Masterfile tightens its belt as microstock sites cut into its business

Masterfile, one of the largest stock photo companies in Canada, has laid off 20 employees in its Toronto headquarters and 10 elsewhere as uncertainties in the business grow. According to a story in DesignEdge Canada magazine, the company made a little bit of money last year (on revenues of about $32.5 million), but less than it was expecting. And competition from royalty-free and online microstock companies are probably at least partly to blame, according to Masterfile president Steve Pigeon.

Although there is no direct evidence that discount microstock sites are cutting into his agency’s profits, Pigeon says it is not unrealistic to assume they are affecting Masterfile’s bottom line.

“Given the fact that these guys are popping up like mushrooms and licensing pictures at very low prices, it stands to reason that some of our traditional business is going that way,” Pigeon says. “We’re assuming that’s having an affect on the industry.

Another of Pigeon's concerns is a possible U.S. recession.

As a 35-year veteran of the design and photography industry, Pigeon says advertising budgets are always the first to go when companies start tightening their belt. Masterfile does approximately 85% of its business in the advertising sector. “So when there’s a downturn there, we feel it.”

Masterfile was created in 1981 and was acquired from its corporate owners by Pigeon in a management-led buyout in 1984. Today it is one of the largest independent stock image companies in the world.

A week or so ago, DesignEdge reported that Adobe is getting out of the stock photography business and Getty Images, an unparalleled repository of historic stock imagaes, is up for sale.