rival those with high demand if the distribution channel is large enough. The group or community that then controls the supply of these goods and services makes up the ‘long tail’. So suppose you have a million people who create a million assets and those people come back and buy every day; a pretty good recipe for business according to Bruce. It’s then the job of the people in Calgary to keep the website flawless, market and constantly build momentum through the world in terms of membership, loyalty and branding. The members are then left to make products and take care of the long tail.

Web 2.0
The term web 2.0 refers to an integrated system of websites that become a platform for collaboration between communities and a place to sell labor or digital assets. Web 2.0 is also about monetizing the assets rather than just community websites such as Youtube that sell ads. Bruce explained that the term Web 2.0 isn’t just the monetization of community-based websites through advertising as alluded to by some media. It’s more like tapping into a human workforce to generate products and service that you can sell, especially seeing that advertising may not be a long-term sustainable way to make revenue from the Internet. Having people tap into the network and create assets for you to sell is very important in Web 2.0 world.

Bruce’s secrets of how to make money in a Web 2.0 world
1. Get an idea that causes a social epidemic that runs through people like a sickness. This way people won’t be able to help themselves and they will want to commit to, contribute to and be part of the community. Once this is done, you must come up with a way to monetize traffic that hopefully isn’t advertising because advertising may not sustain itself. Advertising isn’t sustainable because it relies on many outside factors. Seasons, economy, war and whomever dictates the value of traffic to your sight (Google), can all affect the amount of traffic you get which will then determine per page visit commissions.

2. Listen and respect the crowd or community because they are both your suppliers and customers. Some of the best ideas for iStockphoto came from the site’s most vocal critics. You must also be selfless to be able to take criticism from millions of people. But if you are selfless and you listen you will learn exactly what needs to be done.

3. Balance needs of the community with the needs of the corporation. For example: if you pinch your margins too much you may loose contributors or customers, as they will get less value from your service.

4. Set up human filters to rate, sort and categorize all data, but let the crowd dictate what is best and that way all the best stuff comes to the top.

5. Realize you have no control at all by inviting the crowd in (the toughest thing to do) to make a contribution. You may be able to design the website and design the branding but any real control is an illusion. By virtue of their contribution you are asking them to make the place their own!

6. Commercialize your epidemic: If you have something of value you should be able to charge for it!

7. Constant progress. Everyday you have to make something a little better and improve it. Out-innovate your competitors and operate with excellence.

Q and A
Why isn’t advertising a good model for monetizing your website?
Bruce: The best thing about the Internet is that there is a notion that everything is for free, it feels like it’s open source, but actually it takes money for servers, bandwidth and downloads. Advertising can work but is better if it’s built into your own site so that you have control, and values aren’t at the whims of third parties. Alternatively is there a sustainable way to pay people who contribute content to sites like Youtube? If you want to build a real business with real revenues then you can’t rely on advertising from third- party controlled clicks.

Sean: Although net advertising is all the rage, it’s a shifting target and it’s difficult to pinpoint your attack. Moreover, in Japan you can’t always be in people’s faces. The typical salary man is crammed on the train and in the office, and his only personal space is his home so be careful with the Internet because you are going into people’s home and pop-up ads etc. may have negative effects. You also need to take care and find a balance between advertising and content on your site.

With $50,000 how do you get started and use crowdsourcing to end up making millions of dollars per year?
With the initial $50,000 I started three companies that grew to about 20 employees, and then had 5 angel investors who put in $50,000 each. I went for angel investors because venture capital seems like expensive money which would take a long time to pay back, whereas the angels genuinely wanted to help and they had expertise, advice and wisdom to give. I learnt a lot form angels and angels made their money back plus a lot more!

In starting all these business some of which failed, as an entrepreneur, how do you know when its time to say OK that’s not working and get out?
You kind of just get a feeling in your gut that tells you it’s not going to work, whether someone beat you to the launch, competitors are winning market share or your idea was too crazy.

Sean. What attracted Getty images to buy-out iStockphoto?
The amazing pace of change brought it about. It wasn’t that long ago that purchasing royalty free images was unheard of and until last year I tracked our competitors by whether they had a website or not and was it able to handle e-commerce? Many Japanese competitors are way behind! Getty was the big boy on the block, selling to corporations and to films such as Spiderman and Sex in the City, but iStockphoto had a new model. Although we sell stuff for big bucks, we ignored and didn’t really even know about the other market until iStockphoto as an upstart came along and tapped this market that Getty hadn’t even thought about. Now iStockphoto is adding to the value of Getty and both companies have learnt a lot form each other without doing any harm.

For small companies whose idea is to build and sell, how can you get noticed by the other guy?
My advice is that if you are just building to sell, then you are probably doing the wrong thing. First you make meaning then you make money. If you can cause people to feel something for your project and contribute something or have an emotional attachment or loyalty, then you have value, and money will follow.

Can you mention some other interesting web 2.0 sites?
Video: www.revver.com
Fashion: www.threadless.com
Images: http://beta.zooomr.com/home

How does the future look for iStockphoto?
In the next 2 years iStockphoto will aim for localized growth and internationalize by creating the site in different languages. We intend to start in Japan and travel east until we get to China. Then we will try to expand upon video. Video is going to explode! There are going to be many opportunities for new businesses related to video.

Can you give us some other tips on how to succeed?
- Hire people who are smarter than you and who can replace you if you are hit by a bus!
- Hire people with complementary skills to balance out your weaknesses
- Innovate like hell
- Don’t be scared to take risks and make mistakes


March 06 , 2007 (Tuesday)

Bruce Livingstone
Founder & CEO of iStockphoto

Sean Mooney
Representative Director of Getty Images (Japan)