Shutterstock’s Lucrative AI Licensing Business: $104 Million Revenue in 2023
The stock media powerhouse Shutterstock has been furthering its foothold in the AI industry for a few years. In addition to developing native, generative AI applications, the company opened up a fresh avenue for growth: AI licensing, an innovative approach that involves licensing their extensive content library as training datasets for third-party AI models
And now we know how lucrative this new revenue stream has been in its short life, as they report AI licensing partnerships brought in over $100 million last year.
Shutterstock's Fruitful AI Licensing Business
Renowned for its tech-driven and innovative approach, Shutterstock was among the first, though not the sole, stock media agencies to harness its vast content library to power the training of AI models. Particularly generative AI, which has been the talk of the town in recent years and was even predicted to spell the end of the stock photo industry.
It looks like this strategic move is paying off big time—$104 million in revenue in 2023 alone.
CEO Paul J. Hennessy revealed more details of this new revenue stream, including this impressive number, in a recent interview with Bloomberg.
Earlier this week, Shutterstock inked a new AI licensing deal with Reka AI, a startup specializing in large language models. But it is just the tip of the iceberg.
In the past couple of years, the agency has closed training dataset agreements with companies the size of Meta, Amazon, and Apple. It also has an ongoing partnership with OpenAI, including a six-year licensing deal signed in 2023.
As for projections, they're aiming high: according to the CEO, they are projecting $138 million in Revenue for the AI licensing business unit in 2024, with expectations soaring to $250 million by 2027.
The Fundaments of AI Licensing
AI models, especially those powering chatbots, image generators, and other nifty tools, need a lot of data—millions upon millions of images. Initially, AI startups and labs resorted to datasets built with content scraped from the web. The first generative AI apps to hit the mass market, such as image generators Dall-E and Midjurney, were trained this way.
Soon enough, the creative and media licensing communities raised concerns regarding the legality of such training based on images used without permission from copyright holders and the ethics of using artists' work to train software that could virtually steal their livelihood without compensating them. Subsequently, legislative and regulatory entities worldwide focused on creating a new legal frame to contain this new technology, and AI companies went under the microscope.
As they now operate under scrutiny for copyright infringement and other moral standards, AI developers are more keen to invest in legally obtained, high-quality images to train their models safely.
With its 771 million images, 54 million videos, 4 million audio tracks, and even 1 million 3D figures, Shutterstock is a goldmine for AI training—all the more when they're constantly expanding that depository through acquisitions and distribution partnerships.
For example, CEO Paul Hennessy mentioned that the video-focused library from Pond5, which Shutterstock acquired some years ago and operates as a stand-alone, proved quite relevant for AI training.
It's worth noting that Shutterstock has a Contributor Fund in place that pays its contributors royalties for their work in training datasets.
As mentioned, Shutterstock isn't the only stock media agency offering AI licensing. One of its strongest competitors, Adobe, is doing the same, using its library to power its native generative AI product, Adobe Firefly. Getty Images, another natural competitor to Shutterstock with its microstock brand iStock, is also using its assets to train proprietary AI tools and licensing them out to third-party developers.
AI Licensing May be One of The Ways of the Future
In a nutshell, Shutterstock's pivot to AI licensing is a testament to the company's adaptability and foresight.
While traditional revenue streams from stock photo licensing seem far from disappearing –as somber predictors claimed– they might be slowing down, and this new frontier promises bountiful returns.
AI licensing is a fruitful discovery for Shutterstock and the stock media industry as a whole.
We couldn't be more excited to watch this new business opportunity blossom and see what changes it brings to our dynamic industry.
