Deal Radar 2008: Fotolia

This story was written by Sramana Mitra.

Today's Deal Radar company is New York-based Fotolia, a microstock photography site. The site offers quality images at low prices and is stiff competition for traditional stock photography sites such as Getty and Corbis as well as microstock photography sites such as iStockphoto and SnapVillage.

Fotolia targets graphic artists, web designers, art directors, SOHO users (small office home office users), advertising firms, software companies, and bloggers. Fotolia was co-founded by Thibaud Elzire, who had always had a keen interest in photography and ecommerce, in 2005, and Oleg Tscheltzoff, who previously co-founded Amen, a leading webhosting company in Europe. As an intern at Amen, Elzire was constantly on the lookout for photos for his company's brochures and other campaign materials but found that Amen's budget prevented him from buying pictures from traditional stock companies, which were generally expensive. After leaving Amen, Elzire talked with photographer friends and worked on the idea of a site that sold professional, low-cost images. He approached Tscheltzoff and Amen's other founder Patrick Chassany with a first version of Fotolia, and they all joined hands to create the company.

Fotolia has remained privately funded and has been using its revenue for growth. The site has over 800,000 members worldwide, receives millions of visits each month, and boasts more than 300,000 media buyers. According to Compete, the site attracts 248,778 unique visitors monthly. The site has a collection of over 4 million images and boasts a better collection of more "ethic sensitive" images because of the presence of local photographers from each country they support. Fotolia currently has sites for countries across North America, Europe, and Asia.

While some photos are for free, others are sold at varying prices that range from $1 to $2,000. Buyers can also opt for the subscription model, which gives them the flexibility to download 25 to 250 images per day. The individual subscription is priced at $199 per month for 25 downloads a day, while the corporate subscription begins at $249 per month for three users also for 25 downloads a day.

The price of the photograph is set by the contributor but within certain limits, as the payment made to the contributor depends on the system used by the buyer. If the buyer opts to pay per image, the contributor can expect a commission of 50% if the photograph is sold exclusively through Fotolia and 33% otherwise. However, if the buyer opts for the subscription system, the payment depends on the contributor's ranking, which in turn is determined by the number of files sold.

But what really is striking is that Fotolia offers royalty free images. Buyers can use images (once they are paid for) for as long and as many times as they want within the terms of the license. The terms of the license, however, depend on the image acquired. Further, the site uses the same search method as Amazon and helps the customer locate just the exact image they are looking for. Fotolia's search function also recommends images that might be of interest to buyers based on collective information.

The stock photography industry is estimated to be worth $2.2 billion. The landscape, however, was different when the company was launched. Elizire began with the idea of first launching Fotolia in Europe and gaining a strong foothold there, which he did, and then rolling out Fotolia to other nations. CEO Oleg Tscheltzoff explained, "Providing a local presence in each country is and always will be key to Fotolia's success." The company gained early traction in the market with PR, blogging, emails, advertising campaigns, and partnerships with companies like Microsoft, 1&1, Template Monster, and SWSOFT. But what relly worked for Fotolia was word-of-mouth publicity.

The company is currently in an aggressive growth mode and is looking to hire more employees in late 2009. Fotolia recently announced a partnership with Pingg, an online invitation and event management site. Under the deal, Fotolia's collection of images will be integrated with the Pingg Platform and power the Pingg Plus+ application. Users can select an image from Fotolia and change it to further customize online and/or print invitations.

The partnership seems to mark the start of Fotolia's growth strategy, and the company is looking at more strategic partnerships. The recession has not had much of an impact on Fotolia, and Tscheltzoff said that "revenue has continued to double every year and there is no sign of a slowdown despite of a bad economy. In fact, we are thinking it will increase because of the poor economy. Fotolia is a great deal and people do not have money to spend on overpriced images at Getty."

By Sramana Mitra

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