Rambling CEO

2009 summary by Alamy CEO James West

James West - CEO — Tue, 23 Feb 2010 10:22:00 GMT

Quarter 4 2009 wraps up last year with a 13% drop in revenue from 2008 for the Alamy group, resulting in a better than expected figure from our 15-20% forecast.

Our financial position remains strong however, with a 6.5% operating profit last year - just a couple of percentage points below our 'business as usual' number.

Despite the challenging year we have been investing in new infrastructure, product, and putting marketing plans together for a suite of new services coming online later this year. Our US sales operation is also continuing to grow. To support the sales team we have added a US customer service division (handling inbound calls and emails).

We think it is sensible to remain cautious about the near term - there's too much uncertainty to make bold statements about returning to growth anytime soon. However, we are still optimistic about the long term. Alamy has come through the first year of the worst recession in living memory with a healthy cash balance and a healthy operating profit.

Quarterly Statement Q3 2009

James West - CEO — Tue, 03 Nov 2009 12:58:00 GMT

Q3 2009 results reflect what we hope is the bottom of the downturn. It's too early to predict what Q4 will look like, but I can say that September and October numbers have been very reassuring. Until we have more data, however, we're sticking with our earlier forecast of a 15%-20% decrease on 2008.

We're working on some exciting investments for 2010, which include further expansion of direct sales teams, some great new search features for customers, new products, new markets, and a faster service (we'll have more to say about all this later).

Recession hit but still profitable

James West - Alamy CEO — Thu, 06 Aug 2009 09:04:00 GMT

Our latest quarterly results show that the recession has most definitely hit our revenue figures this year. Based on the current trend we anticipate that Alamy gross sales will be somewhere in the range of 15-20% down on 2008 by the year end.

The recession is affecting us in a number of areas:

Some customers have gone out of business altogether
Some customers have drastically cut their picture budgets (mainly evident in the UK newspaper market)
The travel industry has been badly hit, which has a knock-on effect on the amount of brochures being produced, which in turn reduces volumes purchased from stock agencies like Alamy
Some customers have put projects on hold in order to wait and see how the recession develops.

But there are reasons to be cheerful. Alamy is still in profit and, even taking into account our most pessimistic forecast, we will still be profitable in the event of a prolonged recession.

We are still committed to expanding our direct sales operations and we are in the process of hiring more staff for our US sales office. We also are in regular contact with our key customers and some encouraging results are coming from this. Nevertheless it is likely that we will continue to face a difficult trading environment over the next 12 months and this will be reflected in our quarterly statements for some time.

Our long term view, however, is unchanged. Alamy is in a great position as a privately held, profitable, independent company to continue to acquire market share while paying out one of the best royalty splits in the industry.

US office - quick update

James West - CEO — Thu, 07 May 2009 10:33:00 GMT

Our NYC office in Brooklyn opened in February and the sales team have been out on the road and on the phones getting to know their new customers.

I have also been getting out as much as possible and listening to what our customers are saying.

Here's some of the things I've been hearing alot:

That they are pleased they can speak with sales reps in the US
That Alamy has images that they can't find anywhere else, especially international material
That they would like to see more US content
That they are increasingly experimenting with video
That the economic climate is pretty awful and budgets are being slashed dramatically

In some respects it's a shame that the recession took hold just as we got started in the US, but on other hand there's never been a more important time to be in close contact with our key customers. Understanding their evolving needs and responding to competitive pressures are essential parts of our survivial strategy for the next couple of years.

UK newspapers - message 2

James West - Alamy CEO — Thu, 19 Mar 2009 17:42:00 GMT

The following email has been sent to all contributors who have images with us and to newly registered contributors.

Thank you for all of your thoughtful emails and comments on the blog. It's been very interesting to read your various perspectives and I appreciate your support in helping us find a workable solution.

Below are some of my thoughts in response to some recurring comments in your correspondence:

UK newspaper revenue for 2008 was about 1.8m USD (approx. 1.3m GBP), or 8% of our overall business.

Our assumption that the uniqueness of the images on Alamy enables us to keep away from subscription deals has been obliterated in recent weeks. Financial difficulties being faced by these customers have overridden the fact that Alamy has a better selection to offer than our competitors.

If we sit back and do nothing, over 1million USD in revenue will be wiped out over the next two years. That's an optimistic forecast - the truth is that we have no idea when or by how much this market will decline, but we know from recent experience that it has the capacity to fall dramatically and without warning.

Some of you are concerned that a subscription scheme will drive prices down to very low rates per image. In theory that's possible, but it's far from certain:

Most newspapers are reducing the number of pages they print and are moderating their online ambitions due to budget constraints. I don’t envisage that picture usage volumes in UK newspapers will increase significantly over the next couple of years. If anything, they will reduce.
Alamy is already one of the leading suppliers of stock imagery to the UK newspaper market. Alamy’s share of overall usage will likely increase if we do some deals, but not by a huge amount.
'Unlimited downloads' are the most generous terms we might offer. I don't want to run every commercial decision we make past all 17,000 of you, so I'm deliberately giving you the worst case scenario. In practice every customer is different, meaning that in some cases we might cap the number of downloads in order to preserve some lower limit on price per image.

I am not suggesting that we must compete head to head with newswire services. Nor am I suggesting that Alamy must transform the entire business into a subscription business, but for the UK newspaper business we must compete with other stock agency offerings – some of which come from agencies that also provide newswire services.

If you’re still unconvinced, please email Member Services, with the subject line “UK newspaper opt-out”, and we will exclude your images from any deals we do with UK newspapers.

If you are going to take my offer of an opt-out, please do something for me in return: wait and see. Don’t rule this out until you have had a chance to gauge the impact it will have on price and volume for yourself. You will be able to opt-out at any point in the future if you wish.

Apologies to those of you who would like an opt-in by pseudonym – I can’t justify the engineering effort at this time.

UK newspaper revenue declining rapidly

James West - Alamy CEO — Wed, 18 Mar 2009 17:45:00 GMT

The following email has been sent to all contributors who have images with us and to newly registered contributors.

We have seen some dramatic declines with some of our newspaper customers this quarter, ranging from 30% to 70% down year on year. I would like to share some thoughts with you on how we can reverse this trend.

I have spent the past week visiting photo editors and managing editors at several of the major UK titles to get a better understanding of why this is happening and where they see their businesses going.

All of the people I met with made the following observations:

Advertising revenues have fallen dramatically this quarter in most cases
Print sales have been falling and will continue to do so
Online versions of newspapers have yet to deliver a revenue stream comparable with that of print
Most titles have been making redundancies in recent months
Editorial budgets have been cut
Further editorial cuts are anticipated

Newspapers are going through a painful transition period that is being exacerbated by the recession. Most of the main titles think they will survive, but it is not yet clear what the right commercial structure for them will be. The only thing that is certain is that difficult choices and further cost reductions lie ahead of them.

Alamy is the only large supplier of imagery not offering a subscription scheme to newspapers and we are being squeezed out of this market by offerings from our largest competitors. These deals are in addition to, and separate from, newswire subscriptions. In the past we have managed to keep away from these deals because we represent a lot of material that isn't available anywhere else. Unfortunately the recession is forcing a change in behaviour at the picture desks that leaves little opportunity for image providers who don't offer unlimited downloads for a fixed fee. To put this in context, our largest UK newspaper customer has ordered their picture desk to only download images from agencies they have subscription deals with.

To keep our newspaper revenues alive this year we will have to move quickly to regain the ground lost to our rivals. The good news is that it's not too late to act - most of our customers want us to succeed because they like the speed, simplicity, and choice on Alamy.

Broadly speaking any subscription offering needs to be priced at or below the total expenditure for the previous year for an unlimited number of downloads. Wherever possible we will allocate revenue to contributors based on usage, but in some cases we may have to divide up the revenue based on downloads. It is hard to judge in advance what impact this will have on the average price per image for this market. At one end of the scale prices will remain at or slightly below 2008 prices, whereas at the other end prices might fall by up to 50% or perhaps even more. My expectation is that we will see a mixture of both.

We face a stark choice – either we adapt to match the competition, or we accept that UK newspaper revenue will continue to decline sharply over 2009.

Commercial images - thoughts in progress

James West - CEO — Mon, 02 Mar 2009 11:44:00 GMT

We've got a lot of work to do before the commercial section of the Alamy site is something we can aggressively market. We knew this from the outset - sticking something on your homepage does not constitute a sales and marketing plan. You have to go out and sell it, tell your customers about it, etc.

The commercial filter on the homepage accounts for only 3% of customer searches since it went live the other week. Good. That's exactly what we wanted.

Putting this collection live is the first small step in a bigger plan that I outlined in my presentation at the annual contributor event last year (you can see it here - watch from 10min and 10sec to hear me describe the stages we are now following).

This project is a work in progress and something that we are learning more about as we get into it. Based on some early feedback from customers gathered both verbally and by looking at the data we've been collecting, it's clear we need to make the license type filter more prominent again. We're also going to put some BETA messaging with it - we contemplated this before going live and we're now convinced we should.

Important changes at Alamy - follow up

James West - CEO — Mon, 29 Sep 2008 13:09:00 GMT

Thank you for your feedback on our plans to increase the Alamy percentage split and to open an office in the US.

All of the blog comments and forum posts have been read and I will be discussing the issues raised at the annual contributor event in London on November 7th. The event will be filmed and made available to everyone.

Further details regarding the event will follow shortly.

Important changes at Alamy

James West - CEO — Wed, 24 Sep 2008 10:39:00 GMT

This video has been uploaded and compressed using Google Video. If you have any playback issues please visit the Google Video Help Center for support. If you would rather view this video in higher quality, please download the high res version. (20.4MB .mov file)

If you can't see the video above, here's a quick summary:

This is to give you advance notice that our royalty percentage will be increasing by 5% in early 2009 for direct and distributor sales. The change applies to all images from all our contributors, regardless of which commission structure you are on. We're making this change to fund a shift in strategy for the company which, I believe, will lead to a significant increase in gross payments to our contributors. We're starting by opening a dedicated sales office in the USA.

The US market currently makes up 30% of our global revenues. With a dedicated US sales office, we expect to significantly improve our performance in this market. It's difficult to provide precise numbers at this early stage, but we're forecasting that US sales will jump from our current 15% annual growth rate to around 30% to 40%. This will increase gross payments made to contributors from $72m to between $74m and $78m over 3 years.

Recruiting starts this month and we expect staff to start joining us around January. The new royalty split won't come into effect until the team has been recruited.

New terms will be:

Alamy's percentage for direct sales and for distributor sales will rise by 5%
An end to bank transfer fees
No more cheque fees
No charges on foreign exchange fees for payments

We will issue a formal notification of a change to the contract in due course but we wanted to make you aware of our plans.

This is an important step in Alamy's future and I will be moving to New York in March to oversee the first six months of operation and to get a better understanding of the market.

James West BBC interview

James Allsworth — Tue, 16 Sep 2008 15:38:00 GMT

Alamy CEO James West was recently interviewed on BBC Radio Oxford.

During the 'Real Stories' feature James talked about Alamy, the early days and general entrepreneurship.

BBC Oxford 'real stories' page.

Direct link to interview (real audio .ram file).