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A $61 million rock in the Pond

photo by Mike

It ripped the sky open like a lighting in a summer night but we hardly heard the thunder. Yet. A few articles, from the Wall Street Journal to Techcrunch replicating the press release, but that is about it. Which is a little disturbing because a series A investment of $61 million is pretty exceptional.

The news that company Pond5, a marketplace for UGC video, photos, illustrations, and sound files, just raised a whooping $61 million (from Accel Partners and Stripes Group)  did much less to excite the masses than when Colors raised $40 million. Sure, Pond 5 has been operated at profit for 8  years while Colors didn’t even have a product. However, that is a massive input of cash and it is surprising that it hasn’t made more waves. Even Shutterstock’s stocks, Pond5 main competitor and target, hardly fluctuated, down around 2% before going back up today.

Why is it a big deal? Like Shutterstock, Pond5 is a company that has reached profit without any outside investments, reaching a substantial growth via a powerful network effect supported by clever technology. If it’s any indication, Shutterstock raised $76.5 million after its stock price surged from $17 to 21.66 in its first day of trading, giving the company a market value (in 2012) of $558.3 million. Today, the stock is trading around $75 and has a market cap of $2.68 Billion.

However, unlike Shutterstock and other competitor in the same space  Getty’s Istock, it has succeeded mostly in licensing videos, something that both are still  trying to ramp up. Istock and  Shutterstock are very strong in the photo space, but show slow growth in videos, or audio, another of Pond5 ‘s feature. Video, as we see with YouTube as well as in advertising, is a massive market with high growth potential.

Finally, Pond5 seems to have successfully managed the one stop shop marketplace, offering multiple types of digital files, allowing them to reach a much wider range of customers than its more famous competitors.

Pond 5 search page

We caught up with CEO and co-founder Tom Bennett to find out more :

The Microstock/UGC space is very crowded, why create Pond5?

We launched in 2006, focused entirely on video, so were the first open marketplace for footage on the web.  We then expanded into other media types over the years.

 We now have the largest selection of royalty-free video on the web and a massive selection of other media types.

What makes POND5 different from Shutterstock or  Getty’s Istock?

3 key differentiators:

• Leader in video

• Higher royalties for artists (50% vs as low as 15% at istock and 30% at ss)

• Artist-set pricing means that we can offer content at all price points, not just “microstock”

Do you see this market as a “winner takes all” or is there space for a few large players? Will your expansion be more about gaining market share from others or from an overall growth of the market?

The market is growing explosively — we’re transitioning from a world where a privileged few could create content to one in which everybody can produce, edit, distribute, consume, & monetize rich media.  So we expect most of our growth to come from overall growth in the market, but we are also in a great position to disrupt the traditional players.

Pond5 is more of a digital file marketplace than just photos or videos. Do you have a large % of your clients purchasing various file types (sound clip, video, photo) for the same project or is your client base just wider because your offering is larger?

Yes, significant crossover.  Of our 250k customers, about a quarter of them have purchased more than 1 media type (e.g. video+photos).

Who is your typical customer?

Our “sweet spot” customers are producers of long form / episodic television content.  Also films of all sorts, and a very, very long tail of other users.

How big is your company today (how many users, contributors, growth percentage) and where is it concentrated mostly (Europe, US, Asia)?

30k+ artists

250k+ customers

2.7 million videos

12 million photos & illustrations

600,000 audio clips

6,000 after effects

25,000 video clips posted every week

We are growing at 50-100+% y/y across pretty much all major metrics — collection size, revenues, user base, etc.

About 60% of our business is US based, but shifting quickly towards international, which is obviously a major growth area for us.

How important is technology in your company? For example, how do you get the right file to the right customer quickly?

Tech is key, and constantly changing – both in terms of the content that’s being produced (video tech is moving really quickly for instance, and we are leading-edge when it comes to offering professional formats etc.), as well as the technology to operate the platform.  We’re trying to be best-in-class in both areas, and this financing will definitely help us consolidate that position.

The Microstock/UGC space uses/ needs heavy marketing. Is most of the investment funds going to compete with the stock / Shutterstock marketing firepower?

We will certainly be expanding our marketing efforts, but the bulk of our investments will go towards improving our product, expanding our collection, and making sure p5 is the best place to buy and sell stock media on the web.

How do you feel about on-demand stock. Companies like Scoopshot or EyeEm that allow clients to submit a request to thousands of contributors? Disruptor or fad?

Definitely interesting, and we think there’s a lot of great innovation coming out of companies like that.  Not a fad, but not sure if it’s a big disruption either — we shall see.

 Any plans to go into the image embed spaces like a few of your competitors did? What is your position on that?

No position on this, or immediate plans — although it was certainly an interesting move by Getty.

 What, if anything, would you like to launch that current technology does not allow you to?

A BCI interface for finding stock media with your mind 🙂


Author: Paul Melcher

Paul Melcher is the founder of Kaptur and Managing Director of Melcher System, a consultancy for visual technology firms. He is an entrepreneur, advisor, and consultant with a rich background in visual tech, content licensing, business strategy, and technology with more than 20 years experience in developing world-renowned photo-based companies with already two successful exits.

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