8 CORBIS 2004 REVENUE IS $170.4 MILLION
January 21, 2005
At Corbis' second annual meeting, held in New York, CEO Steve Davis announced that the company had gross 2004 revenue of $170.4 million, representing growth of approximately 22% over 2003 revenue of approximately $140 million. Recently acquired zefa visual media group reported approximately $41 million (33 million Euro) in 2004 and Davis estimated combined 2004 revenues of the two companies at approximately $211 million.
"We have experienced strong growth across all our lines of business. Our strategy of offering complete visual solution, encompassing existing imagery, rights services and assignments and representation, has gained tremendous traction with the market. 2004 revenues are the highest in Corbis history," Davis said. "Today's creative professionals want exceptional imagery combined with the services necessary to use them in innovative ways -- which is why more publishing and advertising clients start with Corbis for their visual projects than every before."
Corbis revenue in the Americas grew at a rate of 18% and international revenue grew at almost twice that rate, with European revenue growing 31%, Asian 51% and Japanese 57%. Davis attributed the Japanese boost to a lucrative partnership with Amana, Japan's leading stock photo seller. Non-US sales accounted for approximately 42% of Corbis' revenues (or $71.6 million). With the zefa acquisition Davis predicted continued growth in excess of 40% for 2005 and expects the company to have positive cash flow from operations for the first time in its history.
About half of Corbis' image sales worldwide were for editorial uses with the other half being for commercial advertising uses. Given Corbis' very strong editorial image collection, one-third of the commercial sales used images from the editorial collection. I was unable to get an official breakdown of these percentages figures into actual dollars, but for the purpose of illustration I believe about $25 million of the revenue was for media services which would include everything but still image licensing such as rights clearance, research, motion licensing and assignment services. This would leave approximately $145 million that represents the still image licensing portion of their business. Given the percentages almost $97 million of this image licensing total would have been for the use of editorial images and about $48 million was for commercial images.
There have been recent rumors in the London press that Bill Gates, who owns Corbis, might be about to launch an IPO, but in his opening remarks Davis quickly put that idea to rest by saying an IPO was not "imminent."
During his presentation Davis described Corbis as a "media services company" and put particular emphasis on the rights clearance aspects of the business. Sources indicated that the rights clearance division grew in excess of 100% in 2004, and experienced 90% growth in 2003. Corbis got into this business in 2003 when it recognized that many of its customers had great difficulty in using many of its editorial images because they had so much trouble in clearing the personality rights of the subjects.
They acquired a company that had been doing this kind of clearance work for the motion picture industry and began offering their customers a clearance service that includes personality, property, trademark and logo rights. Not only does Corbis generate revenue from providing such clearances, but facilitating clearances has made it possible for advertising and commercial customers to effectively use more Corbis images than they had been able to use before. Corbis also supplies this service for their customers regardless of whether the image in question has been acquired from Corbis or from someone else.
Getty Images has made a fledgling effort to offer a similar service, but it appears that Corbis is clearly recognized by advertising customers as the leader in this aspect of the image licensing business. During his presentation Davis offered customer testimonials as to how the availability of such a service had made it possible for them to acquire rights on deadline and successfully complete projects that might have otherwise been impossible.
Davis also announced the launch of a new Corbis service, allied with Rights Clearance, called Rights Representation. Rights Representation allows Corbis to better serve both Corbis customers and rights holders by administering all aspects of the rights management and clearance process. The company launched this service with the announcement of rights representation partnerships with the Andy Warhol Foundation for the Arts and Marvel Enterprises, Inc. It is expected that in the near future they will be announcing worldwide representation of a number of other major rights holders.
In looking at the percentage of growth one investment analyst made the observation that "revenue growth is not directly comparable between Corbis and Getty, given Corbis' broader services offering," and said that Corbis has defined its business model around the broader concept of digital imagery while Getty focuses more tightly around stock photography. It seems to me that both Getty and Corbis are very focused on stock photography. If we take footage out of the mix, I estimate that at least 85%, and maybe a little more, of Corbis revenue comes from the licensing of still stock photography and illustration. With Getty that figure is 92%. In both cases the companies are strongly dependent on stock image licensing. Getty has a stronger footage division, and as we pointed out above Corbis is currently stronger in Rights Clearance. But both have a long way to go if the goal is to reduce their dependence on still imagery licensing.
In addition to presenting 2004 results, Corbis described its global expansion plans. Davis announced the January opening of Corbis' first office in Canada. This new office, combined with the acquisition of zefa, has extended Corbis' direct operations into five new markets -- Canada, Italy, Holland, Belgium and Poland -- strengthening its global reach. Davis also announced Corbis' intention to open its first office in China in 2005 and said China is projected to be "one of the top advertising markets in the world" (although that may be in the rather distant future).
"We have experienced significant expansion in Asia and Europe as well as strong growth in revenues from new products and new distribution channels," said Davis. "To better service our advertising agencies, publishers and editorial clients, we are expanding our global presence, providing creative professionals around the world with access to images and motion licensing, research, and rights services 24/7. This is just one more way that we are fulfilling our commitment to meet our clients' visual needs."