In a deal that could be worth more than $200 million, global visual content provider Getty Images (Nasdaq: GETY) has announced the purchase of leading online art dealer Art.com. The transaction means that Getty will now sell images to the large consumer market, rather than just businesses. Getty will use Art.com as a marketplace to sell its collection of more than 30 million images.
Art.com was launched last year and has already been visited by four million users and sold art to 30,000 customers. Art.com already has more than 100,000 images online, including works by artists such as Claude Monet, Vincent van Gogh and Pablo Picasso, and photographers such as celebrity favorite Herb Ritts and the controversial Robert Mapplethorpe. Art.com has partnerships with almost 7,000 affiliate sites, as well as Yahoo! and America Online.
“Our acquisition of Art.com provides Getty with access to a $9 billion consumer art market and with the opportunity to leverage our content into this market,” said Mark Getty, co-founder and executive chairman of Getty Images and grandson of billionaire J. Paul Getty. “Our plan is to accelerate our top line revenue growth by penetrating this market.”
Under the terms of the deal, Getty will exchange 4.51 million newly issued shares of common stock for Art.com. Shares of Getty climbed 3-1/4 to 29-3/8 on Wednesday. At that price, the stock would be worth more than $132 million. Art.com shareholders may also receive up to an additional $84 million of stock and cash, depending on the value of Getty stock at the time of the payment.
Getty’s E-Commerce Sales Pick Up
In related news, Getty reported its first-quarter results on Wednesday. The company reported $52.2 million in sales, an increase of 38 percent over the first quarter of 1998. E-commerce sales grew more than 100 percent in the same time period, rising to more than $10.4 million. Digital sales, which include e-commerce and CD-ROM sales accounted for $20.1 million, or 39 percent of total sales.
After the Art.com deal closes, Getty will form an e-commerce committee to guide all of Getty’s e-commerce businesses. Getty, which is moving its headquarters to Seattle, is going head-to-head with its most prominent neighbor. Microsoft CEO Bill Gates owns competing digital imaging company Corbis, which is selling images to consumers over its Web site.
Bill Lederer, founder and chief executive officer of Art.com notes that “Purchasing art in the analog world is a time consuming, daunting process. We believe the initial success of our web site demonstrates that people want a better solution.”
It remains to be seen whether more consumers go to Getty or Corbis for that solution.