a blog

Creative Destruction At Work Again

The so-called creative destruction is a natural process that is currently eliminating many businesses such as newspapers. One can argue with it, one can try to deny it, but that’s about what you can do with it.

Creative destruction has many forms. It can mean market elimination, such as when Craigslist destroys the market of classified ads. Or, it can mean commoditization, which is what Fotolia, iStockPhoto, and now PhotoXpress are doing to the business of stock images.

The last one being the first to give away A LOT of images free-of-charge.

I worry about the photographic profession. It used to be that you had to pay upwards of $500 to purchase a single photo for your presentation. These days, I can feed an entire slide-deck with rich media for less that $20.

What’s really happening, though, is that amateurs* being equipped with affordable digital equipment are entering a market that has previously been closed to them. Crowding the market with supply, they drive the prices down with each shot they take. That’s how PhotoXpress can now offer 600 thousand freebies.

True art is not going to depreciate as a result, but anything less-than-awesome is an enormous pressure to price at or close to $0.

If I were a non-Pullitzer-winning photographer, I’d be deeply worried about my financial outlook. If I were a product manager at any of these companies, though, I would be worried as well. Being in the commodity business is not bad per-se (just ask your phone company about their profit margin from every SMS you send!) but you have to be big or get big enough very quickly AND customers are not really interested in your product innovations. Not as much as they would be if your product were not a commodity.

And I don’t think that the business of stock images is at a point where further innovation wouldn’t matter. My opinion is, then, that the commoditization / creative destruction has happened too quickly and too rapidly here.

Then again, one can argue with it but that’s not going to change anything. Here is hoping that the guys won’t stop innovating even as they are busy slashing prices every day.

July 9, 2010 | Filed Under Enterpreneurship | Comments Off 

  • subscribe

  • One man's microISV

    Playground - an on-demand requirements management tool helping you get the right things done.

  • Lifestream

    • RT @MilosLenoch: wow, kentico featured by 37signals! http://bit.ly/cGjRL5 about 8 hours ago
    • ... problem is they are already there about 25 days ago
    • So the Taliban stoned some adulterers recently. I wish US/NATO would bomb them back to the Stone Age but the problems about 25 days ago
    • Not sure that Wave is gone altogether. I can imagine it creeping into Gmail eventually. But why didn't they kill Buzz instead? about 35 days ago
    • Rooting for Uruguay. Still bad memories of CZ vs NL a couple years back. Plus I really like URU's game. #worldcup about 65 days ago
    • @ktorn what kind of app are you going to make for your Samsung? about 66 days ago
    • Firefox 4 nighly looks pretty good to me. But I still have to restart it after installing add-ons? Hope they'll fix that one day soon. about 71 days ago
    • I love that I can put MY photo on friggin Google HOMEPAGE! about 91 days ago
    • Or more precisely, it does seem a bit smarter AFTER you've visited a given URL that corresponds with the query about 94 days ago