How Does Pexels Make Money? Dissecting Its Business Model

Executive Summary:

Pexels is a free stock photo and video platform aimed at content creators and everyone else who’s in need of imagery.

Pexels makes money from referral fees, as well as advertising and sponsorships, which are paid by businesses that want to promote their brand on the platform.

The company, after being founded in 2014 by three Germans, was acquired by design software maker Canva in May 2019.

What Is Pexels?

Pexels is a free stock photo and video platform aimed at content creators and everyone else who’s in need of imagery.

The images on Pexels are royalty-free, meaning you can edit and use the content as you please. Attribution is also not required but definitely appreciated.

This is because all content on Pexels falls under the Pexels License and the Creative Commons license (CC0). As such, you can also use the content in a commercial context.

Using Pexels is as simple as it gets. You either navigate to its website or download the firm’s mobile app, which is available for Android and iOS devices.

pexels website

After typing in whatever you are looking for, you will be presented with a multitude of free pictures and videos. These can then be directly downloaded with the click of a button.

Pexels also offers a few features aimed at discovery. For example, it lists its most popular searches or runs a leaderboard of the photographers with the most views.

Furthermore, Pexels runs regular challenges that prompt photographers to submit content based on a particular theme (like the color pink or content about friendship).

Over 3 million photos and videos have been uploaded on Pexels thus far. But who’s actually behind the platform?

Who Owns Pexels?

Australian design software maker Canva owns Pexels. It acquired both Pexels and Pixabay for an undisclosed sum back in May 2019.

Canva wanted to acquire the two stock image sites to beef up its own capabilities, meaning that free stock photos would be natively integrated into its software.

Luckily, photos and videos on both sites remained free to be used. In fact, Pexels still operates as an independent company that currently employs over 130 people.

Pexels itself was founded in 2014 by German brothers Bruno and Ingo Joseph as well as Daniel Frese. The two brothers started the company first while Frese joined in 2015.

Consequently, Pexels is headquartered in Germany’s capital Berlin. Why the founders decided to sell their company remains unclear.

Given that they did not raise any outside venture capital, it likely just represented a very nice payday since close to 100 percent of the proceeds would go straight into their pockets.

I’d assume that they retained some percentage of Pexels or were given equity stakes in Canva to participate in any future upside. Canva is now worth tens of billions of dollars and may eventually reach the twelve-digit valuation mark given where Adobe has historically traded at.

Furthermore, Pexels would ultimately benefit from the scale that comes with being in a larger organization like Canva.

How Does Pexels Make Money?

Pexels makes money from referral fees, advertising and sponsorships, which are paid by businesses that want to promote their brand on the platform.

On the advertising front, companies can create branded profiles of themselves through which they share images.

Those images, which often include the brand’s logo, are then widely used by bloggers and the like. It’s effectively free advertising.

Interestingly, Pexels competitor Unsplash, which is owned by Getty Images, monetizes its platform in a similar fashion.

Pexels, apart from allowing brands to create profiles, also enables them to sponsor the competitions it runs. As I’ve mentioned above, Pexels periodically launches competitions based on certain categories.

The company sponsoring the competition would then be mentioned as a sponsor, thus granting it additional exposure. Similarly, brands can sponsor in-person events, too.

Admirably, Pexels seems to be still scrappy enough, as evidenced by the fact that brands can also pitch ideas to Pexels.

Advertising and sponsorships aren’t the only revenue-generating avenues the company could pursue.

Currently, Pexels offers free-of-charge access to its API, which enables websites to natively embed Pexels photos and videos into their own platforms. It currently counts companies like Airtable, Google, or WordPress as users.

I would assume that Pexels eventually starts charging for access to that API. Right now, the platform is still focusing on building up its collection of photos.

It incentivizes uploads through leadership boards, offering access to an invite-only community called Pexels Heroes, and the challenges it runs. After all, photographers benefit from the added exposure their work receives.

Plus, creators can also earn money from donations, which they keep fully (minus the payment processing fees that PayPal charges).

Another aspect is the strategic importance Pexels has for Canva. The design software will inevitably offer image-generation features based on algorithms like Stable Diffusion.

Those algorithms could then be trained on Pexels and Pixabay images, among others, which would likely yield better outputs. It would not be surprising if Canva even tried to acquire a license holder like Getty Images.

In the present day, Pexels already acts as a customer acquisition channel for Canva. When downloading a Pexels image, you are invited to try Canva to edit it.

Lastly, Pexels also generates revenue from referral fees, which it collects for promoting other stock image sites.

More precisely, when searching for photos on Pexels, you will find a link to Getty-owned iStock, giving you access to a 20 percent discount if you signed up.

Pexels, for every person that signs up to the paid plan, receives a portion of that money as commission. The referral fee is likely paid on a recurring basis, meaning Pexels gets a cut as long as the user stays subscribed.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.