What Does The Duchess of Cambridge Know About The DAM Software Market That We All Don’t?
Back in 2016, I wrote an opinion piece investigating the Digital Asset Management research report marketplace, drawing a parallel between businesses selling DAM market research publications and the war for supremacy amongst North London’s kebab shops.
I noted the disparities between the figures presented by the (then) current reports and the questionable nature of some of the estimates:
“Last year, one research firm based in Pune, India declared that the DAM market would be worth $4.12bn by 2019. A year later, their 28.67% CAGR (Compound Annual Growth Rate) prediction had been raised to 30.6% for 2020 with a valuation $5.36bn. A week ago, another research firm, who (in a similar vein to the aforementioned kebab vendors) also happen to operate across town in Pune as well are predicting it will be $7.48bn by 2024. According to their numbers, by 2024 the DAM industry will be worth more than the entire $6bn GDP of Monaco, despite the presence of the Monte Carlo resort (including its casino) and some of the most expensive property in the world.” [Read More]
Rolling forward three years, the situation appears to have changed very little, with a similar selection of proprietors all peddling the same type of fare. If you trace the numerous tributaries of cloned sites, spun reports and fake offices to their source, you invariably find that everything still flows back to Pune, India.
From what can be gleaned by digging into whois records and legal pages, there are a number of operators who are closely associated with one another, some of whom may be based under the same roof (I suspect a few share the same piece of office carpet too). The list includes:
- HTF Market Intelligence Consulting Private Limited
- HTF Market Report
- Markets and Markets Research Private Ltd
- Transparency Market Research
- Zion Market Research
The DAM research report trade appears to be one sector where free market economics isn’t delivering any form of appreciable price competition which might benefit prospective buyers. The average is around $5k for a single user report to well over $10k for corporate licences. Is there any evidence to suggest that the quality of these reports has improved since 2016? Let’s dissect the numbers behind the headlines and find out where we are three years down the track.
A recent press release by ResearchAndMarkets states that:
“The digital asset management market was valued at USD 1,240.7 million in 2018, and it is expected to reach a value of USD 6,901.6 million by 2024” [Read More]
In 2015, however, MarketsandMarkets said:
“[The] Digital Asset Management (DAM) Market to grow from $1.16 Billion in 2014 to $4.12 Billion in 2019.” [Read More]
So if the DAM market was at $1.24bn last year, it will needed to have grown 332% in the last year alone to reach their 2015 prediction of $4.12bn in 2019. Setting aside the questionable growth numbers the valuation of the DAM market was $1.16bn in 2015. In 2018, according to the numbers above, it has increased over a three year period by just $80m to $1.24bn. So we’ve seen growth of about $20m per year in the DAM market since 2015, until 2018 when suddenly it increased $2.88bn in a single year. Do those figures sound plausible to you?
A separate article from ‘Markets and Markets’ introduces another contradiction:
“The Digital Asset Management (DAM) market is projected to grow from USD 2.44 billion in 2017 to USD 5.66 billion by 2022 ” [Read More]
If we’re to believe this, the DAM sector’s worth dropped from $2.44bn in 2017 to $1.24bn in 2018, bucking the apparent upward trend. Either the DAM market is massively volatile, or these numbers are simply made up.
The same report also includes the following statement:
“The major solution and service providers in the DAM market include ADAM Software NV (Belgium), Adobe Systems Incorporated (U.S.), OpenText Corporation (Canada)…” [Read More]
As many of our readers will be aware, ADAM were acquired by Aprimo in March 2017. The absence of any basic fact-checking should raise a serious red-flag to those considering spending their organisation’s hard earned cash on one of these reports. One or two of the others also mention Widen’s Smart Image, which was also shuttered back in 2018.
Yet another report, this time from ‘Zion Market Research’, confidently informs us that the DAM market will grow from $2.5bn in 2017 to $8.1bn by 2024:
“According to the report, the global digital asset management market was valued at around USD 2.5 billion in 2017 and is expected to reach approximately USD 8.1 billion by 2024, at a CAGR of slightly above 18.4% between 2018 and 2024.” [Read More]
The comedy prize for the most entertaining piece of PR, however, has to be awarded to the ‘Pioneer Reporter’ website, who offer a collection of stats and graphs with placeholder ‘XX’ figures in a pointless and painfully tautological teaser article for HTF Market Intelligence’s ‘Global Digital Asset Management (DAM) Software Market Size, Status and Forecast 2019-2025’ report, (yours for a mere $3,900).
At this juncture, a few readers might be wondering what the connection is between the DAM industry report market and HRH The Duchess of Cambridge (aka Kate Middleton) referred to in the title of this article. The following couple of links should explain all:
‘Rachel Osward’ (author of the report)
HRH The Duchess Of Cambridge:
Credit is due to my co-contributor (and author of our weekly DAM News Round-Up), Charles Russell for discovering this revelation.
Evidently, the princessing game isn’t the good number that that it’s usually cracked up to be. It seems our Kate has been forced to make ends meet by going incognito under the ‘nom de plume’ of ‘Rachel Osward‘. Despite her best efforts at subterfuge, however, we have uncovered the shocking truth about The Duchess’ double life.
According to her bio, Kate/Rachel knows a thing or two about quite a diverse range of other subjects, including: Organic Oilseeds, Automotive Adjustable Steering Systems and Microwave Magnetrons (to name just a few). In total, she has published over 8,000 articles in a single month about all manner of topics.
According to her profile: “In Free Time she is mostly found in Gym”. We wondered how The Duchess manages to find any free time at all, given she has to juggle royal engagements, complete such a gruelling writing schedule and look after the three kids as well?
These reports are completely unreliable as sources, not to mention being radically over-priced for the thin amount of value they offer. I have no idea about the business model for the publishers, but I would imagine the income is primarily from subscribers who pay a flat fee for access to all of their reports, plus a smattering of ad-hoc sales from the unwary or desperate – like DAM vendors trying to build a case to secure equity finance.
In view of the insecurity surrounding pricing among many vendors, a subject we have recently covered in some detail, an onlooker with little at stake might forgive these as merely opportunistic methods to exploit the ambiguity and ignorance surrounding a sector that has a reputation for being opaque and far less lucrative than it expected to be. After all, what’s wrong with servicing those attempting to peer through the frosted glass façade of the DAM marketplace by giving them something appealing to look at?
The issue isn’t that these reports exist, it’s that there are no superior alternatives to them. Far too many people from trade journalists through to DAM vendors and private equity or venture capital investors often appear to uncritically take these sources at face value. It took myself and my-contributor less than an hour’s worth of of research to find facts which prove that the information they present cannot be relied upon.
Setting aside the industry analysts who review individual DAMs and vendors, to the best of my knowledge, the closest there has been to a (slightly) more credible report about the size of the DAM market was a Frost & Sullivan study in 2010. Around the time that came out, the market was assessed at being worth approximately a billion dollars (a stat which got quoted all over the place at the time, as I recall). The current estimates used by some of the more dubious studies discussed earlier is around $1bn also – the highest being $1.24bn. I have no evidence to support my assertion, but I estimate the 2010 DAM market was worth approximately $0.6bn and has taken nine years to double in size. That suggests a CAGR (Compound Annual Growth Rate) of about 11-12%. This is not bad, but not the ‘hockey stick’ growth trajectory claimed in these reports.
One of the unspoken facts about the DAM software market is that it has been a replacement-oriented business for far longer than many people on the sell-side want to admit (although we’ve been saying it on DAM News for years). To put it simply, most large companies already have DAM systems now and have done for a period that averages something like 10-12 years. It didn’t take long for enterprises to catch on that digital media libraries might be almost as useful for them as they are for media-oriented business too.
As most people who I talk to in DAM circles generally agree, the 2018 Bynder acquisition of WebDAM was essentially an exercise in competition removal and getting rapid access to someone else’s customers because Bynder couldn’t grow fast enough via organic means. In the last year, I have been asked by a few vendors if I am aware of any legacy DAM software providers who have ceased active development of their platforms and now might be willing to sell off their client as an exit strategy for their shareholders. These are all signs of an industry entering a mature phase, not one of sustained growth.
As I write, there is little evidence to suggest that the European, North American and Australasian DAM markets have the capacity to grow a great deal larger than they are now. During the next ten years, the 11% figure mentioned previously might seem like a golden era where you could start up a DAM software vendor and realistically bring in about 40-50 or so clients and service them at a respectable (but unremarkable) profit. I believe there is strong competition that will soon start emerging from Chinese, South American and Indian vendors. While they will expand the total size of the DAM software market, it probably won’t be to $8bn+ and they won’t be willing to share any local clientele with the incumbent western vendors (who probably won’t be able to compete with them anyway). The net result might be that the DAM market could become even more fragmented and diffuse than it is now.
The only real approach to scaling up DAM businesses that has been tried with anything approaching success (in a very loose sense of the word) is to effectively give up, cease being independent and instead merge with some other larger player who operates in wider markets (so DAM vendors being acquired by larger players who are active in MRM or WCM etc). This is a massively fraught area, however and one of the other factors I can recall about the earlier period of the DAM market was that it was possible to acquire lots of business from ECM vendors who failed to adequately service DAM users properly. Other than the fact they know about the risk of that happening now, there is little evidence to suggest that history might not repeat itself (as it does so often in DAM). There seems to be a dichotomy between the perception that the DAM market is growing while at the same time it is also consolidating. You can’t generally have both scenarios simultaneously, if it is consolidating then this is usually because growth has stalled and market participants see mergers as the only way to squeeze out any more value for shareholders.
In an ideal world, someone would do a proper study of the DAM market which includes a realistic valuation of its actual net worth. I suspect that won’t happen, however, because the demand for that kind of research it is not that great and the immense effort involved (given the huge number of vendors) makes it a thankless task that no one wants to pay for.
To wrap this up, if you’re looking for a quick summary of this piece, it is as follows:
- Don’t believe the hype.
- Don’t bother buying one of the aforementioned DAM industry reports (sorry, Kate).
- Don’t go into the Digital Asset Management software business if you want to get stinking rich.