Artemis Images Case Study Report

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Business Model and Financials:

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I believe Artemis Images business model was complex but realistic. Their advantage lies in not obtaining ownership of the images but rather simply sublicensing the rights of image distribution and sale. This, as described in the case study, is a niche business model since Artemis Images’ clients wouldn’t burden by the large amount of money they had to pay if they were asked a company to digitize the photo archives they have. With their revenue sharing model, Artemis Images would be able to reach out to more customers in which would enlarge their customer segments. For Artemis Images, they also delivery services for their clients. Their customer segments are wide and cover both individual customers and other business corporations. Unfortunately, but not surprisingly, with this thorough written business model, they weren’t able to attract VC investments. One of the factors that contributed to this would be having a too broad and general business model. As I mentioned earlier, they are trying to target both individual customers and business clients at the same time. Instead, they should be focusing on a particular customer segment and grasp the important characteristic of that market segment. It is important to have a deeper understanding of the market segment in order to differentiate one segment from another. Comparing to the two major competitors—Getty Images and Corbis, they have great advantage in their archive sizes and number of images digitized. Getty Images and Corbis mainly focused on “owning content and the scanning on demand”. They are successful in this area because they already developed large client bases and pursued ownership of archives to secure their customer bases. Artemis Images projected revenue per digitized image is much less than that of Getty Images and Corbis. Having less cumulative number of digitized images, Artemis Images is hard to compete financially with Getty Images and Corbis. Artemis Images listed their consumer photos price to be $19.99 per image, which is way below the average estimated price, $150. Comparing to its competitors, Artemis Images was charging lower price and having lower sales volume, which resulted in lower profitability.

Besides incapability to compete with potential competitors, Artemis Images had critical problems in their financial projections. First of all, Artemis Images lack in different kinds of revenue streams and sales volume forecast. In exhibit 2, they listed their sales of volume of images is mainly based on the number of images sold which is estimate to be 15,000 images per archive during the year of 2001, even though they claim they have four types of revenue stream. According to exhibit 6, Artemis images estimated the percentage of archive that must be sold for them to hit revenue target to be 0.30% for 2001 and 0.16% for 2002. These two estimates are much lower that of its competitors in 1999, which were 2.35% and 1.00%. Therefore, I suspect these two percentages were not a reasonable estimation. Artemis Images had flaws in the comparisons between its own competencies with the competitors’. The financial projection in general was not accurate. In the long term, Artemis Images would not be able to generate enough revenue to support its stock.

Reference:

Byers et al., (2015). Technology Ventures: From ideas to enterprise. New York, NY: McGraw-Hill Education.

Upadhyaya, V. (2014, November 30). The Hub for Startups. Guest Post – Team, the most important ingredient in a startup. Retrieved February 8, 2017, from http://thehubforstartups.com/2014/11/30/guest-post-team-the-most-important-ingredient-in-a-startup/#more-1894

Shapiro, D. (2011, April 28). GeekWire - Breaking News in Technology & Business. The only wrong answer is 50/50: Calculating the co-founder equity split - GeekWire. Retrieved February 6, 2017, from http://www.geekwire.com/2011/wrong-answer-5050-calculating-cofounder-equity-split/