One of the biggest challenges facing the ever growing digital business sector is how to generate a consistent revenue and profit stream. A good illustration of just how to do it is provided by the photo image website Shutterstock which recently again set a new high for quarterly earnings. It is a company that demonstrates how a well thought out business model can help to generate early and on-going profitability.
Shutterstock was founded in 2003 by Jon Oringer who had been frustrated in his attempts to find good quality images for marketing materials like brochures and blogs. His first investment was in a $800 Canon Rebel camera with which he took over 30,000 photos and uploaded them onto his website. Customers could either purchase photos individually or pay a subscription fee to download up to 25 images per day. This option was then expanded to allow unlimited downloads. The company’s primary customers are businesses operating in creative industries that Oringer reached through search advertising and direct sales. Shutterstock’s business model meant that, unlike many start-ups, it got paid first making it instantly profitable and it has generated revenue growth in excess of 30 per cent per year since its formation. In 2011 the company reported gross profits of US$105m on sales of US$169m and went public in 2012 making its founder a billionaire. Its stock currently trades at a price-to-earnings ratio significantly ahead of stellar names like Apple and Google .
On the supply side, the opportunity was opened to any photographer anywhere to submit photos and they were paid from 25 cents to US$120 if these were downloaded. But its decision to provide feedback to photographers on what was and was not selling was innovative and helped it to generate a supply for photos that customers were looking for. By 2014, 55,000 photographers around the world were uploading 30,000 images per day giving the company a total database of over 30 million images. Since 2006, the company has included video images in its library and in 2014 it decided to expand its business with the launch of Shutterstock Music, giving musicians everywhere the opportunity to make money from the music that they create.