Random Thoughts 109

8

September 20, 2005

Corbis Reports Growth

Corbis has reported that its revenue for the first half of 2005 was $111.5 million. This was a 33% growth over the full fiscal 2004, but four acquisitions that have been completed this year accounted for most of this growth. The four acquisitions completed so far in 2005 are zefa Visual Media Group in January, Roger Richman Agency in April, eMotion in July and image100 in July.

The pro forma growth overall was 6.6% and management reported that 8% of its growth was due to pricing and 4% due to volume. Corbis expects a stable pricing environment in the near future. In contrast Getty's pro forma growth during the same period was about 16.5%. The relative slowdown in pro forma growth compared to Getty is expected to be temporary and was attributed to the challenges of integrating the newly acquired companies.

As a result of the increased investment in integration, Corbis has pushed back its cash flow breakeven point from late this year to late 2006.

Management gave the following revenue breakdowns.

The company also reported that the revenue mix between Commercial and Editorial was 60% and 40% respectively, or about $60 million for Commercial and $40 million for Editorial. Thus, depending on how Getty and Corbis account for the sales of commercial images to the editorial side of the market (and there is room for wide differences in strategy here) Corbis's sales to the Editorial market are about the same as Getty's despite the company's much smaller overall size.

Geographically the revenue was divided in the following manner.

In a conference call CEO Steve Davis characterized the acquisition landscape as "somewhat picked over". Investment analysts believe that the shrinking universe of potential targets should slow the pace of consolidation.

A21 Raises $1 Million

a21 Inc., parent of SuperStock, has raised a little over $1 million by selling 7 million shares of the company's common stock to three investors -- Ahab International Ltd., Ahab Partners L.P. and John L. Steffens - for a purchase price of $.15 per share.

The company has still not filed its quarterly report with the SEC for the period that ended 30 June 2005 after announcing late last month that it had changed auditors. Haim Ariav, President of SuperStock said the delay is nothing to worry about as the auditors "needed to get on the same page with regard to a couple items." However, the company is listed as delinquent on the OTC Bulletin Board and if it does not file the report by Sept. 22 its shares of common stock may be removed from the OTC Bulletin Board.

a21 also noted in an SEC filing last month that its board named Thomas V. Butta chief financial officer. Butta, the president of a21 and CEO of SuperStock, replaced William E. Murphy IV, who resigned from the company.

Help Getty Find Photographers

Getty Images is trying to locate hundreds of photographers whose images they would like to return, but for whom they have no good address or contact information.

In the past 5 years Getty has returned over 16,000,000 images to photographers. They continue to work diligently to return images to photographers they no longer represent but for one reason or another many of the photographers represented by agencies Getty has acquired did not keep their agency up to date regarding their movements. Now Getty is holding images with a photographer's name on the mount and no other way to locate the photographer.

Getty has posted the names of the missing photographers in a database at
http://contributors.gettyimages.com/fpeople.asp. If you ever worked for any of the agencies that Getty has acquired you should go to this site and check to see if your name, or that of any or your friends, is there.

Getty is asking everyone to please contact them if you know the whereabouts of any of the photographers, or contact the photographer and ask him/her to contact Getty. The person to contact is Stephen Morelock (323) 202-4233, or by email at imagereturns@gettyimages.com.

Getty is employing several search tools to try to locate these photographers and the company's strong desire is to see images returned to the proper photographers. They expect to further update the site in October with more names of the missing.

Registering Copyright Pays Off

Photographer Brian Harness of Dallas recently won a $135,000 settlement for the unauthorized use of his photos of the Bradford Lincoln Park Hotel in Dallas. Harness had produced the photos for Merriman Architects and licensed rights to Merriman for its promotional use.

According to Harness he was approached by John Wilson, an officer and director of the partnership that operates the hotel, after delivering the images to his primary client. Mr. Wilson wanted to purchase a license to use the images in brochures, but when he discovered the price he decided that he just wanted one print each for display purposes in his office -- the least expensive license available.

Through discovery it was later learned that five days after Harness supplied prints to Wilson for "display purposes only" one print was delivered to the hotel's advertising agency for use in thousands of advertising flyers. The agency also designed a web site using one of the photos and that design was eventually accessible through more than 1400 URL's.

After shooing the images Harness had taken the precaution of registering them with the U.S. copyright office. Thus, when he learned of the infringement he hired Houston, TX lawyer, Dana LeJune to bring a copyright infringement action against the Bradford Lincoln Park Hotel. LeJune said he took Harness' case in part because Harness had registered the photos with the copyright office, which made the case stronger.

Copyright infringement cases are expensive to pursue and legal bills in this case exceeded $55,000. There was also the risk that if he lost Harness might have had to pay the defendants' legal fees.

Harness estimated actual damages based on what he would have charged for all the uses would have been $58,752 for the Internet infringements and $610 for the print infringements. He also described to the court that multipliers of between 5 and 10 are used industry wide for such flagrant and willful misuse, resulting in an overall damage calculation of $446,740.

The case was settled through mediation. Harness continues to register his work. As a routine, every 90 days he mails a CD of his most recent photos to the copyright office and pays a $30 fee for the registration.

Christina Vaughn Interview

Recently Pat Hunt interviewed Christina Vaughn for MacTribe. You can find this article that provides a lot of background on Christina, ImageSource and plans for the future by going to: http://www.mactribe.com/entertainmentarticle.asp?Articlep=1077.

ShutterStock Subscription Offering

ShutterStock™ (www.shutterstock.com), founded in 2003 by Jon Oringer, has announced that it has over 300,000 images in its RF library that is licensed by Subscription. Over 15,000 photographers have added images to this library which means that the average photographer has about 20 images in the library.

Customers can purchase a one-month subscription for $139.00 or a three-month subscription for $395. This entitles them to download up to 25 images a day or 750 per month and to use them for as long as they would like. (Remember, Getty's subscription offering only authorizes buyers to use the images for as long as the subscription is active.)

It appears that ShutterStock™ is not interested in buying photos outright, but they pay photographers $.20 (that's right 20 cents) every time one of their images is downloaded. Thus, even if an image is never used the photographers get $.20 per download and according to , ShutterStock™ some customers download the full number of images to which they're entitled. The minimum file size for an accepted image is 2.5MP, the company says they now "super-size" all images up to 4000 x 3000 pixels.

The photographers must load their own images, do their own keywording and supply signed and witnessed model releases for any image that includes an identifiable human. Despite the model release requirement the company says that the majority of images on their site are available for commercial use. They will also accept non-released images for editorial use only, but not for any kind of commercial use.

As it is hard to see how any professional photographer could earn enough to justify the effort at $.20 per download one would assume that most of these images are coming from amateurs. However, a quick review of the site by doing several searches shows a surprisingly high quality level in much of the imagery. ShutterStock™ may have figured some way to bring the most professional looking images to the top of every search, but few professional photographers would be embarrassed by the general quality of this imagery. By going to the site it is possible to review the "Top 50 Images Ever", "Top 50 Images This Week", and "Top 100 Keywords". This provides an interesting perspective on what is available.

It also provides some important "food for thought" for all professional stock photographers if in the future customers will be able to get images of this quality for these prices.

"We're thrilled with the pace of ShutterStock's™ growth," said Jon Oringer, founder and CEO. "Our photo collection grows by thousands of images every week - and we're pleased to say that our customer base has grown to match."

OnRequest Receives $8 Million

OnRequest Images has received an $8 million investment in venture capital from Frazier Technology Ventures, a Seattle venture capital firm, after having also received a $4 million first round investment from Maveron in 2004.

OnRequest recently expanded its North American presence by adding to its New York staff and opening an office in San Francisco. Headquartered in Seattle it now has offices in New York, Chicago, Los Angeles, San Francisco and Denver. The company employs 45 people, with plans to double that in the next 12 months. It has more than 300 customers, including Procter & Gamble, Charles Schwab and The Discovery Channel.

Recently the company launched its Custom Assignment Services, offering commissioned photography with a wide range of customer involvement in the image production process.
The company will provide full pre- and post-production support for custom commercial imagery including matching photographers to customer needs, casting, location scouting, stylist selection and art direction, while providing a convenient web-based production interface for both customers and photographers at every stage of the process.

With the launch of Custom Assignment Services OnRequest customers have access to 1,600 photographers in 53 countries and the same control in choosing the specific photographer for the project as they would have in any other assignment situation. OnRequest expects to use the new investment to grow its customer base beyond advertising firms such as DDB, Saatchi & Saatchi and Campbell Mithun.

Frazier Technology seems to think that the OnRequest business model has great potential to attack the $6 billion market for photography and that the differences between what OnRequest is offering and the assignment services of Getty Images and Corbis are distinctive enough to give OnRequest a major advantage over these two companies.

(The $6 billion figure is often used in the investment community, but there are no hard figures to support such an assumption.)

Frazier Technology Ventures has four general partners and 11 investments, 5 of which are in the Seattle area. The company's Len Jordan told the Seattle Post-Intelligencer "We are aggressively finding and pursuing new companies and we are excited about the ones we have." He also said OnRequest is a "great Web play" because it efficiently matches the needs of advertisers with photographers. In that regard, he said it is similar to eBay.

OnRequest Images CEO David Norris, who co-founded the company in 2002 and chose Seattle for the headquarters because of the presence of Corbis and Getty, said they can offer corporations custom imagery at stock photography prices. "People can get exactly what they want, quickly and efficiently and at a price they can live with," Norris told the Post-Intelligencer, adding that the images can be produced in less than 72 hours and at a cost that shaves millions of dollars off a traditional photo shoot.

Searching For Images On Google

PhotoSource International reports that buyers can find photographers listed with PhotoSource and their images by going to Google, input the keywords they are looking for in the search bar and follow it with the word "photosource". That will give the buyers the names and contact information of all the photographers in the PhotoSource directory who have images on the subject needed. The buyer may then contact the photographer, request a lightbox for viewing and negotiate a fee.