Getty Images/NGIC Deal

314

June 2, 2000

The gettyone.com representation of the National Geographic Image Collection

(NGIC) file is causing quite a stir outside the U.S. The press release

implies to some readers that gettyone.com has the "exclusive" right to

distribute National Geographic images worldwide. In fact, the only rights

they have, at this time for the first batch of 2000 images, are to distribute

them in the U.S. market.

Since many U.S. clients interested in NGIC images would be likely to contact

National Geographic directly, rather than going through Getty, it would appear

that the U.S. market would be less of an opportunity for Getty than the

foreign markets.

NGIC has contracts with more than 26 agencies outside the U.S. to represent

their images in particular territories. Some of these agencies and

territories include: Premium Stock, Germany; Images Colour Library, UK;

Slide File, Ireland; Fototeca, Portugal; Stock Image, France; Prisma, Switzerland; Marka, Italy;

Contrast PhotoAgentur, Austria; Van Parys Media, Belgium; Horizon

International, Australia; First Light, Canada and Mon Tresor, Japan.

Some foreign agents tell us that the press release is "causing big

problems" for them. Local trade associations and clients are contacting them

and saying, "I understand you will no longer be representing Geographic."

Geographic has produced two print catalogs -- in 1996 and 1999 -- which

contain the 2,000 images that will initially be posted on gettyone.com. With

the first catalog most of the foreign agents have seven year exclusive

contracts to license the images in their territories. In general they have

five year contracts on the second catalog. Maura Mulvihill, Director of NGIC,

says, "We will honor each agreement."

Roger Ressmeyer, VP

of Getty Images says, "While the gettyone.com site can be accessed from

anywhere, at this time the only territory choices allowed during online

licensing are in North America. Our clients are formally registered and must

agree to the terms that are offered. For now there are no other regions

available, and that is very clear during the online licensing process."

Getty intends to eventually expand the marketing of gettyone.com worldwide,

but no date has been set.

Ressmeyer continued, "gettyone.com has online global rights to distribute

National Geographic Image Collection (NGIC) images that are cleared for global

distribution. When NGIC sends images to gettyone.com that are not in the NGIC

catalogs and are not otherwise encumbered, they will be distributed globally."

Getty Images has an exclusive worldwide e-commerce arrangement for images

other than the 2000 NGIC catalog images. This may make it difficult for any

foreign agency other than Getty Images to distribute a future print catalog

produced by NGIC because images in such a catalog will likely also be

available on gettyone.com.

In summary, at this time gettyone.com only has U.S. rights to the initial

2,000 images (from the two catalogs) that NGIC will supply. Getty Images

expects NGIC to later supply them with other non-catalog images and they will

have online global rights to those images. It also seems that if a client of

one of the foreign agencies that currently represents NGIC, comes to that

agency and requests an image not currently in one of the print catalogs, that

agency will still have the right to get that image from NGIC and make the sale

-- even if the image is one of those on gettyone.com.

When gettyone.com is eventually opened up outside the U.S., it is unclear how

Getty will block foreign clients from viewing or licensing the Geographic

images as opposed to any other image on gettyone.com. Ressmeyer said that if

gettyone.com gets a request for license of a NGIC image that they don't

represent they will refer that request to NGIC who could then forward the

request on to the appropriate local agent. Ressmeyer said, "Gettyone.com will

not take any royalty for referring requests back to National Geographic Image

Collection for imagery gettyone.com does not represent."

Mr. Mulvihill indicated that once the 2,000 images are up and working they

might slowly expand their representation on gettyone to between 6,000 and

10,000 images, but that the bulk of the 10.5 million collection would never be

made available on this on-line site.

In theory, if a client in the U.S. calls gettyone.com and requests a specific

image seen in National Geographic, but not one of the 2,000 images on

gettyone.com, gettyone.com could request that image from NGIC and complete the

sale. On the other hand one would expect this scenario to occur infrequently

since most image buyers in the U.S. with a special request would know where to

find National Geographic and go to them directly.

Ressmeyer points out, "gettyone.com provides hundreds of thousands of

on-line clients, both large and small, with nearly instantaneous access to the

world's greatest imagery. We expect this relationship to substantially expand

NGIC's client base."

Sources estimate that current foreign sales (not including the U.S.) from the

two NGIC catalogs are less than $2 million per year -- and maybe significantly

less.

While gettyone.com is only available in the U.S. the Stone and PhotoDisc sites

are fully localized and are available in

multiple languages and currencies. In the first quarter of 2000,

approximately 67% of Getty Images' online sales came from North America.