(1) source their images almost exclusively via the Internet,
(2) do so from a wider range of photographers than the traditional stock agencies (including a willingness to accept images from "amateurs" and hobbyists),
(3) sell their images at a very low rate for a royalty free (RF) image.
A number of microstock sites also sell vector art and some sell Flash animations and video as well as images.
The pioneer of microstock photography was Bruce Livingstone who created Istock originally a free stock photo site that quickly became an industry phenomenon. Livingstone sold Istockphoto to Getty Images in February 2006 for $50 million. Many other sites sprang up in the years after iStockphoto's inception. Some of the larger ones are Fotolia, 123RF, Dreamstime, Depositphotos, Dreamstime and Shutterstock founded in 2003 by entrepreneur Jon Oringer.
After a few years of initial growth, the microstock industry began a period of mergers and acquisitions. The acquisition of iStockphoto by Getty Images in 2006 was followed by acquisition of StockXpert by Jupiterimages during 2006. Consequently Jupiterimages, a wholly owned subsidiary of Jupitermedia, was bought by Getty Images in 2009 for $96 million in cash and resulted in the closure of StockXpert in 2010 because it was perceived to be non-strategic for Getty compared to iStockphoto. After the sale, Jupitermedia changed its name to WebMediaBrands, Bigstockphoto was purchased by Shutterstock in 2009.
Starting from limited RF license, all agencies added various Extended Licenses; sites based on a "pay-per-download" principle introduced subscription and vice versa. "
Just few points that I would like to add an emphasis on.
1. The photographer, designer, videographer or illustrator remains the legal owner, and images can be sold many times.
2. Selling prices are generally low, ranging from $0.15 to $10 dollars for a royalty free image. However, because these pictures can be sold many times, it is possible to get a reasonable, or even high income from them.
3. Microstock agencies have provided an opportunity to all photographers to earn money for their images. They have broken down the barrier between professional and amateur photographer. Once approved by a microstock agency, there is no difference between a pro and an amateur photographer.
3. Quality standards are quite high, but with some post processing knowledge and the right equipment, it is possible for nearly everybody to upload images and earn some extra income.
4. The Microstock industry is a global market. Once approved, your images are sold worldwide.
5. Once approved in multiple agencies, your images can be uploaded to multiple sites. The photographer can choose to become exclusive to a single agency. Not all images or photographers are accepted. Most agencies contributors must go through an acceptance procedure.