Under the agreement, Demand Media will have access to Getty Images’ whole library of rights-managed images, video footage and audio clips. These will be used across Demand Media’s content properties like eHow, LiveStrong, and the Tyra Banks-branded TypeF.

This should help the company along in its quest to boost quality of content, as Getty is known for having high quality imagery itself. The video can’t hurt either.

The move follows a big overhaul of Demand Media’s eHow site – the company’s property that most often dominates Google search results, even post-Panda update.

“Like Getty Images, we strive to create and distribute high quality content to a broad audience,” says Steven Kydd, executive vice president of Demand Media Studios, the company’s content creation arm.

Also as part of the deal, Getty Images will become Demand Media’s exclusive distributor of stock video. Getty will license Demand Media videos for specific uses via GettyImages.com.

“Licensing our videos through Getty Images and including their award winning digital assets across our online properties was a natural fit for both of us,” said Kydd.

Demand Media has no shortage of video as it it. The company is the biggest supplier of videos to YouTube (which is often considered the second largest search engine).

“Demand Media’s video library provides our customers with access to stock video across hundreds of new topical categories,” said Craig Peters, senior vice president of business development at Getty Images. “Our partnership also allows for Getty Images to reach new customers by distributing our digital assets through Demand Media’s fast growing network of web properties.

Getty Images serves business customers in over 100 countries. Demand Media has expressed great interest in continued international expansion. In some ways, this should help with that.

The photos feature descriptions and are categorized allowing users to view, rate, share and link to images in the vast collection.  In addition to the Life photos, Getty plans on adding about 3,000 new images daily.

"Whatever you want to look at, whether it happened an hour ago, a century ago, or any time in between, you’ll be able to find it quickly, easily, and for free. Life.com’s mission is to allow you to explore your world through the world’s greatest images," said Andrew Blau, CEO of Life.com.

The site will feature photo galleries, news, celebrity, sports, travel and animals along with timely photos to be offered daily.  Users will be able to search photos by topic, time period, interest and by photographer. Framed prints will also be available for purchase.

"The Life.com tagline, ‘See your world,’ demonstrates the access consumers have to the photos that have shaped their lives. From photos of newsmakers and heroes who have made a profound impact on our lives, to classic Hollywood and celebrity images that have shaped our culture, this expansive photo collection gives the public seven million new ways to see their world," said Bill Shapiro, Life.com Editor.
 

The collection contains handpicked images with "an originality and authenticity rare in stock photos" in the site’s words. The images come in both rights-managed and royalty-free options.

"For the past few months, editors at Getty Images have been busy exploring the Flickrverse to find the right photos to be part of the collection – a task that is somewhat daunting when there are more than three billion images to choose from on Flickr," explains Flickr General Manager Kakul Srivastava on Yahoo’s Yodel Anecdotal Blog. "The goal was to choose photos that created a commercially viable collection, while preserving the inspirational and unexpected nature of the kinds of images that are so prevalent on Flickr."

There will be thousands of images added to the collection each month. The site is located at gettyimages.com/flickr.

The company says, "WebMediaBrands will continue to operate the BtoB online communities that were not sold to Getty Images. These communities are comprised of Internet.com for IT managers and Web developers; Mediabistro.com for media, publishing and communications professionals; and Graphics.com for design and creative professionals. These three communities have a combined 22 million unique visitors and 70 million page views."

Starting February 24, WebMediaBrands will be known byt he NASDAQ symbol WEBM. Both the name change and the sale of Jupiterimages have been approved by stockholders.

On a related note, Jupitermedia has also terminated its Credit Agreement with KeyBank National Association (KeyBank) and applied approximately $82 million of the proceeds from the Sale to repay all outstanding debt.

Revenues for the third quarter of 2008 were $31 million down from revenues of $34.8 million for the same period last year. The company says its loss per diluted share was $0.63 and included non-cash stock based compensation expense, legal fees related to the recent signed stock purchase agreement with Getty Images.

Jupitermedia is selling its online image business to Getty Images for $96 million in cash. The company expects to incur a non-cash loss of about $95 million when the sale is completed. Jupitermedia says they sale of Jupiterimages will allow it to re-focus the company on the B2B content business which is a move in the right direction.

Jupitermedia says the sale of its image business will allow it to focus on its online media business which includes internet.com, EarthWeb.com for IT and business professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative professionals.

"In a very difficult business environment we have some significant highlights. Revenues from our JupiterimagesUnlimited royalty-free subscription offering grew over 100% for the nine months ended September 30, 2008 compared to the same period in 2007.

We continue to experience significant growth from our Stockxpert.com microstock offering, both with single images and subscriptions," stated Jupitermedia’s Chairman and CEO Alan M. Meckler.

"Our Online Media division continues to be impacted by the economy, which has put pressure on our advertising and job board sales. We have, however, made progress in reducing operating expenses, specifically with our costs of sales and general and administrative expenses.

In addition, we have made additional investments in our Online Media business, with the launch of three new blogs focused on Mobile media and a new event, UGCX, which is focused on user generated content and social networks."
 

Jupitermedia’s board of directors has approved the transaction and has recommended that its stockholders approve the deal as well. The deal has to receive regulatory approvals and customary closing conditions.

Alan Meckler, Jupitermedia’s Chairman, Chief Executive Officer and a significant stockholder, and certain other stockholders, collectively own 35.9 percent of the company’s outstanding stock, already have the votes lined up to agree to the deal.

With the sale of its image business Jupitermedia will now focus on its online media business, which consists of five networks: internet.com, EarthWeb.com for IT and business professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative professionals.

Jupitermedia will retain ownership of its Peoria, Illinois building and property and lease the facility to Getty Images. Jupitermedia expects to incur a non-cash loss of about $95 million when the deal is completed.

"We believe that this transaction will be beneficial to Jupitermedia and its stockholders, both in the near term and the long run, as it will allow Jupitermedia to pay off all of its bank debt. Upon closing of the transaction, we will continue focus on the further development and growth of our Online Media division," stated Alan Meckler.

 Jonathan Klein, co-founder and CEO of Getty Images stated, "Jupiterimages has built a foundation that Getty Images will build upon to the benefit of customers worldwide". Klein added, "Getty Images has always been dedicated to making strategic investments that will provide long-term value to our customers".

A previous deal to sell Jupitermedia to Getty Images fell apart in February 2007. That deal according to press reports was for around $450 million, with a potential buyback of non-image assets such as internet.com for $100 million.

Everyone who’s spent any amount of time on Flickr knows that the community’s users create some top-notch photographs.  It seems Getty – and presumably some of Getty’s clients – noticed this, too, and so the company intends to build a collection of images that will be available for licensing.

 Jonathan Klein

Dan Richman reports, "Flickr users . . . will be paid in the same manner as professionals if their images are used commercially.  Getty customers usually pay between $29 and $200,000 for an image, depending on how freely they may use it.  Photographers receive 30 percent to 40 percent of the licensing fee if the customer’s rights to use the image are limited in scope or time, or 20 percent if the image may be used with fewer restrictions."

This deal won’t be big enough to have a real effect on bottom lines at either Getty or Yahoo.  Getty wants to collect thousands of images, though, so the average Flickr user has a reasonable chance of getting noticed.

A tip: according to Richman, Jonathan Klein, Getty’s co-founder and CEO, "said Getty’s customers will likely prefer scenic or creative images, not those of news events."
 

Getty is trying to charge a premium over its current value, according to Michael J. de la Merced and Andrew Ross Sorkin.  That’s not an uncommon practice, and the company’s inability to pull it off may just speak to the condition of the U.S. economy.

Some onlookers are interpreting this as a bad sign for Getty in particular, though, and feel that it signals the success of newer, smaller, and cheaper competitors.  Getty deals in stock photos and videos, and there are a lot of other businesses that can now provide them.

On the sort of bright side, the price of Getty’s stock on Friday afternoon gave it a market cap of about $1.6 billion.  The stock has since taken a small hit, making the company’s market cap closer to $1.5 billion, and any standing offers will seem more generous as a result.

Getty hasn’t promised to sell itself, however, so like Yahoo, the company may try to find some partners or just stand by itself for a while yet.

Control is not really possible when there are so many ways to pirate or undercut sales. The newspaper, music, movie, and now images market are changing drastically (and I love to read Seth Godin’s take on the changes).

Now, Getty Images, which is the world’s largest supplier of pictures, is for sale. Goldman Sachs is handling the deal which the New York Times says could get $1.5 billion. In November, Getty reported a third-quarter profit of $25.7 million, down 31 percent a year ago.

Getty was the first to license images online and now it’s fallen victim to it. Sites like Flickr, iStockphoto (which they bought for $50 million in 1996), and others charge much less – sometimes free or a dollar an image. That forced Getty to lower their prices. Then came cell phone cameras, that have further eroded their profit (which is interesting because though they are low quality they are quick to get, free, and people like how real they are). Their shares dropped more than 47 percent this past year.

I noticed that Getty also sells music (another industry that has been killed, or should I say transformed, by the Internet).

Getty was founded by Jonathan Klein and Mark Getty (see picture, right) in Seattle in 1995. The Getty family, who made their money in oil, owns about 20 percent of the company. They grew by taking traditional image stock archives and putting them online. They also sell high end photography from professional photographers and distribute images from National Geographic and others. They claim an average of 3.2 billion images and 4 million monthly unique visitors to its web site.

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The company has hired Goldman Sachs to consult on any potential sale and The New York Times is reporting that Getty Images could sell for $1.5 billion. A number of equity firms have interest in Getty, including Kohlberg Kravis Roberts and Bain Capital.

When asked about a potential sale, a Getty spokesman in London told Agence France-Presse," We do not comment on rumors."

Getty was founded in 1995 by Mark Getty and Jonathan Klein and has grown through a series of acquisitions, including its purchase of its biggest competitor, MediaVast, for $202 million. The company was also in negotiations with Jupitermedia but the talks ended without a deal.

Getty’s main selling point is the licensing of high quality images from professional photographers around the world. It also offers video for use in movies, television and online.

"Getty Images continues to be a company in transition, adjusting from being the leading player in an oligopolistic market to being one of many players in a highly competitive market," Barbara Coffey, a research analyst with Kaufman Brothers, wrote in a research note earlier this month.