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CORBIS REVISES CONTRACT
March 31, 2000
Corbis is out with a new contract and photographers who have been with them since
the start have been told that Corbis will not review any new submissions until
the photographer has signed this new revision.
On the whole, given the way the industry is headed this contract has several
positive aspects. However, there are a two or three points photographers should
give careful consideration to before signing.
Changes For The Good
The term of the contract is now five years, not twenty as in the old contract.
After the five years it is renewed automatically on a year-to-year basis. Corbis
does have the right to continue to sell the images for three more years after the
contract is terminated, but this is still a lot better than the previous
contract.
They have eliminated the $4.50 advance per image that they were paying for each
accepted image. This was needed several years ago in order to attract
photographers, but given the huge growth in Corbis sales in the past eighteen
months most photographers, if not all, have now paid off their advances.
It appears that one of the major motivations for the new contract was get rid of
the payments for accepted images. The money itself was not the issue, but the
process of administering these payments was very complicated and something Corbis
felt it was time to revise.
They have defined four different categories of use, each with a separate
percentage rate of payment. They are:
Limited Rights
|
45%
|
Consumer Use Rights
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20%
|
Merchandise
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5%
|
Broad Rights (Royalty Free)
|
20%
|
The very good news is that Limited Rights (traditional rights protected sales)
have remained at 45% which was part of the original contract. This is better
than Stone which is now at 40%. There have been strong suspicions that many of
the other Getty properties would move to 40% soon, and the existence of the
Corbis contract may make it more difficult for Getty to make such a move.
Corbis does have one supplier relations problem with their 45% rate. Less than a
year ago the WestLight photographers were given a contract where they get 40% of
sales (not 45%). They were required to sign exclusive contracts rather than the
non-exclusive contracts all the non-WestLight photographers have been given. I
would think Corbis will have a difficult time in explaining why they are
punishing the WestLight photographers in this manner unless they are planning to
revise the WestLight photographers contracts upwards.
The Consumer and Merchandise rights in the old contract were on a complicated
sliding scale that ranged from 2% to 5% of the gross fee collected. The new
numbers are much higher and a lot easier to understand.
Photographers are not required to allow their work to be licensed in all these
categories, particularly the Broad Rights (RF) category.
Under Policies and Practices the contract says, "When submitting images and other
artistic materials, you agree to notify Corbis of any restrictions to Corbis's
rights to license such images, including designating at the time of submission
whether such material is submitted on an exclusive or non-exclusive basis."
Providing images to Corbis on a non-exclusive basis also solves the "Similars"
problem many photographers have been concerned about. With the non-exclusive
deal the photographers are allowed to continue to license those same images
themselves, or through other agencies. The contract says, "...you appoint Corbis
as your non-exclusive licensor throughout the world for all conceivable uses,
including but not limited to the licensing categories listed above."
Of course, if Corbis has a non-exclusive right to license, they could not license
an exclusive use of one of the photographers images without first getting his or
her permission.
Some photographers might be concerned that if they don't give Corbis an exclusive
on their images they might be cutting themselves out of a high ticket sale where
the client insists on having exclusive rights to the image. In fact, such
exclusive sales are rare. Almost never does the deal have to be closed
instantaneously. Usually the negotiations for exclusive sales stretch over
several days.
It is hard to imagine that if a Corbis client wants to pay $10,000 for exclusive
rights to an image which Corbis only has non-exclusive rights to license, that
Corbis would not call the photographer and see if something can be worked out
rather than simply tell the client they can't make the sale. That's what
photographers want to happen. Then they only have to restrict sales on the
single image where there is a guaranteed big sale rather than on every image in
promotion. Pulling a specific image from other sources will also be so much
easier as we transition more to a primarily digital market.
Note: Stock Connection is a small agency, but we make $10,000 and $12,000 sales
for use of individual images. Every image we handle is non-exclusive, but when
we get a call for an exclusive use we call the photographer to see what can be
worked out. So far we have not lost a single big sale because we could not
arrange the exclusive rights that the client needed. It is good to see that a
big agency like Corbis has finally recognized that this method of operation is
workable and that it greatly benefits their suppliers.
Bad News
Corbis is still making payments quarterly within 30 days after the end of
each calendar quarter. There is no reason why they should not be paying monthly
since all other major agencies and many small ones are on a monthly payment
basis.
Under "Current and Future Works" Corbis wants you to, "agree to submit all
images created after the Effective Date to Corbis," and they "will have first
right to represent and exercise the rights described in this Agreement with
respect to those images."
This doesn't fit with the non-exclusive nature of the agreement. Photographers
should be free to submit that part of their production which they believe Corbis
can market effectively. They should not be required to only shoot subjects which
they know will be of interest to Corbis, or to submit images to Corbis which they
have good reason to believe Corbis will not be interested in. This wastes the
time of the Corbis editors and the photographer. It also delays getting the
image into an analog file where it could be earning the photographer revenue.
At another point in the Corbis contract it also says that the photographer should
submit no more than 250 images at a time, and only what the Photo Editor has
approved. It is unclear what can be done with a submission that is not approved
by the Photo Editor.
As a practical matter, I believe that most photographers who sign this agreement
as is, and who submit images on a non-exclusive basis, will disregard this
language and offer only that portion of their production which they think will be
of interest to Corbis.
Enforcing this provision will be very difficult for Corbis. The entire paragraph
should be revised or removed.
Photographers should look closely at the definition of "Revenue" on page 5.
It says:
"Revenue" means the gross amount invoiced to customer for license of Accepted
Image(s) less any shipping costs, taxes, duties, or fees paid to distributors,
resellers, agents, or international subagents (which may include fees paid to
Corbis offices in their capacity as international subagents.)
That means that Corbis wholly owned offices outside the U.S. are now clearly
considered subagents.
In the previous agreement it said: "Corbis will pay Licensor a sum equal to
forty-five percent (45%) of the cash revenues received by Corbis directly from
the license of the respective Licensed Elements."
The previous agreement may have also allowed Corbis to treat their foreign
offices as subagents, but it wasn't made as clear that this is their specific
intention.
It is also not clear how the foreign photographer is treated. Suppose, for
example, that a photographer lives in UK. Are all U.S. sales subject to a
subagent deduction for that photographer because the U.S. sales offices are
"foreign offices"? Photographers need to have a written understanding of how
this will be treated, particularly if they live outside the U.S.
Why is this important?
If the independently owned subagents are taking a percentage of sales why does it
make a difference if a Corbis office in another country takes the same
percentage?
It used to be that subagent agreements allowed the agents to keep 30% or 40% of
the gross fee collected before submitting the remainder to the prime agent.
Recently, more and more subagents (particularly wholly owned subagents) have been
allowed to retain 50%. Some of the distributors of royalty free materials are
allowed to retain 60%. With each new move the photographer's share gets cut more
and more.
There is nothing in this contract that prevents Corbis from continually raising
the subagent share the wholly owned offices are allowed to keep in order to
increase its revenues. Since there are widely varying subagent percentages
depending on the services the subagent provides there is no such thing as a
"standard" subagent percentage. There is nothing in this contract that prevents
Corbis from negotiating agreements with independent subagents for 30% or 40% and
letting their wholly owned subagents keep 50% or more. If Corbis makes such
moves, the photographers providing the images will never know.
This certainly happened at FPG and Telegraph Colour Library now owned by Getty.
At a time when most subagents were retaining 40% of their gross sales VCG allowed
their wholly owned offices to retain 50%. This went on for years before most
photographers thought to ask the right people the right questions and figured it
out.
When the subagent is not part of the parent company it is in the parents best
interest to negotiate the best deal they can. This will benefit the photographer
because the photographer's percentage is based on what the parent gets. However,
when the parent owns the subagent, the more the parent lets its subagent office
have the more in benefits the parent.
In a $100 sale where the subagent keeps 40% the photographer gets $27 (45% of
$60). If the subagent keeps 50% the photographer gets $22.50 (45% of $50). If
times get tough and they move the subagent share to 60% the photographer get $18
(45% of $40). When the subagent is wholly owned what usually happens is that the
parent allows its child to retain that money in the first instance, but then
charges the child some type of service fee, not split with the photographer, to
bring more revenue back into the parents pocket.
Granted, at this time no major agencies supply information to their photographers
that will enable them to know the true percentage of the gross sale they are
receiving when a subagent is involved in the sale. Someone needs to be the
first. If Corbis want photographers to trust them they need to make a positive
move in this direction.
The answer is very easy. Corbis could create another attachment to the contract
entitled "Subagent Percentage For Corbis Wholly Owned International Offices". It
might read:
"The percentage of the gross fee retained by a Corbis office in their
capacity as an international subagent, will never be greater than 40% unless
Corbis informs its suppliers (photographers) of a specific higher percentage, in
a specific country."
If Corbis is forced to adjust this percentage in order to compete they simply
send photographers a new attachment which amends the contract. This way image
suppliers are informed and understand when changes that will affect their bottom
line percentage have occurred. If the number is already 50% or higher, then at
least tell photographers what it is now.
©2000 SELLING STOCK
The above copyrighted article(s) are for the sole use of Selling Stock subscribers and may
not be copied, reproduced, excerpted or distributed in any manner to non-subscribers without
the written permission of Jim Pickerell, the editor. For subscription information contact:
Selling Stock 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720,
fax 301-309-0941, e-mail: jim@chd.com.
Rules for supplying feedback
Feedback:
Steve Pigeon
You are wrong when you say that "no major agencies supply information to their
photographers that will enable them to know the true percentage of the gross
sale they are receiving when a subagent is involved in the sale".
Masterfile has been doing it for many years. Our contract includes the
following sentence under the "International" section:
"...It is generally Masterfile's practice to require that International Agents
pay Masterfile a royalty ranging from fifty percent (50%) to sixty percent
(60%) of all amounts received by them in connection with their licensing of
File Images..."
On the invoice copy that our artists receive from Masterfile when reporting
international sales each month, the body of the invoice specifically states:
"Our 60% share of sale as per royalty statement for (month). Sales in (name of
country)" or "Our 50% share..."
Perhaps you weren't aware of this, or perhaps you didn't consider that
Masterfile was a major agency. As the world turns, it now appears that we are
the largest "independent" stock photo agency in North America... and maybe the
world, so I guess that makes us "major" by default.
It's hard to be humble when you're as big and kind-hearted as we are.
Best regards,
Steve Pigeon
President
Masterfile Corporation
Editors Note: I wasn't aware of Masterfile's practices and I commend them for
them. I would be interested in hearing from other agencies that provide their
photographers with the same type of accurate information with regard to sales.