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MARCH 2001 SELLING STOCK
Volume 11, Number 4
©2001 Jim Pickerell - SELLING STOCK is written and
published by Jim
Pickerell six times a year. The annual subscription rate is $120.00 to have the printed
version mailed to you. The on-line version is $100.00 per year. Subscriptions may be
obtained by writing Jim Pickerell, 110 Frederick Avenue, Suite A, Rockville,
MD 20850, phone 301-251-0720, fax 301-309-0941, e-mail: jim@chd.com. All rights
are reserved and no information contained herein may be reporduced in any
manner whatsoever without written permission of the editor. Jim Pickerell is also
co-owner of Stock Connection, a stock agency. In addition, he is co-author
with Cheryl Pickerell of Negotiating Stock Photo Prices, a guide to pricing
stock photo usages.
Thought For The Month
"The greatest tragedy in life is people who have sight, but no vision."
Helen Keller
Story 377
PHOTOGRAPHER SURVEY
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February 6, 2001 - The survey of Photographer Income and Expenses for 2000 is
now available online for photographers to fill out. All stock photographers are
encouraged to go to the site and fill in the information. The Survey has also been
mailed to many photographers. Go to www.pickphoto.com/sso and click on "2001 Photog
Survey." We are interested in getting as broad a base of data as possible.
The results will be collated and made freely available in a public section of the
SELLINGSTOCK site by the end of April.
This may be the most important survey SELLING STOCK has conducted to date. There are
indications that in 2000 the number of rights protected sales decreased compared with
1999. At the same time many stock agencies report receiving higher use fees on average
than in the previous year. In addition, we may be facing a downturn in the U.S. economy
that could change the sales environment for 2001. Reliable trend data is important. The
more photographers who answer these questions the better our data will be.
Long lead times between planning, production and income make producing stock
photographs a particularly difficult and risky business. An accurate understanding of
industry trends is necessary to anticipate the rapid shifts in the industry and plan
for the future. Old strategies for marketing and pricing stock images are no longer
adequate.
Industry consolidation in the past 18 months has dramatically changed the income
potential of many photographers. Most photographers need to develop new marketing
strategies to effectively compete in this new environment. Detailed information about
the market is critical when making such decisions.
This survey looks at production costs as well as income. We want to make the point to
agencies that photographer costs must be taken into account when pricing usages.
Currently no one, but the poor photographer trying to survive in a very competitive
environment, is considering the cost of production.
We are asking for very specific detail. We have made arrangements with Integrated
Statistics in Massachusetts to collect and collate the data so no one in the stock
photo industry has access to your private and personal data.
We urge every stock photographer to take the time to participate in this survey, and to
supply accurate information. Coupled with the baseline result of the surveys in the
last two years, this information can help us track trends and aid everyone in the stock
photography industry.
Story 381
CONVERGENCE
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ICL and Zepher Acquired
February 24, 2001 - Convergence has acquired Images Colour Library Limited,
(ICL) a UK based image library for 3.6 million pounds ($5.2 million dollars) and Zephyr
Images, Inc. a San Diego based library for $2.15 million. These acquisitions are a key
stage in the development of GlobalState's image business, Image State.
GlobalState Holdings, through its subsidiaries ImageState, VideoState and MusicState,
provides pre-edited off and online content for the professional user worldwide. Sheldon
Marshall, former CEO of VCG, is Chief Operating Officer of Convergence and chief
executive and president of GlobalState.
ICL is one of the largest independently owned image libraries in the UK with
approximately 300,000 images, of which 78,000 are in digital format. Richard Robinson
and Peter Robinson own 83% of the company that is based in London and Leeds and has 23
full time employees. It specializes in the rights protected sector of the industry. In
the year ended March 31, 2000 ICL's earnings before interest and depreciation were
approximately 3.05 million pounds ($4.42 million). This included a $900,000 loan to
Zephyr Images, Inc. which will be repaid on completion of the acquisition. The offices
of ICL in London will be the base for GlobalState's European operations.
Zephyr is a general image library based in San Diego and is 50% owned by Richard and
Peter Robinson, and 50% by Leo and Melanie Gradinger and other local management. The
company has 200,000 images of which 10,000 are in digital format. Zephyr operates in
the rights protected sector of the industry and its images are predominantly in the
lifestyle, business, concepts, nature and landscape genre. As of September 30, 2000
Zephyr's earnings before interest and depreciation were approximately $1.7 million.
Other companies that are part of ImageState include:
In June of 2000 ImageState acquired Adventure Photo & Film for a net consideration
of $2.67 million. It is believed the annual turnover of the company is approximately
$1.3 million. APF is a Ventura, CA photo and film library specializing in extreme
sports such as mountaineering, rock climbing, sky diving, base-jumping, scuba diving
and surfing. The library also has extensive wildlife and travel imagery. It houses
approximately 150,000 still images and hundreds of hours of film from over 160 of the
world's leading adventure photographers and film makers. They had 10 full time
employees at the time of the acquisition.
In late 2000, WestStock and John Foxx images were acquired for an aggregate total
of 8.3 million pounds (approximately $12 million). In the year ended March 31, 2000,
WestStock's revenue was $1.1 million. WestStock licenses rights to still images using
both the Rights Protected and Royalty Free strategies and has rights to approximately
one million images.
WestStock was one of the early innovators of the digital delivery of imagery
through CD's and the internet and supplied images for 31 of the first 36 CD's produced
by PhotoDisc. The company has had its own internet site since 1995. In its last fiscal
year WestStock's online sales, before photographer's commissions, was $579,000,
representing approximately 27% of total turnover according to the press release. (This
would indicate that total revenue was about $2.15 million. The inconsistency with the
$1.1 million figure reported above could not be explained at press time.)
John Foxx is a Dutch company based in Groningen, Netherlands. It specializes in
Royalty Free still photography and has 5 full time employees. In the year ended
December 31, 1999, John Foxx's revenue before tax amounted to NLG 3.12 million
(approximately $1.3 million).
Following the acquisitions of WestStock and John Foxx, ImageState had over 1 million
images in transparency form and over 40,000 pre-edited images online.
The files of Zephyr and Adventure Photo & Film (APF) will be merged with the files of
WestStock in Seattle. Seattle will become the U.S. headquarters for ImageState, the
still images division of the company. A fully transactional ImageState website will be
launched in April.
MusicState was developed to provide edited rights-cleared music tracks over the
Internet in MP3 format for the professional business user and was launched to a
preliminary market in November 2000. Customers are able to search tracks by genre,
tempo, mood and instrumentation. They can be listened to and purchased online and
downloaded in full broadcast quality for use in advertising, film and other multi-media
applications. MusicState is a 75% owned subsidiary company of GlobalState Holdings.
In due course, the Director intends to launch VideoState which will provide an online
library of film footage, accessible for the professional user via the Internet for
research and ordering. Users will search the database by subject or keyword. The
selected film footage will, subject to user bandwidth, either be downloaded online or
delivered off-line in existing tape or CD format. VideoState already has a footage
collection acquired from Adventure Photo and Film, based in Ventura, CA, which will
form the basis of its library when the service is launched.
Sheldon Marshall has an employment agreement for an indefinite term and terminable on
12 month's notice by either party. Mr. Marshall receives a basic salary under this
agreement of 120,000 pounds per annum (approximately $175,000)
Story 369
MOFFLY FORMS CREATAS
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Creatas Acquires Dynamic Graphics
David Moffly, former CEO of FPG has announced the formation of Creatas to sell high
quality, value added products and services to creatives and consumers. These products
include stock images, (photography, illustration and film), publications, and education
to creators and consumers of these services. Creatas has also acquired Dynamic
Graphics, a leading provider of visual content, knowledge and solutions for the graphic
design community.
Dynamic Graphics known mostly for their Subscription Services and Royalty Free Images
with four individual units, Clipper, Print Media Service, Designers Club and
Photography and Footage also has a vibrant business in trade publications, "Step by
Step," "Dynamic Graphics" and "Step by Step Electronic Design". Dynamic Graphics
educational unit is the Dynamic Graphics Education Foundation, which conducts
educational seminars teaching design tools and techniques. Sales for Dynamic Graphics
in 2000 were in the range of $20 million.
Moffly won't rule out the possibility that one day Creatas will license rights to
Rights Protected images, but for the moment they are only interested in selling Royalty
Free. He is anxious to talk to RF suppliers about representing their line.
"We are thrilled to make an acquisition of such a quality company. Dynamic Graphics is
the market leader in Art subscription services and has a Royalty Free business that is
leading the industry with its growth rates" noted David Moffly, Creatas CEO.
"With this acquisition we have a platform to build a powerful creative services company
with global reach. The company already has vibrant offices in Europe and Australia and
we intend to build on these successes. Dynamic Graphics is unique in that its products
and services touch the professional creative at various points in their professional
lives. The magazines take a look inside the creative process, the art services
businesses supply essential illustration and design elements, the photo and film
businesses add a depth of choice and the school gives professional creatives important
skills improvement opportunities."
There have been rumors in the industry that Moffly and Sheldon Marshall of GlobalMedia
would be getting together in some type of joint-venture. Moffly says that GlobalMedia
has no interest in Creatas, but that Creatas will be licensing rights to the John Foxx
line of RF images which are a GlobalMedia property.
Story 369
INVOICING AT FPG
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FPG photographers have been complaining that their checks are small. It may not be
because sales are off, but because authorized usages haven't been invoiced.
A major advertising agency trying to close its books at the end of the year was anxious
to pay FPG for usages made months earlier but which had yet to be invoiced. Repeated
calls to the accounting department produced no results. Finally, they appealed to an
industry expert outside of FPG to see if he had any contacts within FPG who could break
the log jam.
The source was able to learn that FPG had only two people handling all invoicing and
they were months behind in the process. As a result of the inquiry the ad agency's
transactions were moved to the top of the pile, and the agency received its invoice for
almost $350,000 worth of uses.
Story 378
GETTY YEAR 2000 RESULTS
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February 9, 2001 - Getty Images, Inc reported 4th Quarter 2000 revenue of $129.4
million, up less than 2% from $127 million in the 3rd Quarter. Gross revenue for all of
2000 was $484.8 million.
Getty has reported minimal quarter-to-quarter revenue growth all year. Getty's pro
forma revenue for 1st Quarter 2000 was $124.9 and some minor acquisitions in June and
the buy back of TIB's London operation should have added revenue.
The basically flat 3rd Quarter to 4th Quarter sales are all the more amazing
considering that PhotoDisc, which represents almost one-quarter of Getty's gross sales,
instituted a 20% to 25% price increase (depending on the size of file ordered) in
September. This alone should have resulted in more than $5 million in increased revenue
for the 4th Quarter if sales had remained level.
CEO, Jonathan Klein also reported the average sale for Stone in North America is about
$660 per image used. This is up from just a little over $500 the previous year. Stone
NA should represent in excess of one-eighth of Getty's total revenue. If prices in NA
are up this much, but quarter-to-quarter revenue is flat, it must mean that the number
of units sold is down.
When questioned by stock analysts during the quarterly conference call Klein refused to
acknowledge that there was any evidence of a slow down in sales volume.
Analysts had been predicting that Getty's 4th Quarter revenue would be $133 million.
This was the first time in the company's history that it failed to meet analysts'
quarterly expectations. Getty did exceed analyst estimates for EBITDA with a total of
$30.7 million or 60 cents per share. Analyst estimates were 56 cents per share.
"EBITDA" is defined as earnings before income taxes, depreciation, amortization,
interest, exchange gains and losses and, when applicable, loss on impairment, debt
conversion expense, integration and restructuring costs, extraordinary items and other
income and expenses. EBITDA should not be considered as an alternative to operating
income, as defined by generally accepted accounting principles, as an indicator of
operating performance, or to cash flows as a measure of liquidity.
The shortfall in revenues was attributed to the company's consumer operation, Art.com.
This division represents about $19.2 million or approximately 4% of Getty's total
revenues. Revenues for the 4th Quarter were about $4 million under expectations. Losses
were $13.3 million for the year. Klein said that Getty would not allow the consumer
operation to become a drain on earnings in 2001. The company is reducing staff at
Art.com by more than 50 people and evaluating alternatives, including the "potential
disposal of the business," according to Klein. In their projections for 2001 Getty does
not project any revenue for Art.com beyond the 1st Quarter. (A little less than two
years ago Getty purchased Art.com for shares and cash worth $135 million, and has had
continual losses since the acquisition.)
Klein also noted that 4th Quarter revenues were lower due to a strong dollar and that
on a currency neutral basis revenues would have been $135 million for the quarter.
Analysts' interpretations of the news was reserved, but basically positive. The stock
was up almost 7% to 27 5/8 the day following the announcement.
Web Sales
E-commerce sales represented almost $49.3 million of the 4th Quarter revenue, or over
38% of total revenues. Separating out VCG which Getty has only started to e-commerce
enable, 43% of all sales were on the web. For the whole of 2000 there was $165 million
in e-commerce sales, or 34% of all revenue for the year. This was a 134% increase in
web sales over 1999. In the 4th Quarter more than 40% of Stone sales were e-commerce;
more than 60% of PhotoDisc sales; about 60% of Allsport sales and more than 70% of
EyeWire sales.
Klein said, "We expect that substantially all of our North American business will be on
the web in 3 years and substantially all worldwide business in 5 years. The trend is
all in one direction and that is more on the web."
It should be noted that an e-commerce sale is one where the customer uses the web to
search for the image, but does not necessarily pay for the transaction on the web, or
receive delivery on the web. Getty classifies a sale as "digital" or "analog" based on
how the image is delivered. If a image is delivered on the web it is classified as a
"digital" sale. If any type of "hard copy" is delivered it is called an analog sale.
Thus, if a digital CD-ROM disc is delivered to the customer it is classified as an
"analog" sale for Getty's accounting purposes. Getty has not provided any statistics as
to the percentage of sales that are "digital," but many photographers report that they
have very few sales where Getty takes a digital royalty share as opposed to the lower
(for Getty) analog royalty share.
Royalties To Creators
Klein said that in 2000 Getty paid about $120 million to photographers and filmmakers,
or a little less than 25% of total revenues. Rights Protected photographers should
recognize that Getty wholly owns its Hulton Getty collection, most of the material
handled by AllSport and much of the PhotoDisc imagery. Thus, if we only looked at the
revenue generated by those who are entitled to royalties, the average amount paid would
undoubtedly be higher.
The company's average gross margin grew from 70.5% in the 3rd quarter grew to 72.5% in
the 4th Quarter and was led by faster growth at Stone.
Klein mentioned that later this quarter Getty would be introducing a new contract that
would provide "fair and equitable treatment to photographers across all brands." He
said, "Getty Images has been, and will continue to be, a financial gold mine for high
quality commercial photographers. There is no doubt that the contracts are more
favorable to our photographers than the contracts that we inherited with the
acquisitions of VCG and The Image Bank and there are also many improvements to the
terms concerning photographers. Nevertheless, we do not expect this contract to have a
material impact on our 2001 financial results and the guidance (2001 expected revenue
of $550 to $565 million) includes the implications of the new contract."
In her report Rebecca Runkle of Morgan Stanley Dean Witter said, "One method to monitor
the success of the new contract is to watch the speed with which the VCG/TIB
photographers transition (the faster the better). Getty doesn't expect these changes to
have a material financial impact, as the reduced rates from the web sales are expected
to offset higher outlays due to expanded territories."
During the conference call the analysts showed little interest in, photographer
contracts or the recent letter from the StockArtistsAlliance outlining issues of
concern not dealt with in the contract outline (Story 375). Likewise, the analysts
showed no concern about the Penny Gentieu lawsuit or the recent ASMP letter to the SEC
(Story 376).
Other Items Of Interest
Image Bank sales grew over 10% in the 4th Quarter compared with 4th Quarter 1999 and
the sequential growth between 3rd Quarter 2000 and the 4th Quarter was 10%.
Sixty-five percent of Getty's revenue comes from creative professionals that work for
advertising agencies and graphic design firms. Other customers include: Publishing
(Newspapers, magazines and web sites) 17%, Corporate Accounts 10% and Film 8%.
Fifty-nine percent of sales were in North America, 36% in Europe and 5% in the Rest of
the World.
TIB sales grew over 10% in the 4th Quarter compared with 4th Quarter of 1999.
Sequential growth from 3rd Quarter to 4th Quarter was also 10%. VCG did not grow in the
4th Quarter compared with the 3rd Quarter.
Klein also acknowledged that there was some weakness in motion picture film sales.
Expected Sales In 2001
The company lowered its revenue guidance for 2001 from a growth of 20-22% to 14-17%.
It estimated sales would be between $550 million and $565 million. The company had a
net operating loss of $0.67 vs. $1.50 previously.
Flat Revenue Analysis
Flat revenue implies that pricing gains are COMPLETELY offset by unit sale decreases.
Are the recent price increase driving down unit volumes, and does that mean that Getty
(or others in the industry) should cut prices to increase volume? My belief is that
there are two other factors that are having more of an effect on unit volumes than
price.
First, there is strong anecdotal evidence from other suppliers to indicate there was a
reduction in the number of calls in November and December. This seems to be continuing
in January. I believe some image users have been delaying or cancelling projects as
they try to retrench with the anticipation of a slower economy. This is happening not
because the picture (a very minor part of the total project cost) is to expensive, but
because they need to cut the total expense of the project itself. For the most part,
buyers are not going to other cheaper sources, but are simply reducing their overall
buying.
Secondly, in the Royalty Free area another thing seems to be happening. For years RF
buyers kept ordering new discs with 100 different images every time they needed a new
image for a new project. They would bill the cost of the disc to the client and throw
the disc in a box in the corner of their office. Now, as the economy begins to get
tight for these graphic designers they go to that box in the corner, find an image they
can use on their next project, and bill their client an image usage fee of which they
get to keep 100%. If there is a real slow down in the economy, the Royalty Free
strategy of selling each customer their own individual library could finally come back
to haunt the RF producers, and the entire industry.
In the last recession there was no RF so Rights Protected stock benefited, when
compared with assignment costs. In the next recession, the RF libraries already sold
may be the lowest cost option for the designers.
Additional Figures From Press Release
Revenue for the fourth quarter of 2000 was $129.4 million, a 61.9 percent increase over
revenue for the fourth quarter of 1999. For 2000, revenue was $484.8 million, a 95.6
percent increase over 1999 revenue. Organic revenue growth in the fourth quarter,
excluding all acquisitions made in the last twelve months, was 26.4 percent and was
29.4 percent for 2000. On a currency neutral basis, revenue for the fourth quarter was
$135.0 million, representing revenue growth of more than 68 percent over the same
period in 1999. E-commerce revenue in the quarter more than doubled over the fourth
quarter of 1999 to just under $50 million, representing 38 percent of total sales for
the company.
EBITDA increased 225 percent over the fourth quarter of 1999 to $30.7 million, or 60
cents per share, exceeding average analyst estimates of 56 cents per share. The EBITDA
margin increased from 11.8 percent in the fourth quarter of 1999 to 23.7 percent in the
fourth quarter of 2000, and increased from 14.1 percent in 1999 to 19.5 percent in
2000. For its business-to-business operations, the company achieved EBITDA in the
fourth quarter of $34 million at an EBITDA margin of 27.4 percent, and in 2000, the
company recorded EBITDA for business-to-business operations of $108.7 million at an
EBITDA margin of 23.4 percent.
After tax cash flow for the fourth quarter was 44 cents per share, compared with 21
cents per share in the 4th quarter of 1999 and compared with the First Call estimate of
41 cents per share. After tax cash flow per share for the year was $1.39, compared with
80 cents per share in 1999.
Story 369
B2B'S NEED SALES REPS
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In the January issue of Wired the following appears under the tag line, "Surprise! B2B
makes customer relations even more important"
The article said, "As B2B apps have rolled out over the past year, it's become clear
that the Internet isn't going to eliminate the need for sales reps. At first, some
analysts believed that the 'frictionless' nature of B2B transactions would make it
unnecessary for companies to maintain a sales force for calling on other businesses.
Now it appears the opposite is the case."
"Making products available on the Web allows business customers to choose from among
several sources. This tends to turn high-margin products into low-margin commodities,
which was demonstrated when PCs were first made widely available online. Computer
manufacturers began competing on price alone, creating a price war that ate up profits.
The lesson learned was that companies must differentiate their products and services
beyond just their price tags.
"Though building a recognizable brand name is one way to provide differentiation,
personal relationships between buyer and seller have never been more important in the
business world. As the mechanics of purchasing become increasingly automated, it will
be up to sales reps to provide the hand-holding and service needed to secure ongoing
loyalty.
"The companies that are integrating B2B into their current sales efforts, keeping the
sales reps in the loop, are the ones that are winning today, according to Harry
Wohlhandler. 'Business-to-business selling is still a personal activity, with
negotiation and human interaction,' he explains. 'Companies are quickly learning that
it's a strategic advantage to have a personal relationship with the buyer.'
"The importance of such relationships is illustrated by the many companies whose B2B
activity is limited to prospecting for new customers, rather than closing business
deals and taking orders. 'Fully 55 percent of the companies doing B2B today are only
using the Internet to generate leads for their sales force,' says Wohlhandler, 'And
even of those companies taking orders on the Web, only half of their orders, on
average, are taken on the site.'
"Wohlhandler insists that there are a large number of B2B transactions -- especially
those involving service providers -- for which the Internet isn't an appropriate
vehicle to close the sale. While he, like many other market analysts, predicts that the
number of online transactions will grow rapidly over the next few years, reports of the
demise of the sales rep in the B2B world have, it seems, been greatly exaggerated."
This is GREAT NEWS for small and medium sized agencies with brand identity among the
buyers. It points to the continued need for knowledgeable sales reps, negotiation and
personal relationships. It should be a strong word of caution for the various start up
companies such as Speedpix.com and Alamy.com that propose to offer a fully automated
service with little need for direct contact with the customers. It also indicates that
Getty and Corbis may not be able to reduce their number of sales reps and this could
have a major impact on their future profitability.
Story 373, 374, 375
GETTY PHOTOGRAPHER'S CONTRACT
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It is expected that any day now Getty will mail its new streamlined cross-brand
contract to photographers who currently have Stone, The Image Bank, and VCG (FPG, TCL,
Pix and Bavaria) contracts.
Management has indicated that, "Our intent is simple: to work in a straightforward
manner with you (the photographers), and to compensate you fairly for your high quality
images."
The agreement is designed to provide all "commercial" photographers shooting for Getty
with a master agreement that achieves consistency and equity. At the same time they
have built in flexibility through addendums.
A summary of the terms of this new contract was sent to photographers at the end of
January.
Photographer Response
While praising some of the proposed changes, many photographers moved immediately --
well before the contract was actually in their hands -- to organize a legal action
group called the StockArtistsAlliance (SAA) to retain legal counsel to review the
document, make recommendations, and aid in the negotiations for those interested.
Indications are that a significant number of Getty photographers are joining this group
and see it as the most cost effective way of availing themselves of legal advice. Any
photographer under contract to any of the above named brands can get information about
joining SAA by contacting any of the following steering committee members:
Glen Allison (Stone)
|
1-310-822-1534
|
GlenAllisonPhoto@aol.com
|
Peter Dean (Stone)
|
+44-139-833-1598
|
peter@agripicture.com
|
Mark Harmel (FPG)
|
1-310-546-6509
|
mark@harmelphoto.com
|
Kevin Kelley (Stone)
|
1-415-455-9260
|
KWKelley02@aol.com
|
Fred Licht (TIB)
|
1-818-763-9941
|
fredlicht@home.com
|
Steve McAlister (TIB)
|
1-214-746-6336
|
steve.mcalister@d2studios.net
|
Joseph Pobereskin (Stone)
|
1-973 313-0799
|
joseph@pobereskin.com
|
SAA Responds
After receiving Getty's letter outlining changes in the new contract the SAA sent their
own letter which praised Getty for positively addressing the following photographer
concerns:
--- No tight turnaround deadline to sign new contracts.
--- One uniform contract for all brands.
--- Addenda that will allow cross-brand marketing.
--- Larger home territory for TIB artists.
--- Image Exclusive vs. Artist Exclusive with no "right of first refusal."
--- No restrictions on alternate agencies for our marketing.
--- Faster Payments (However, 120 days is still too slow).
--- Protection from Bad Debts.
--- No charge for Catalog Images that don't pay for themselves.
They also listed the following additional issues of concern that the photographers
still feel need to be addressed:
The relationship should be one of artist/agent with all the implied fiduciary
duties and responsibilities.
New images should be edited promptly.
There should be no catalog charges.
The proposed commissions were unsatisfactory and the present commission structure
is outmoded and requires modification.
The definition of "Similars" should be less restrictive.
Getty should guarantee substantial audit rights and provide more extensive
records to contributor's auditors.
Percentages should be calculated before deducting foreign taxes and prior to
claiming foreign tax credits.
Getty should place the highest priorities on return of the images they have
withdrawn from the market.
If Getty pays web affiliates (such as Random Eye) a percentage for click-through
traffic, the photographer's percentage should be calculated on the gross fee paid for
usage, not the amount Getty receives after affiliate deductions.
Contracts should not include non-disclosure clauses except regarding confidential
information concerning image needs.
Getty should set minimum license fees.
Getty should minimize delays in reporting and remitting royalties from foreign
licenses.
Contributors are concerned about high cancellation ratesand the lack of
cancellation charges to clients.
For the full text of this letter and Getty's initial outline go to
www.pickphoto.com/sso and see Stories
373 and
375 .
Story 370
GETTY SNAPS AT ANALYSTS
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Mark Getty has charged that industry analysts have "forgotten how to be objective". The
interesting thing is that he is not talking about people like me; he's talking about
the investment banking analysts who have told the world for so long that Getty Images
was such a great buy.
Evidently, when analysts start asking hard questions and not accepting the company line
verbatim that is evidence of not being "objective."
He complains that in the past Getty Images had to "carve banks into deals when they
have done absolutely no work for us merely to keep them sweet." This sounds like Getty
was "buying" favorable comments about his company (and that certainly doesn't sound
like it's in the best interest of investors). But what really upsets Getty is that now
the analysts are refusing to be bought, or once they are bought they won't stay bought.
He unburdened himself to Neil Bennett of the Daily Telegraph in London for a December
17, 2000 piece. For the full article see "Mark Getty Snaps At Analysts," Story
370 on our online site.
Story 368
GETTY RETURNS IMAGES
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January 11, 2001 - Getty Images has announced that they will begin returning to
TIB photographers, early in 2001, approximately 5.5 million original images
"inventoried in Dallas". They have had a team of approximately 30 individuals sorting
through these images for the past nine months and organizing them by photographer.
Getty has also confirmed that all of their offices and the offices of their
sub-agencies have stopped licensing rights to original images in the Stone, TIB and VCG
brands. All these images are being rapidly returned to Dallas which will be the central
sorting facility. They intend to sort and return to the photographers all images from
all these brands on an ongoing basis. They will no longer retain images until the end
of the contract term. TIB and FPG photographers have already received a letter explaining
the policy. The letter to the Stone photographers is expected to be mailed next week.
In a letter to TIB photographers Stephen Morelock said, "Our goal is to put your images
to work or return them to you in a timely fashion and within the terms of our
agreement."
"At the time Getty Images acquired The Image Bank, we inherited a large backlog of
images already in storage. Getty Images has invested heavily in manpower and resources
to bring order to this backlog and to put efficient systems in place to manage the
images. A team of approximately 30 individuals has been at work on the project for the
past nine months. They have taken images that were stored by subject matter and
resorted them by artist. The result of our efforts is that all images in that backlog
inventory (some 5.5 million originals!) have now been sorted by artist and we have
begun the process of returning the images to released artists."
Part of the motivation for this action was the suit for lost originals by photographer
Charles Mason that resulted in an undisclosed out-of-court settlement last spring. This
settlement came after court documents revealed that TIB had distributed images all over
the world without tracking them. (A full report of this case can be found on the PDN
site at: www.pdn-pix.com/news/arts_0700/art1.html.)
Industry sources indicate that there may have been a number of out-of-court settlements
for lost transparencies recently.
Morelock pointed out, "As was announced at our previous artist meetings, it is not
Getty Images policy to license original images in our offices. Therefore, we have asked
each office and franchisee to return all originals to us. Some of these images will be
elevated to CORE, where they will be aggressively marketed through our world wide
distribution systems. The remainder will be sorted by artist and we expect to return
them to you on an ongoing basis.
"In addition, please be assured that the masters of your CORE images are stored
securely. We hope this update increases your confidence that Getty Images is committed
to the care and return of your images, having allocated the resources necessary to
achieve this goal," he continued.
FPG Returns
Rana Faure, Director of Photography at FPG has also announced to FPG photographers the
"permanent closing" of the FPG files. They will begin returning images in the 2nd
quarter of 2001.
The FPG files are now on their way to Dallas where they will be sorted by the same 30
person team that worked on the TIB files last year. Faure said, "These images are all
being sorted by photographer in preparation for their return. We are making excellent
progress and we expect to begin the process of returning images to all photographers
involved sometime around the end of the second quarter of 2001."
Faure told photographers, "As you know, FPG stopped accepting new images for
'file-only' promotion in January 1999, in a move to prepare for our evolution to a
fully e-commerce enabled business model. Since then your editor has been selecting
images for product representation only. After many months of careful preparation,
evaluation and editing, we are now at a point where we are ready to announce the
permanent closing of our files. We realize that this is a milestone in FPG's history,
one that we have approached with the utmost care and consideration. We feel that it is
critical now that we fully embrace the technology available to us today. This
technology will allow our business to grow by providing better access and exposure for
your images then was ever possible before.
"Over the past several months, we have been closely evaluating the original images
residing in our files for relevance and marketability. We have completed the process of
selecting the most viable images from the file material and we are in the process of
digitizing and uploading this material to the web. The selected file material will now
be marketed as part of our core collection," Faure continued.
Barbara Roberts, former President of FPG before the company was sold to Visual
Communications Group and later to Getty Images, said, "The dismantling of the FPG file
is totally tragic. One of FPG's biggest money makers was retro photography from the
50's and 60's. Photography, like everything else, goes in and out of vogue on a cycle
of about 20 years. I predict that the photography and fads from the 70's and 80's will
have renewed demand in the 21st century. Nostalgia for the last century will explode in
the next ten years. The documentary photographs on social issues that we produced while
I was at FPG will have tremendous value in the future. Some FPG photographers have
really chronicled the whole development of taste and culture in the 80's and 90's. The
people at Getty Images don't seem to appreciate the absolute gold mine they are
dismantling."
Contact Your Agency
It is recommended that any photographer with images at either TIB or FPG contact their
respective companies and supply a current address where their images can be returned.
TIB photographers are advised to write to Stephen Morelock at: The Image Bank, 2777
Stemmons Freeway, Suite 600, Dallas, TX 75207, or e-mail him at
smorelock@theimagebank.com. FPG photographers should write to: Sarah Whiteside at FPG,
32 Union Square East, New York, NY 10003, or e-mail her at sarahw@fpg.com. If FPG
photographers have questions, contact Claudia Micare at claudiam@fpg.com or by phone at
(212) 358-6520 and she will be happy to assist you.
New Year's Present
Getty is offering all the other stock agencies in the industry (except Corbis because
they intend to do the same thing) a huge present.
By closing down these files they are significantly reducing the number of
competitive images in a number of categories.
They are leaving a number of the world's best photographers no alternative but to
take a substantial portion of their work elsewhere in order to make it available in the
marketplace. Once photographers make such a move it will be interesting to see if they
continue to give Getty first choice of their production.
For many agencies this will be an unprecedented opportunity to add depth to their
files with material from some of the world's leading photographers.
They are offering many of their customers no alternative, but to go to other
sources to find much of the imagery they need.
Once they have dismantled their files there is little or no chance that they will
be able to rebuild a file that competes in these particular subject areas, if they
happen to discover that this has been an ill advised move.
This move is likely to significantly reduce the oversupply of images in the
marketplace at the expense of some of the world's top photographers. Once the images
are returned to photographers many will never see the light of day again. Some
photographers will edit the best of their material and make it available to other
agencies. Many will find the task too burdensome.
This move is likely to make it clear to customers that Getty is not a supplier
concerned with their needs.