Marketing Channels

547

March 22, 2003

Editors Note: In "Scanlon On Royalty Free" Henry talks about the importance of
finding a marketing "channel" to work with. But, it seems that most RF brands try to
place their products with everyone. Thus, if a photographer gets images on a disc
produced by any major company, there is a good chance that the images will be available
through all portals before long. Sort of the "Wal Mart" approach to marketing. Comstock,
on the other hand, seems to be the only major brand that is building a channel with only
its own material. I asked Henry to discuss the logic for that position.

The question of whether it is strategically sound to "dance with everyone at the ball" is
one that we are profoundly ambivalent about. On the one hand, clearly, that is the
accepted wisdom and it seems that every portal, every reseller--ones that have been
around for awhile as well as those that keep popping up--take the view that their best
course is to represent the work of all the usual suspects, under the theory (I would
imagine) that their ability to build a client base will be predicated on the "you can get
it all here; no need to go anywhere else" approach. From the vantage point of the content
providers, it seems to be, "Hey, even if they have only one customer, I want to be in on
it", which makes a certain amount of sense.

On the other hand, all you get are revenues.

Which sounds like a preposterous quibble: After all, what else is there? Isn't that what
this is all about?

Well, yes. And this "anywhere and everywhere" approach does address that revenue issue --
for today. But it does so at the expense of two other issues that may -- or may not
(therein lies the gamble) -- prove to be central in the future: Unique selling
propositions and (relatedly) control over one's destiny.

Put another way, think Sun-Tzu: "If you attack everywhere, you attack nowhere; if you
defend everything, you defend nothing".

I like knowing who our customers are. I like learning from their behavior as well as
their words and establishing a real relationship with them, directly. Selling pictures
through portals and resellers generates revenue; establishing a loyal customer base
builds value, and, by extension, security, not only for the agency but for the
photographers it represents. It is a harder course, and a longer one, but might
ultimately be the process of building one's house out of brick rather than straw. There
is no way to know for sure until the evolution of our industry -- and it is evolving and
will continue to do so at an increasing pace -- takes clearer shape.

Let's not mince words: For anyone in my position -- or for that matter, any other agency
or reseller ("portal") who is not Getty -- the challenge is clear: What can you provide
customers that they cannot get (or don't want to get) at Getty? They are formidable, they
are smart, and they don't sit on their hands. Plus, they have more money than Croesus to
throw against you. The only other company that could meet them head-on in the spending
department is Corbis, and it would be nice for the rest of us if they did a more
effective job of providing a countervailing influence against Getty, but for reasons that
I have to believe are sound and strategic -- albeit baffling -- they choose not to
implement those things that would allow them to do so. (I'm guessing the strategic agenda
there has objectives outside of, or tangential to, the conventional ones usually thought
of as central to our industry.)

Thus, the "anywhere and everywhere" approach has always bothered me on three counts:

• 1. Where is the "unique selling proposition"? That is, what reason is being
  provided to the customer to select one "have it all" portal over another?
  

  
  

• 2. "Information overload": Sometimes (actually, often) less is more, from the
  customers' point of view. This is a huge -- and interesting -- area that I won't go into
  here, but I believe it to be an absolutely critical concept to apply in our industry
  going forward, with ever-increasing urgency as tons of material flows into the arena.
  

  
  

• 3. Whose hands are on the steering wheel? Yours, or somebody else's? Example: As you
  know, there is a consortium of resellers in Europe who engage in a certain amount of
  cooperation with each other. For awhile, their customers had at least one desirable thing
  that they could get from these resellers, but could not get from Getty, thus preserving
  at least some reason for customers to go to them: that was the Euro-strong Digital Vision
  material. In one fell swoop, as Getty signed up to resell DV material, that remaining
  "reason" was eliminated. I don't get the feeling that this was an accident. (Can you say
  "hegemony"?) Do I criticize either Getty or DV for this move? Not at all; revenues are
  revenues and smart, tough business is just that. But, in the long haul, when it comes
  time to renegotiate with Getty, will DV be in a stronger or weaker position if these
  European resellers have been essentially eliminated thus providing DV with no viable
  alternative (theoretically) than to accede to whatever terms Getty might offer? Whose
  hands are on the steering wheel? Of course, as Keynes pointed out (referring to worrying
  overmuch about the consequences of governmental deficit spending), "in the long run we're
  dead"... so why worry about it, right?

All of which contributes to, as mentioned above, our ambivalence about going the reseller
route: We have no great antipathy towards placing our material with others--so long as
they are the right "others"--it's just that we haven't pursued it aggressively, and, as a
result, tend to be underestimated. We do know, for example, that at the one reseller in
North America with whom we have placed material (something we sort of stumbled into) our
material, when sent head-to-head with everyone else's in the same "store", does
exceptionally well. And it's nice to get the checks every month. But they are not checks
we depend on. Fortunately, our internally generated revenues are sufficient not only for
significant profitability, but also for funding the step-by-step strategy we embarked
upon several years ago and which is proceeding nicely as planned. We intended to
establish a very specific position for ourselves within the industry that would then
provide a platform for a great variety of options, and that's what we've been doing,
successfully, without the need for reseller revenue that, while nice, divorces us from
direct contact with our growing customer base.

On the other side of the coin, so far, no, we have not opened our "channel" to others,
sort of under the theory that building it (the channel) is the hard part, and, "if you
build it they will come". As it happens, we are currently in discussions with certain
entities to, indeed, open that channel, with the crucial ingredient being our
determination not to trifle with the loyalty of our customers by incorporating anything
other than true value-added, customer-service oriented offerings. In terms of our own
photographic production, most is wholly owned (at least in our royalty free division),
produced by in-house photographers or photographers to whom we pay top dollar assignment
rates to shoot with our complete support, direction and involvment--and I'm as proud of
the material we've generated over the last year or two, especially, as I have ever been
at any time over the last couple of decades. Producing powerul imagery that connects with
the marketplace is something we understand in our bones, and we do it as well as it can
be done.

What does all this mean to photographers? You and I have disagreed on this for years, and
will continue to do so until you have an epiphany and see the light (which is to say, see
things my way...). I don't fault any photographer who takes the position that the goal
is to get his or her pictures everywhere and anywhere thereby increasing the odds that
they will have a chance to be purchased. It is a legitimate approach and a sound
strategy. But it is not the only one. When Steve at Masterfile announced that they were
going to "image exclusive" as opposed to "photographer exclusive" it struck me as smart
and necessary...and sad. I don't know anyone in our industry who is more dedicated to
photographers as individuals, more interested in nurturing their careers and providing a
professional "home" for them than Steve. But our industry has evolved to the point where
photographers do not perceive that sort of relationship as either advisable or even
possible. At least not today. But tomorrow might be another story. It might be that as
things progress, the "everywhere, anywhere, all the time" approach implodes on itself.
Maybe that's attacking everywhere and thus nowhere. Maybe the viable
agencies-who-are-not-Getty of the future will be the ones who find a core group of
dedicated and loyal photographers who hitch their wagon to theirs in mutual support to go
out and do battle together, as a team.

Maybe. We'll see...

Henry Scanlon/CEO

www.comstock.com