Group Project 1: Getty Images Serves Up Profit and YouTube Grows Exponentially

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-1

961622 邱鼎翔 971601 林冠輔971609 康明仕 971701 黃天安971735 劉恩銓 971756 林恆睿971757 傅辰宇

Group Project 1: Getty Images Serves Up Profit and YouTube Grows

Exponentially


• Getty Images– Was found in 1995 with the goal of

• Consolidating the fragmented photography market• Applying business discipline to the merged entity• Developing modern information systems

– By 2004, the company becomes a profitable company that earns $600 million per year

– By 2007, had increased its revenue to more than $880 million– By 2008, was purchased by the private equity firm Hellman &

Friedman, LLC for $2.4 billion

Summarize - Getty Images (971757)


• Owns the world’s largest private archive of imagery

– Obtain its imagery from photographers and artists under contract

– Employs staff photographers to shoot the world’s news , sports, and entertainment event

• Was the first company to license imagery via the web

• Three license models ：– Subscription

• Customers contract to use as many images as they want as often as they want

– royalty-free

• Customers pay a fee based on the file size of the image and can use the image any way they want and as many times as they want

– Rights managed – the largest in revenue terms

• User pay fees according to the right they wish to use – size, industry, geography, prominence, frequency, exclusivity and so forth

Summarize - Getty Images


Getty Images


Summarize - YouTube

• YouTube– 2005

• On February 15, Chad Hurley, Steven Chen, and Jawed Karim registered the domain “YouTube”

• On April 23, they had posted their first video• On November, YouTube had 200,000 registered users and was showing

2million videos per day– 2006

• On January, YouTube was showing 25 million video per day• On May, YouTube was showing 43 percent of all videos viewed over the

Internet • On July, users were viewing 100 million videos and uploading 65,000 new

videos per day– Final - A phenomenal success

• In October 2006, It was capped by Google’s $1.65 billion acquisition• In just 20 months, YouTube’s founders had turned nothing but an idea into

1.65 billion.


YouTube


Q1.1 Visit www.gettyimages.com (961622)


www.gettyimages.com


Q1.2 select”Images/Creative/Serach royalty free”


Q1.3 Search for an image of a major city of interest to you


Search Taipei city


Q1.4 select a photo and determine its default price


An image of Taipei city


The price of the photo


Q1.5 Follow the link of the photographer’s name to find other images by that

photographer


Other images by Hung Chei


Q2 Explain how Getty Images’ business model takes advantage of the opportunities created

by IT as descibed in Chapter 1? (961622)


• Low communication cost

Online service

Online gallery

Sale products on website

communicate customer with e-mail• Low storage cost

save images in digital format

digital images are easier to preserve


Question 3-1 Evaluate the photography market using Porter’s five forces.

(971601)


• 1. The intensity of competitive rivalry: Industry competitive structure , Industry cost structure, Product differentiation level ,Transfer cost, Strategic considerations , Exit barriers …etc , are all important factors to affect manufacturers.

• 2. The threat of new entrants: We need to consider Economy of Scale effect is big or not , if the Economy of Scale effect is significant , the aspiration and the threat power of new entrants will decrease.

• 3. The threat of substitute products: In the threat of substitute product , we consider several factors, including room for improvement of overall quality , Price-Performance, Switching Cost and Willingness …etc . When the substitute product is bigger and bigger , it will make profitability of manufacturers continue to decrease.

Q3.1 Porter’s five forces


• 4. The bargaining power of customers: The bargaining power of customers affect existing firms profit level is high or low through Concentration , product standardization level, buyer profit level , Backward Integration or Forward Integration , Switching Costs …etc.

• 5. The bargaining power of suppliers: Relative to The bargaining power of customers , The bargaining power of suppliers is also affected by Concentration , product standardization level , buyer profit level , Backward Integration or Forward Integration , Switching Costs …etc.


I think its marginal cost is sustainable because they just pay once fee to the owner , so they can continue to use these pictures to supply to customers.

• Fast: Because of the internet , so customers can use the pictures in the short time.

• Convenience : Customers can just stay in house to use.

Q3.2 Do you think Getty images’ marginal cost is sustainable?


Because the market of GETTY is very large , I think its price can be sustainable. In other words ,if the price is too high , customers will do not use ; if the price is too low , company will do not earn .

• The price float: the price float is not too much.

• Other factors to the price: Government ,Economy.

Q3.3 Are its price sustainable?


• 1.Low cost: almost none physical cost

• 2.Convenience: Because of setting server in the NET.

• 3.Double wins between company and customers

Q3.4 What is the key to its continued success?


Q4:What seems to be Getty Images’ competitive strategy? (971709)


• Create loyal customers : Providing the best service and products. Let customers send the information to their friends.

•Composition a strategic alliance: Getty Images must link the companies into a alliance to get the resources together.


• Having the own images support: Getty Images has many photographers to take pictures.

• The first company use digital images: Digital images can reduce the cost for many aspect like storage , transfer and preview.


• Creating other discussion platform in the Net( facebook & twitter): Because it can be the community bridge between Getty Images and customers. .(Community under resource bottom)

• More function to use(tools under resource bottom): Providing many useful tools to use which will make the customers more convenient.


• Having the research store to research the trend of the world: Having own research institute to research the trend of the world to maintain its competitive.

• The products include pictures, movies and music: Getty Images create other sale items to have more incomes.


• If someone can create useful picture , video or music Getty Images will give money to get the ownership for them. .(Submit your work under resource bottom)

• Opening the new function with customers: Sharing the new technology and the new ideas to test the results. (labs under resource bottom)


Explain how Getty Images’ use of information systems contributed to the company’s value when it was acquired?

(971701)


First

• Why did Hellman & Friedman purchase GettyImages?

• Strong, defensible franchises• Predictable revenue and earnings growth• Generate high levels of free cash flow or

attractive returns on the capital reinvested in the business


Predictable revenue

• Subscription:

Customer pays fixed fee to view the photograph


earnings growth

• Royalty-free and rights managed• Elevate the earning by increasing the volume

of photograph


Generate high levels of free cash flow or attractive returns on the capital

reinvested in the business• Take cash:

Don’t have to worry about the Accounts Receivable like industrial company

• More cash:

can invest on itself to earn more money


Q6. How did the availability of near-free data communication and data storage facilitate YouTube’s success? Would YouTube possible without them?

(971735)


Answer

• YouTube set up a huge server to let the user be able to change the datas(videos) via the net , and use the database to store users’ information and videos.

• Their success can’t be without both of them.


Q7. Even though the cost of data communication and data storage is very low, for the volume at which YouTube operates they are still substantial expenses.How did YouTube fund this expenses?

(971735)


Answer

• YouTube is funded from Sequoia Capital• YouTube began as a venture-funded

technology startup, primarily from US$3.5 million investment in November 2005 and US$8 in April 2006 by Sequoia Capital.


Q8.How does YouTube(now owned by Google) earn revenue?

Answer-1

(971735)

• Before YouTube has been owned by Google ：• Their master income are from Silicon Valley

venture capital company,ad revenue and Google AdSense.

• Then They sign a contract with NBC and Warner to reduce the problem of right and bring a lot of money.


Answer-2

• When Google announced that they bought YouTube ：

• They signed a contract with BBC,SONY and Universal music at the same time.

• They continue finding more cooperation of videos with another company. Example : Audi(next page)


• Q9: Choose a corporation located in the geographic vicinity of your college or university. In what ways is it already taking advantage of the low cost of data communication and data storage?

• Q10: Using the corporation you identified in question 9, identify three innovative ways that the corporation could take advantage of the low cost of data communication and storage.

(971756)


Sinyi Realty － Online Service

• Sinyi Realty originate iPhone APP and Android App.

• The User can have a look at the house at any where by using AR (Augmented Reality).

• Low cost – Pictures are becoming smaller and easier to restore that have replaced the traditional photos.


Housing details


Combine positioning system 、 AR and Google Map


KFC － E Coupons

• Allow consumers print the coupons on the internet.

• Replace the traditional coupons and decrease the cost of printing the coupons.

• Increase the profits – Consumers using the coupons when they consuming.


KFC － E Coupons


Badongo － Online storage system

• Easily store and access – Individuals worldwide can easily upload any type of large file from any type of computer.

• Easily share files – Badongo offers Applications that are compatible with today’s most popular social networking sites such as Facebook etc…


Answer for Q10

• Create the discussion area for KFC, let the customer advise KFC of any suggestion.

• Badongo store the data on the internet, and user can download or share the files any times.

• Sinyi Realty use Augmented Reality and replace the traditional advertisemennt.

Answer for Q10

Group Project 1: Getty Images Serves Up Profit and YouTube Grows Exponentially

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