Aaron Strout:                             

Today I am speaking with executive Vice president Kelly Thompson.  Kelly is the executive Vice president for iStockPhoto, one of our case study companies in the We Are Smarter book.  He also, with the purchase of iStockPhoto by Getty, is the Vice President of Web Marketing.  So, Welcome, Kelly.

Kelly Thompson:                   

Thank you very much.

Aaron Strout:                             

Thank you for joining us today.  So, we'll jump right into the questions.  You guys have a fascinating business model.  I'll put you in the crowdsourcing model.  This is sort of how we couched you in the book, but one of the things I'd love to know is you did get acquired by Getty, I believe it was last year, for $50 million.  So, how has this acquisition impacted your business, if at all, and has Getty – obviously they saw the value of what you guys do, which is really – actually, maybe you could talk a little bit about what you do because there may be some folks listening in that might not be familiar with iStockPhoto, and then we can actually jump into that question if that's okay.

Kelly Thompson:                   

Sure.  Well, iStock took the road of using sort of amateur, semi-pro photographers to deliver really inexpensive stock photography.  So, there were several orders of magnitude lower in price than what was traditionally sold at the large stock houses.  It was a huge hit, and quickly what we learned was we were selling to a whole new stock buyer, a whole new group of people.  At three or four hundred an image most consumers and even most small businesses can't afford imagery at those prices.  You bring it down from one to twenty dollars and pretty soon you see everyone using an image that wouldn’t have before.

So, that's really, really the business model, and it was one of the first micro-payment models.  Because it's so hard to charge – or so expensive to charge a credit card a dollar or so at a time we just use credits.  So, you buy a pack of ten credits at a minimum, which is $12.00, and then you use those credits to purchase images.

Aaron Strout:                             

Great.  So, if I'm reading this correctly – and I think we do this in our office – as an example, before where if an image does cost somewhere north of $250 to $300.00 usually you're only using it maybe in a direct mail piece or some sort of wide distribution campaign.  I know photos can go for as much as tens of thousands or hundreds of thousands and dollars. 

In this model now if I want to jazz up my PowerPoint presentation or if I have a fairly simple newsletter that goes out if I'm looking at a buck or maybe 10 bucks or maybe 30 bucks for an image, all of a sudden it's a lot easier to use and certainly made the barriers to entry much simpler with your micro-payments and through the credits you'd talked about.

Kelly Thompson:                   

Exactly.  Exactly.

Aaron Strout:                             

So, getting back to my question that I had originally teed up before I had explained what iStockPhoto did talk about what the merger has meant.  I assume you were with iStockPhoto before, and if you weren't maybe you can just talk about what the culture has looked like and has Getty impacted the culture, and have they adopted any of those elements?  Or have they really just sort of kept you stand-alone?

Kelly Thompson:                   

Well, yeah.  I've been here for quite a while – before the acquisition.  It's always really felt like a little startup here.  Lots of energy.  We still only have 58 people here, as Jonathan Kline just called it a cow shed in Calgary.  (Laughter)

Aaron Strout:                             

(Laughter)

Kelly Thompson:                   

And it's a great open office environment.  There's dogs running around, and it's very, very casual, which I think Getty really appreciated.  Getty's a very large company, and the guys when they come up and come for meetings really, really enjoy being here.  So, hopefully a little bit of that has rubbed off in the right direction. 

Now, definitely things they brought to us; they had some really great technology around their controlled vocabulary.  It's a little geeky, but I'll kind of tell you a little bit about it.  It's basically a few hundred thousand phrases and things like that in the English language, and it's translated into 12 other languages.  So, when one of our photographers keywords their images it's automatically keyworded in all those languages, which means instantly our site was searchable in 12 other languages.  So, that was a huge thing they brought to us instantly.  They've been working on it for ten years with language experts in all the different languages, so almost overnight it felt like we were an international business in a lot of languages, which allowed us to expand incredibly quickly.

Aaron Strout:                             

That's very cool.  But it does sound like they have sort of respected your entrepreneurial spirit and have left you somewhat stand-alone and really where applicable they've added on some of the value add that they bring to the table but have not undermined really that crowdsourcing model you've got and the secret sauce that I think has made you guys what you are.

Kelly Thompson:                   

Yeah.  Exactly.  They really have left us alone in those ways.  We still have our CEO up here.  We still do all of our own budgeting.  We just meet every once in a while.  They're amazing, amazing business people, so that's been a great learning experience for us as well.

Aaron Strout:                             

Of course, you wouldn't tell me otherwise because you know they might listen.  I'm just teasing you, right.  It's a good plug for the bosses.  Shifting gears a little bit, I noticed you have a community section on your iStockPhoto site, and it seems fairly heavily comprised of discussion forums from what I could tell poking around, looked fairly active.  Now, one of the questions a lot of companies have is do you provide a community setting.  How much does the company itself participate in it?  So, I was speaking to a gentleman named Steve Swasey from Netflix the other day, and he's one of our other case study companies, and he said they do kind of keep their participation at arm's length.  What are your thoughts on that, and how do you guys contribute, and how do you view sort of participation in your community?

Kelly Thompson:                   

We totally encourage it.  In fact, I think sometimes I think our employees are spending too much time on the forums.  When we hire people here at iStock, even if it's a developer or someone in marketing, customer support, we look for people who really, really love photography and design and who can connect with the site that way.  So, they really care and our interested in what's going on in the forums.  I think it really helps make iStock what it is.  We have developers who are uploading their photos and selling them.  So, they completely understand what's going on behind the scenes and then what's going on from a user perspective.  So, it really helps make iStock what it is.

Aaron Strout:                             

That's great.  We applaud you for that because I think we're big believers in that ourselves, and we do build communities for other companies.  I think there is a certain value – a very great value in encouraging your employees to become your customers and to participate and view it from their eyes.  I think there's also the element from either a technology or a product perspective to have them out there talking and rubbing shoulders with some of the people so that (a) you impart that value they have in their heads to the customers and (b) they get the reciprocity from that and they also understand what people are thinking about and what issues they're having and where the trends are.  So, that's great to hear that you guys do that.

My next question is – shifting gears a little bit here, there are some free photo-sharing sites that have cropped up, and two of the big ones obviously being Flickr and Picasso, and I think that the original purpose or intent of these was really to just provide the ability to share photos.  But one of the things that I personally found is that it is a resource that whether it's free because I put my own photos up there and I can go and use them as needed or paid, meaning there are people that do put their photos up there and you can license them, do you see any competition from this?  Does this sort of one-up you guys, or do you eel like you'll continually have your niche because you keep it clean in terms of "this is the service we offer.  It's very clear who owns the photos and how to get access to them" and things like that?  Maybe you could talk a little bit about that?

Kelly Thompson:                   

Yeah.  I mean, you have to be really, really careful using images from Flickr and sites like that in a business setting.  I know there's someone being sued right now.  So, let's back up a bit.  When we accept an image into iStock it goes into an image queue.  We have 90 image inspectors around the world that look at every single image that comes through the system.  It's about 35,000 a week I believe. 

So, those images are vetted for – well, I mean the obvious things are they good, are they in sharp focus, no digital noise, no JPEG artifacts, no purple fringing, those kinds of things.  But probably more importantly, we look for things like is that a Nike logo on the side of that guy's shoe?  Is that a Coke can sitting in the back?  Is that a logo that's visible?  If there's a recognizable human face there must be a model release attached to it.  Those things are incredibly important when you go to buy the image because if that photo isn't model released properly and the image gets used there can be problems.  I know Flickr is running up against that right now.  And when you buy an image from iStock we have vetted them for those kinds of issues.

Aaron Strout:                             

That's a great service.  I hadn't thought about that, but that totally makes sense.  The fact that not only do you do a quality assurance, which I'm sure is a huge benefit, but also the hold harmless making sure that when people buy it they know they can buy it with a clear conscience, not only from a "I didn’t pirate this," but an "I know all the proper releases have been done."  So, that is a huge value.

Kelly Thompson:                   

I was just going to say there are some really odd things that people on Flickr probably wouldn’t know that are uploading photos that we actually have a collection of things that can't be shot as royalty free stock.  There's some really odd ones.  For instance, the Eiffel Tower during the day you can shoot and sell as royalty free stock, but at night the lights are actually trademarked.  So, you can't sell the image, and there's thousands and thousands of odd little rules like that from all over the world that just an image stuck up on Flickr you wouldn’t know that.

Aaron Strout:                             

So, you really bring the best of both worlds.  You have experts in things that most people have no knowledge of working with the crowd to sort of supply your manufacturing arm.  So, very, very clever.  A very cool model.  My final question for you, Kelly, is before we wrap up here is for a company looking to get started with their own community, really I'll call that working directly with their customers whether it's crowdsourcing, working with them to help with their customer service efforts or marketing and sales – as someone who's been in this space for a while – and it sounds like you were one of the early folks at iStockPhoto – any recommendations?  Any thoughts on a best practice?

Kelly Thompson:                   

Well, definitely pay attention to them.  They often come up with really, really great ideas.  And we see a lot of other companies that just sort of don’t grab onto that.  Definitely pay attention to them and see what they can bring to your company.  Obviously, you can't let them make every decision, but make them feel like they're part of the community, which they are if you're working it correctly.

I'd say, secondly, is get them involved where it makes sense.  So, for instance, in the example I just gave you we have a list of thousands of items that maybe can't be shot as stock.  It's actually written as a Wiki so they can add things they find out because they're all over the world and there's different rules all over the world.  They can actually add to that list of things that either can or can't be shot.  That's a perfect example of something we could never do on our own, but it's such a perfect, perfect thing for a crowd to do. 

That's kind of the third thing is give them things to do that they're good at.  Some things a crowd is perfect at and others they're not.  So, we worked really hard to find things where they can really add value to the site.  Things like rating the photos or, actually, if you find keywords on an image that you don’t think are great you can actually keyword the image and submit it back to us so we can fix it.

Aaron Strout:                             

That's great.  Those are, I think, things I'll agree with and very helpful.  So, Kelly, I really appreciate your time today.  For those of you listening in, we have been talking with Kelly Thompson, who is an executive VP at iStockPhoto, also a VP of marketing at Getty Images.  So, Kelly, thank you for your time today.

Kelly Thompson:                   

Thank you very much, Aaron; I appreciate it.