What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-11 compared with 2020-02-13 · 118 added, 93 removed, 181 unchanged (54% of the section changed)

Shutterstock is a global technology company offering a creative platform, which provides high-quality content, tools and services to creative professionals.

Shutterstock, Inc.

is a leading global creative platform offering full-service solutions, high-quality content, and tools for brands, businesses and media companies.

Our platform brings together users and contributors of content by providing readily-searchable content that our customers pay to license and by compensating contributors as their content is licensed.

The content licensed by our customers include:

The content licensed by our customers includes:

• Images - consisting of photographs, vectors and illustrations.

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• Music - consisting of high-quality music tracks and sound effects, which are often used to complement images and footage.

• 3D Models - following our acquisition of TurboSquid, Inc.

on February 1, 2021, we now offer 3D models, used in industries such as advertising, media & video production, gaming, retail, education, design and architecture.

For customers seeking specialized solutions, we also create custom, on-brand content by matching our global contributor network to the unique needs of our customers.

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We typically offer a royalty-free non-exclusive license and the processes we maintain to properly license content and the indemnification protections we provide, allow individuals and businesses of all sizes, including media agencies, publishers, production companies and creative service providers, to confidently utilize such content for their unique commercial or editorial needs.

We believe that we benefit from a network effect between customers and contributors:

as we have grown, our broadening audience of paying users has attracted more content from contributors, and the increasing selection of high-quality content has in turn helped to attract more customers to our sites.

The success of this network effect is facilitated by the trust that users place in Shutterstock to maintain the quality and integrity of our branded marketplace, and our commitment to seamless integration into users’ creative workflows.

We believe that we benefit from scale and network effects between customers and contributors.

We have managed to build a world class library of images, footage clips and music, sourced from our vast network of contributors.

Our extensive content library and contributor network enables us to attract a global and diverse customer base representing businesses of all sizes and from all major industries.

Our robust content and rich database continue to attract more customers and draw more contributors, which enhances our network effects and global reach.

We believe the success of this network effect is facilitated by the trust that users place in Shutterstock to maintain the quality and integrity of our branded marketplace, and our commitment to seamless integration into users’ creative workflows.

We believe that our licensing model and creative platform drive a high volume of download activity that in turn provides a high volume of search, download and other customer behavioral data that enables us to continuously improve the quality and accuracy of our proprietary search algorithms, including keyword, search localization and similar image identification, and encourages the creation and contribution of new content to meet our customers’ needs.

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We also leverage, to the greatest extent possible, the global nature of our user interfaces and marketing efforts, including local languages, currencies and payment methods, and our effective use of current and emerging technology and marketing channels to attract and retain customers and contributors.

Our high-quality products and services and the experience we provide to our customers, combined with our focus on continuous innovation, have allowed us to establish premium brands, including:

Shutterstock - Shutterstock is our flagship brand and the majority of our revenue is generated through shutterstock.com.

We continuously work to expand the collection of photographs, vectors, illustrations and footage available on shutterstock.com to further establish Shutterstock as a top source of high-quality content for multimedia producers world-wide.

Bigstock - Bigstock maintains a separate, extensive library of images, vectors, illustrations and footage that is specifically curated to meet the needs of independent creators and others seeking to incorporate cost-effective imagery into their projects.

Offset - For high-impact use cases that require extraordinary images, our Offset brand provides authentic and exceptional content, featuring work from top assignment photographers and illustrators from around the world, in addition to work from established and respected collections such as National Geographic®.

Every image in the collection is hand-selected, chosen for its artistic distinction and narrative quality, and is curated into specific categories such as lifestyle, food, travel and fashion.

Shutterstock Select - In November 2018, we launched Shutterstock Select, a premium collection of royalty-free footage available on shutterstock.com .

This diverse collection of footage includes exclusive content widely ranging from everyday moments to blockbuster action scenes, all captured by industry professionals using cinema-grade cameras and selected by our expert curators.

Shutterstock Custom - Shutterstock Custom complements Shutterstock’s creative platform by fulfilling marketers’ need to scale unique branded content including images, footage, GIFs, cinemagraphs and 360° footage content.

Shutterstock Custom utilizes proprietary technology that we gained through our acquisition of Flashstock Technology, Inc.

(“Flashstock”) in 2017, and which we expect to grow in the future as we continue to seek expansion in the market for custom content creation.

Shutterstock Editorial - Shutterstock Editorial provides editorial imagery, such as entertainment, sports and news images, to a broad range of customers from independent bloggers to traditional media outlets by providing a real-time feed of editorial content and an extensive archive of editorial images.

We entered the editorial market with our acquisition of Rex Features (“Rex”) in 2015.

We also maintain distribution agreements with a number of leading editorial image agencies and industry partners including exclusive distribution agreements with several third-party organizations.

Shutterstock Music and PremiumBeat - Shutterstock Music and PremiumBeat comprise our curated royalty-free music offerings.

Shutterstock Music provides thousands of handpicked music tracks and sound effects at affordable prices, giving businesses, marketers and social media managers access to the audio content they need to bring their ideas to life.

PremiumBeat provides producers, filmmakers and marketers access to a vast collection of exclusive, high-quality tracks and enables users to search handpicked production music from the world’s leading composers.

We also provide the following tools to enhance our customers’ workflow and project management needs as well as to enable efficient search capabilities:

Superior search - We obtain a high volume of data generated from user searches and content downloads, which enables us to continuously improve our search algorithms.

Our behavioral and keyword data, along with our investments in technology and our experience in developing search algorithms, enhance our users’ search experience by increasing the chances that our users find the content they require in a timely and efficient manner.

For example, Shutterstock Showcase ( www.shutterstock.com/showcase ) features deep learning-powered search tools based on innovative artificial intelligence technology and can help customers refine searches using images, identify specific object layouts within an image, or identify images with blank space for text.

Application programming interface (API) - We maintain an API driven infrastructure, enabling integration of our content platform with various other software tools and services, such as Facebook Ads, IBM Watson® Content Hub, Google Ads and Wix, which allow businesses to gain access to our content without leaving their platform.

In addition, we have developed plug-ins that our customers can use to seamlessly access our content directly from Adobe Creative Cloud® desktop applications, Google Slides TM , Apple’s Final Cut Pro® X video editing application and several Microsoft applications.

Editor and Editor Pro - Shutterstock Editor and Editor Pro are feature-filled cloud-based workflow tools that provide a robust solution for creative professionals to quickly size, edit and enhance images for immediate use in presentations, social media posts or advertisements.

Our high-quality content is distributed to customers under the following brands:

Shutterstock, our flagship brand, Bigstock, Offset and PremiumBeat.

Our Shutterstock brand includes various content types and offerings such as image, footage, editorial, music and studios.

Bigstock maintains a separate content library tailored for creators seeking to incorporate cost-effective imagery into their projects.

Our Offset brand provides authentic and exceptional content for high-impact use cases that require extraordinary images, featuring work from top assignment photographers and illustrators from around the world.

PremiumBeat’s library of exclusive high-quality music tracks provides producers, filmmakers and marketers the ability to search handpicked production music from the world’s leading composers.

Our tools are provided to enhance our customers’ project management needs and to enable efficient search capabilities.

These include:

• Our robust search engine , with highly sophisticated search capabilities, leverages our artificial intelligence (“AI”) based search algorithms to enhance the speed and curation of images, footage and audio files.

We obtain a high volume of data generated from these user searches and content downloads, which enables us to continuously improve our search algorithms.

Our behavioral and keyword data, along with our investments in technology and our experience in developing AI-based search algorithms, enable us to deliver a rich user experience by increasing the chances that our users can efficiently find the content they require.

• Shutterstock Editor and Editor Pro are feature-filled cloud-based workflow tools that provide a robust solution for creators to quickly size, edit and enhance images for immediate use in presentations, social media posts or advertisements.

These tools are designed to simplify the process of editing Shutterstock’s millions of photos and illustrations into compelling presentations.

Also, our Application Programming Interface (API) driven infrastructure further enhances and streamlines our customers’ workflow and project management needs by allowing businesses to gain access to our content without leaving their platform.

Through our API, content can be integrated into the platforms of our Enterprise sales channel customers and can also be distributed to end users through our partnerships with several social media, software and marketing technology platforms including Microsoft Audience Network, Facebook Ads, Hubspot, Google Ads and Wix.

In addition, we have developed plug-ins that our customers can use to seamlessly access our content directly from Apple’s Final Cut Pro® X video editing application, several Microsoft applications, Adobe Creative Cloud® desktop applications and Google SlidesTM.

Sales and Distribution Channels

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Certain third-party resellers and affiliates sell our products directly to end-users and remit amounts to us based on the type of product sold.

Customer sales are made through the following channels:

The majority of our customers license content directly through our self-service web properties.

E-commerce customers have the flexibility to purchase a subscription-based plan that is paid on a monthly or annual basis or to license content on a transactional basis.

These customers generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs.

E-commerce customers typically pay the full amount of the purchase price in advance or at the time of license, generally with a credit card, which has historically resulted in favorable timing of cash flows relative to the time that revenue is recognized and contributor royalties are earned and paid.

We also have a base of customers with unique content, licensing and workflow needs.

These customers benefit from communication with our dedicated sales, service and research teams which provide a number of tailored enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on our e-commerce platform.

As this customer base has grown, the number of our unique offerings has also grown, to address individual business needs.

We continue to focus on our enterprise expansion strategy and are investing resources in cultivating key international markets which we believe have significant growth potential and strategic importance.

Customer sales are diversified across the following channels:

• E-commerce:

The majority of our customers license content directly through our self-service web properties, including our Shutterstock.com, bigstock.com and premiumbeat.com websites.

We offer a variety of subscription plans across images, footage and music content.

Customers in our e-commerce sales channel have the ability to purchase plans that are paid on either a monthly or annual basis or to license content on a transactional basis.

Customers in our e-commerce sales channel generally license content under our standard or enhanced licenses, with additional licensing options available to meet customers’ individual needs.

• Enterprise:

We offer tailored and turnkey solutions to customers with unique content, licensing and workflow needs.

These customers benefit from communication with our dedicated sales, service and research teams which provide a number of personalized enhancements to their creative workflows including non-standard licensing rights, multi-seat access, ability to pay on credit terms, multi-brand licensing packages, increased indemnification protection and content licensed for use-cases outside of those available on our e-commerce platform.

Customers in our enterprise sales channel may also benefit from our API platform as well as access to Shutterstock Editorial, which includes our library of editorial images and videos and Shutterstock Studios, our offering which provides custom, high-quality content matched with production tools and services.

Our range of solutions, including the depth of our API integration, appeals to a broad and diverse customer base and enables us to adapt and evolve with the needs of our more high touch clients to deliver capabilities that embed deep within their workflows.

Our Other sales channel historically included revenue from Webdam’s digital asset management offerings which were made available through annual software-as-a-service subscription plans.

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Year Ended December 31,

2020 2019 2018 2017 2016

E-commerce $ 412,521 $ 392,241 $ 365,730 $ 332,376 $ 318,916

Enterprise 254,165 258,282 254,809 208,713 164,384

Other — — 2,711 16,022 11,017

Total Revenue (1)

$ 666,686 $ 650,523 $ 623,250 $ 557,111 $ 494,317

(1) Effective January 1, 2018 we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) using the modified retrospective approach.

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Our customers are typically classified among three categories, as follows:

Marketing Professionals and Organizations.

Marketing professionals and organizations incorporate licensed content in the work they produce for their organizational or clients’ business communications.

Whether providing graphic design, web design, interactive design, advertising, public relations, communications or marketing services, our marketing professional users range from independent freelancers and internal corporate marketing professionals to the largest global agencies and Fortune 500 companies.

• Corporate Professionals and Organizations.

Marketing and communications professionals incorporate licensed content in the work they produce for their organizational or clients’ business communications.

Whether providing graphic design, web design, interactive design, advertising, public relations, communications or marketing materials, these professional users and teams support organizations of various sizes including the largest global agencies, large not-for-profit organizations and Fortune 500 companies.

• Media and Broadcast Companies.

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Our media and broadcast users range from independent bloggers to multi-national publishing, broadcast and production organizations.

Small and Medium-Sized Businesses.

Organizations of all sizes utilize creative content for a wide range of internal- and external-use communications such as websites, print and digital advertisements, merchandise, annual reports, brochures, employee communications, newsletters, social media, email marketing campaigns and other presentations.

These organizations range in size and type of organization, from sole proprietors to large not-for-profit organizations.

• Small and Medium-Sized Businesses and Individual Creators.

Organizations of all sizes utilize creative content for a wide range of internal- and external-use communications such as websites, print and digital advertisements, merchandise, brochures, employee communications, newsletters, social media, email marketing campaigns and other presentations.

These organizations and users vary in size and type of organization and include prosumers ranging from sole proprietors to social media influencers.

As the use cases for our creative solutions expand, we believe our customers are seeking alternative means to consume our offerings.

As a result, we have seen strong growth in customers purchasing monthly subscription products.

Our subscriptions provide for a fixed number of content licenses that may be downloaded during the month.

Our subscription-based pricing model makes the creative process easier because customers can download content in our collection for use in their creative process without incremental costs, which provides greater creative freedom and helps improve work product.

Customers may also purchase licenses through other contractual plans where the customer commits to buy a predetermined quantity of content licenses that may be downloaded over a period of time, generally between one month to one year.

For users who need less content, individual content licenses may also be purchased on a transactional basis, paid for at the time of download.

Customers that purchase one of our monthly recurring products for a continuous period of at least three months are considered subscribers.

Our number of subscribers and our subscriber revenue have grown by 45% and 12%, respectively, as of December 31, 2020 compared to December 31, 2019.

Subscriber growth has outpaced subscriber revenue growth due to the popularity and expansion of our smaller subscription plans.

Our quarterly number of subscribers and subscriber revenue are as follows:

Content Contributors and Content Review Process

Our collection of content is provided by a community of contributors from around the world and is vetted through our proprietary technology and by a specialized team of reviewers to ensure that it meets our standards of quality and licensability.

Whether photographers, videographers, illustrators, designers or musicians, our community of more than 1.1 million approved contributors as of December 31, 2019 ranges from part-time enthusiasts to full-time professionals, and all content from our contributors must meet our quality standards.

Supplementing the content in our collection, Shutterstock Custom connects business customers with a vast network of contributors from whom to license custom branded content to meet their most specific content needs.

Whether photographers, videographers, illustrators, designers or musicians, our community of more than 1.6 million approved contributors as of December 31, 2020 ranges from part-time enthusiasts to full-time professionals, and all content from our contributors is reviewed to ensure it meets our quality standards.

The content contributed by our five highest-earning contributors was together responsible for less than 5% of downloads in 2020, demonstrating the breadth and depth of our contributor population.

The breadth and quality of our content offerings are critical to our success, and we have created an easy-to-use online and mobile account creation process, which we are continually improving, through which we enable contributors to create an account, become verified, submit content, and once approved for submission, upload content onto our platform for licensing.

During 2019, our contributor website and mobile application have been updated to operate in 21 languages and contributors can now register and upload content directly within the mobile application.

We evaluate submissions based on certain technical and legal criteria to ensure we maintain the quality and integrity of our content library, including whether applicable releases have been obtained, whether third-party intellectual property is excluded and seeking to minimize other technical concerns such as excess noise or focus issues.

As of December 31, 2019 , over 450 million images and footage clips have been submitted from verified contributor accounts.

For each content submission that is not approved during the review process, we notify the contributor by email with an explanation why the image was not published, including guidance on our standards and insight into customers’ expectations.

We believe that this feedback is valuable to contributors and enhances the quality of future content submissions as well as our customers’ experience.

The breadth and quality of our content offerings are critical to our success, and we have created an easy-to-use online and mobile account creation process, where we enable contributors to create an account, become verified, submit content, and once approved for submission, upload content onto our platform for licensing.

Our contributor website and mobile application operate in 21 languages and contributors can register and upload content directly within the mobile application.

We use proprietary computer vision technology along with a trained team of reviewers to complete a comprehensive evaluation of all content submissions.

Our content review process is highly efficient, and our content review team strives to evaluate and process images and footage within 24 hours of submission to make them available for license on our sites, while working to continually improve our process to reduce review time.

Our content review process is highly efficient, and our content review team generally evaluates and processes images and footage within 24 hours of submission to make them available for license on our sites, while working to continually improve our process to reduce review time.

Contributors are required to add a descriptive title and up to 50 keywords to each image and footage submission.

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We have compiled a vast amount of data relating to the content in our collection, including keywords and aggregated customer behavioral data, which combined with our proprietary computer vision and artificial intelligence technology, drives discovery of content through our search algorithms and search engine optimization (SEO), therefore empowering customers to discover the content best suited for their needs.

As of December 31, 2020, over 575 million images and footage clips have been submitted from verified contributor accounts.

We believe that this feedback is valuable to contributors and enhances the quality of future content submissions as well as our customers’ experience.

Content accepted into our collection is added to our web properties where it is available for search, selection, license and download.

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Contributors may choose to remove their content from our collection, subject to the terms of service that govern our contributor relationships.

We provide different earnings structures to contributors based on content type and customers’ licensing needs:

Contributors of photographs, vectors and illustrations to our e-commerce platform typically earn a royalty each time their images are licensed.

The exact amount earned is determined by the type of license obtained and our published earnings schedule that is based on (i) the contributor’s total historical earnings paid by us, which determines the contributor’s earnings tier;

and (ii) the purchase option under which the content was licensed.

Contributors may earn more per download when images are licensed under our personalized licensing options or are licensed for editorial use only and, in these instances, can earn up to 50% of the sales price for a licensed image.

Footage and Music.

Contributors of footage and music tracks also typically earn a royalty each time their content is licensed.

When a contributed footage clip or music track is licensed, the contributor is typically paid between 30% and 50% of the sales price per download.

We provide valuable tools and insights to our contributors.

Our contributors can monitor download activity by content type and geography, as well as by self-defined imagery themes.

We also provide data on search trends, allowing content creators to see which images and subjects are popular on our site, and to plan new content themes accordingly.

We operate a forum for the photographers, videographers, illustrators and composers that make up our contributor community, allowing them to share tips with one another and to showcase their work.

Our rigorous acceptance standards for new submissions provide contributors with a sense of challenge, accomplishment and exclusivity that makes our forums more useful and valuable.

Contributors of content typically earn a royalty each time their work is licensed.

Contributors earn royalties based on our published earnings schedule that is based on annual licensing volume, which determines the contributor’s earnings tier and the purchase option under which the content was licensed.

In addition to content sourced through direct submission to our e-commerce platform, we also obtain all types of content through exclusive distribution agreements with strategic partners or through the direct acquisition of content, content libraries or archives.

In certain cases, we enter into arrangements with contributors or strategic partners whereby we guarantee a minimum royalty, usually paid up-front, in exchange for exclusive rights to distribute content when we believe such exclusivity provides us with a distinct competitive advantage.

In certain cases, we enter into arrangements with contributors or strategic partners whereby we guarantee a minimum royalty, in exchange for exclusive rights to distribute content when we believe such exclusivity provides us with a distinct competitive advantage.

When we license content that has been obtained through direct acquisition, we pay no royalties.

In recent years, we have enhanced our collection through the direct acquisition of content and by entering

into other strategic agreements and partnerships.

We have also enhanced our collections and our content acquisition capabilities through our acquisitions of PremiumBeat, Rex Features, The Picture Desk Limited, and Flashstock.

We continue to seek opportunities for direct acquisition and strategic partnerships to enhance our collection and provide customers with relevant and high-quality content.

We continuously enhance our collection through the direct acquisition of content and by entering into other strategic agreements and partnerships and we continue to seek opportunities for direct acquisition and strategic partnerships to enhance our collection and provide customers with relevant and high-quality content.

Technology and Infrastructure

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We consider the data that we have collected and the search technology that it powers to be an important proprietary asset and competitive advantage that allows us to provide exceptional service to our customers and enable our business.

We also continue to invest in the localization of our creative platform across many countries and regions, allowing customers to search and make purchases in a variety of languages and currencies.

We continuously invest in the localization of our creative platform across many countries and regions, allowing customers to search and make purchases in a variety of languages and currencies.

Further, we have continued to build and launch innovations to the customer experience.

Over the last few years, we have launched additional tools on our platform, such as our in-browser image editing tools, Shutterstock Editor and Editor Pro, to further enhance the customer experience, improve the customer’s workflow and eliminate time-consuming steps in the creative process.

Over the last few years, we have launched additional tools on our platform, such as our image editing tools, Shutterstock Editor and our Shutterstock Editor software development kit (SDK), as well as integrations with third party creative tools, content management systems (CMS) and workflow platforms to further improve the customer’s workflow and eliminate time-consuming steps in the creative process.

We continued to improve the features, functionality and availability of these tools during 2020.

We also maintain an API driven infrastructure, enabling integration of our content platform with various other software tools and services, which enables businesses, and their customers, to gain access to our content without leaving their platform.

We have developed contributor-facing web properties, which as announced in January 2019, operate in 21 languages and enable individuals and creative professionals to become contributors, upload and tag content, receive feedback on their submissions from our review team, see reports on earnings and payouts, and participate in online discussion forums with other contributors, among other activities.

We have developed contributor-facing web properties, which operate in 21 languages and enable individuals and creative professionals to become contributors, upload and tag content, receive feedback on their submissions from our review team, see reports on earnings and payouts, and participate in online discussion forums with other contributors, among other activities.

We have also developed proprietary tools to enable our contributors to improve their success on our web properties, including our keyword trends tool that allows contributors to see what terms customers are searching for and how those search terms are trending over time, which, in turn, allows contributors to anticipate demand and generate content that customers may want to license.

Our contributor-facing web properties are powered by proprietary technology which supports a content review system that allows our review team to efficiently and effectively review content submissions.

Our combination of proprietary technology and large-scale datasets allows us to deliver value to our users and enhances their experience on our platform, which drives and grows our marketplace.

Our combination of proprietary technology and large-scale datasets allows us to deliver value to our users and enhances their experience on our platform, which drives growth on our marketplace.

We use a combination of internally-developed software and third-party applications that enable customer and contributor support, intellectual property rights and license tracking, centralized invoicing and sales order processing, customer database management, language translation and global contributor payouts, in addition to supporting the compliance, finance and accounting functions.

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As we continue to grow our business, our technological needs continue to expand and therefore, we continually invest in our technology to enhance existing products and services and develop new products and services.

We view our investments in technology as integral to our long-term success and we intend to continue to investigate, develop and make increased capital investments in technology and operational systems that support our current business and new areas of potential business expansion.

We market to new customers through a diverse set of performance and brand marketing channels including paid search, online display advertising, print advertising, tradeshows, email marketing, direct mail, affiliate marketing, public relations, social media and partnerships.

We view our investments in technology as integral to our long-term success and we intend to continue to investigate, develop and make capital investments in technology and operational systems that support our current business and new areas of potential business expansion.

We market to new customers through a diverse set of performance and brand marketing channels including paid search, online display advertising, print advertising, trade shows, email marketing, direct mail, affiliate marketing, public relations, social media and partnerships.

We also use customer relationship management (CRM) marketing to grow the lifetime value of our existing customers.

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Under our various license agreements, we expressly represent and warrant that unaltered content downloaded and used in compliance with our license agreements and applicable law will not infringe any copyright, trademark or other intellectual property right, violate any third-party’s rights of privacy or publicity, violate any U.S.

law, be defamatory or libelous, or be pornographic or obscene.

law, be defamatory or libelous, or be

pornographic or obscene.

Provided that a customer has not breached the license agreement or any other agreement with us, we will defend, indemnify, and hold a customer harmless from direct damages attributable to breaches of the express representations and warranties provided in our license agreements.

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We protect our intellectual property through a combination of patent, trademark, copyright and domain name registrations, as well as trade secret protections.

We own a portfolio of trademarks, including “Shutterstock,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat” and “Shutterstock Editor” and associated logos.

We own a portfolio of trademarks, including “Shutterstock,” “Offset,” “Bigstock,” “Rex Features,” “PremiumBeat,” “Shutterstock Editorial,” “Shutterstock Select” and “Shutterstock Editor” and associated logos.

We will pursue additional trademark registrations to the extent that we create any additional material and registrable trademarks or logos.

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We have successfully recovered infringing domain names in the past and intend to continue to enforce our rights in the future.

We also own copyrights, including certain content on our web properties, publications and designs, as well as patents,

including with respect to our display systems and search capabilities.

We also own copyrights, including certain content on our web properties, publications and designs, as well as patents, including with respect to our display systems and search capabilities.

These intellectual property rights are important to our business and marketing efforts.

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• The Federal Trade Commission Act and numerous state “mini-FTC” acts, which bar “deceptive” and “unfair” trade practices, including in the contexts of online advertising and representations made in privacy policies and other online representations.

The European Union General Data Protection Regulation (“GDPR”), which governs how we can collect and process the personal data of, primarily, European Union residents and the California Consumer Privacy Act of 2018 (“CCPA”), which governs how we can collect and process the personal data of California residents.

• The European Union General Data Protection Regulation (“GDPR”), which governs how we can collect and process the personal data of, primarily, European Union residents.

• The California Consumer Privacy Act of 2018 (“CCPA”), which governs how we can collect and process the personal data of California residents.

In particular, we are subject to U.S.

federal and state, and foreign laws regarding privacy and data protection as well as foreign, federal and state regulation.

Foreign data protection, privacy, content regulation, consumer protection, and other laws and regulations can be more restrictive than those in the United States and often have extraterritorial application, and the interpretation and application of these laws are still uncertain and in flux.

For example, GDPR, which took effect on May 25, 2018, includes more stringent operational requirements for entities processing personal information and significant penalties for non-compliance.

For example, the GDPR, which took effect on May 25, 2018, includes more stringent operational requirements for entities using, processing, and transferring personal information and significant penalties for non-compliance.

Several other foreign jurisdictions, such as Brazil and India, have adopted, are considering adopting, or have updated comprehensive privacy legislation to offer additional data privacy protections for individuals.

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The CCPA, among other things, requires companies that collect personal information about California residents to make disclosures to those residents about data collection, use and sharing practices, allows residents to opt out of certain data sharing with third parties and provides a new cause of action for data breaches.

Moreover, a new privacy law passed in California, the California Privacy Rights Act (“CPRA”), which is scheduled to take effect on January 1, 2023 (with a lookback to January 1, 2022), will significantly modify the CCPA, and will impose additional data protection obligations on companies such as ours doing business in California.

In addition, from a taxation perspective, there are applicable and potential government regulatory matters that may impact us.

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and therefore, the full impact of the TCJA on our tax provision may continue to evolve.

Further, we continue to remain subject to uncertainty related to foreign jurisdictions’ potential reactions to the TCJA, as well as evolving regulatory views and legislation regarding taxation of e-commerce businesses such as the Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) proposals and other country specific digital tax initiatives.

As these and other tax laws and related regulations continue to evolve, our financial results could prospectively be materially impacted.

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These events could dampen growth in the use of the internet in general, and cause Shutterstock to divert significant resources and funds to addressing these issues, and possibly require us to change our business practices.

We compete to be an integral component of the creative process for our customers based on a number of factors including the quality, relevance and breadth of content;

We seek to be an integral component of the creative process for our customers based on a number of factors including the quality, relevance and breadth of content;

ability to source new content;

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and customer service.

The industry in which we operate is intensely competitive and rapidly evolving, with low barriers to entry.

The industry in which we operate is extremely competitive and rapidly evolving, with low barriers to entry.

Some of our currently and potentially significant competitors include:

other online platforms that feature marketplaces for stock content or creative workflow tools such as Getty Images and its iStockphoto offering, AdobeStock, VimeoStock and Pond5;

• other online platforms that feature marketplaces for stock content or creative workflow tools such as Getty Images and its iStockphoto offering, AdobeStock, VimeoStock, Canva and Pond5;

• specialized visual content companies that are established in local, content or product-specific market segments, such as Visual China Group;

providers of commercially licensable music such as Universal Music Publishing Group, Sony/ATV Music Publishing, Warner/Chappell Music, and EMI Music Publishing;

• providers of commercially licensable music such as Universal Music Publishing Group, Sony/ATV Music Publishing and Warner/Chappell Music;

• websites focused on image search and discovery such as Google Images;

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In addition, we compete with the alternative of creating one’s own content or choosing not to consume licensed content due to price considerations or because the user is not aware of how to access licensed content.

As of December 31, 2019 , our global workforce included 1,116 full-time employees as compared to 1,029 on December 31, 2018 .

Human Capital

The Company and its consolidated subsidiaries have 967 full-time employees as of December 31, 2020, as compared to 1,116 as of December 31, 2019.

Approximately 64% of our global workforce is located in North America and 29% are located in Europe with the remainder located in the rest of the world.

None of our employees in the United States are covered by collective bargaining arrangements.

In several foreign jurisdictions, including Germany, Canada and France, our employees may be subject to national collective bargaining agreements that set minimum salaries, benefits, working conditions and/or termination requirements.

In several foreign jurisdictions, including Italy, Canada, France, and Brazil, our employees may be subject to national collective bargaining agreements that set minimum salaries, benefits, working conditions and / or termination requirements.

We consider our employee relations to be satisfactory.

Competition for qualified personnel in our industry is intense, particularly for software engineers, computer scientists and other technical staff.

Our people are critical to our success.

We have implemented certain strategies with respect to our employees, to provide a safe, rewarding and respectful workplace.

We adhere to our Code of Business Conduct and Ethics, which sets forth a commitment to our stakeholders, including our employees, to operate with integrity and mutual respect.

We also incorporate safety principles into every aspect of our business.

We have well-developed health and safety programs, which are reinforced through policies, education and engagement of our employees.

We strive to create an outstanding employee experience by creating a culture aligned with our principles by providing our employees access to the programs and initiatives that promote their career growth and development, recognize and reward their performance and support their overall well-being.

Our Total Rewards program focuses on developing and implementing policies and programs that support our business goals, maintain competitiveness, promote shared fiscal responsibility among the Company and our employees, strategically align talent within our organization and reward performance, while also managing the costs of such policies and programs.

Through our Total Rewards program, we provide our employees with competitive fixed and/or variable pay, and for eligible employees we currently provide access to medical, dental and life insurance benefits, disability coverage, a 401(k) plan, equity-based compensation and employee assistance programs, among other benefits.

We encourage employee engagement through regular employee events, productive communication, our global recognition program and by creating a culture of belonging.

Our Diversity, Equity and Inclusion (“DEI”) mission is supported by the work of our employee resource groups, our DEI Council, senior leadership and our employees across the globe.

During the COVID-19 pandemic, our commitment to our employees has been put into action.

One of the principles that has guided and continues to guide our decision-making during the COVID-19 pandemic is to safeguard the health of our employees.

We are following all local and national government guidance in implementing mandatory work-from-home policies and in March 2020, our global workforce effectively transitioned to working remotely.

While we re-opened certain office spaces by the end of 2020, in order to ensure the safety of our employees, our voluntary work-from-home program has been extended through June 2021, and a one-time stipend was paid in December 2020 to employees who are below the level of Vice President, to offset any remote working expenses.

For those employees who voluntarily elect to work from the office (where local law and public health authorities permit offices to operate), we have taken steps to ensure their safety, including providing training, deep cleaning our facilities on a regular basis, installing hand sanitizer stations, providing face masks, installing plexi-glass where appropriate, encouraging hygiene practices advised by health authorities, implementing social distancing policies and restricting business travel and site visitors.

We continue to enhance our practices to remain aligned with federal, state, local and international regulations and guidelines.

Our operating results may fluctuate from quarter to quarter as a result of a variety of factors.

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Additionally, because a significant portion of our revenue is derived from repeat customers who have purchased subscription plans, our revenues have historically been less volatile than if we had no subscription-based customers.

In addition, expenditures on content by customers tend to be discretionary in nature, reflecting overall economic conditions, the economic prospects of specific industries, budgeting constraints, buying patterns and a variety of other factors, many of which are outside our control.

As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indicators of our future operating performance.

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Our common stock is listed on the New York Stock Exchange under the symbol “SSTK”.

Our principal office is located in the Empire State Building at 350 Fifth Avenue, 21st Floor, New York, New York 10118, and our telephone number is (646) 710-3417 .

Our primary website address is www.shutterstock.com.

Our investor relations website is located at http://investor.shutterstock.com.

In accordance with the informational requirements of the Exchange Act, we file reports, proxy and information statements and other information with the SEC.

We make available free of charge on our investor relations website under the heading “SEC Filings” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with (or furnished to) the SEC.

Information contained on our websites is not incorporated by reference into this Annual Report on Form 10-K.

Our corporate headquarters and principal executive offices are located at 350 Fifth Avenue, 21st Floor, New York, NY 10118, and our telephone number is (646) 710-3417.

We maintain a website at investor.shutterstock.com, where our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon as reasonably practicable following the time they are electronically filed with or furnished to the SEC.

The information on or accessible through our websites is not incorporated by reference into this Annual Report on Form 10-K.

In addition, the SEC maintains a website, www.sec.gov, that includes filings of and information about issuers that file electronically with the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business