We heard a wild rumor that Getty Images agreed to buy photo-sharing website Flickr from Yahoo. At first blush the gossip sounds crazy. Widely-used Flickr is a crown Web 2.0 jewel for Yahoo, which dissolved its own photo site after acquiring the company, and Getty can already license Flickr photos through a partnership announced in July. But upon further reflection there's a logic to the alleged deal.
Though Flickr is popular, Yahoo has long struggled to figure out how to make enough money on it to cover the site's heavy bandwidth expenses. It also struggled to integrate the company after buying it three years ago.
Getty, meanwhile, has a ready monetization model through its existing licensing business. If it owned Flickr outright, it might be able to streamline the current licensing process, which requires Getty reps to contact individual Flickr account holders, obtain permission and vet the pictures.
After seeing its margins squeezed by Flickr-based sites like EveryStockPhoto, Getty Images decided to buy one, iStockPhoto. It then sold itself to San Francisco private equity firm Hellman Friedman for $2.4 billion in February. Executives promptly gushed about "the next phase of Getty Images' evolution.... in a very dynamic digital media environment." A Flickr purchase?
It's hard to image Hellman agreeing to pay the nearly $4 billion some speculate Flickr to now be worth. But there's a lot of room between that number and the $35 million Yahoo paid for Flickr in 2005. If the two sides could agree on a number, and if Hellman could somehow assemble the cash in this chaotic economic climate, a deal might just be possible.
UPDATE: A Getty staffer wrote in. The staffer hadn't heard anything about a merger and noted that money seems tight, with the Christmas and summer parties rumored to be cancelled or reduced in size. Further, no additional staff were hired for the Flickr partnership.