Corbis Contract Update

Posted on 4/9/2000 by Jim Pickerell | Printable Version | Comments (0)

298

CORBIS CONTRACT - UPDATE

April 9, 2000

Since my previous story on the Corbis Contract
(Story 296 )

there has been some significant new information. Basically
the same contract has been presented to the Sygma photographers and to all new
photographers who contact Corbis with an interest in joining. However, there
are some important differences.

Percentage

Instead of the 45% for the Limited Rights category that they have
offered all photographers who were previously with Corbis, they are offering 40% to
Sygma photographers and anyone new who wants to join Corbis. (For the
purposes of this article I will refer to the group who have been with Corbis for a
while and are getting 45% as "Old" photographers and those with Sygma and anyone
new who wants to join Corbis as "New" photographers.)

I fact some of the French photographers with Sygma are being offered much less than
40%. Sygma has several different categories of photographers. A handful are paid via
a "fiche de salarie" and are entitled to full social security, retirement, 13th month
bonus and all other benefits. In exchange for these benefits they have given up their
copyright. Others get some benefits, but retain their copyright. Their percentages
may be lower than a U.S. photographer represented by Sygma who receives only a royalty
and no benefits. Corbis is trying to make one contract fit all. The French association
of photographers is now in the middle of the negotiations. The important thing to
recognize is that this is likely to end up with different groups of Sygma photographers
getting different percentages for Limited Rights sales. The percentage will have
to be considered in conjunction with the other rights offered, or taken away, in the
agreement.

In addition most, if not all, of the "Old" photographers have a non-exclusive
contracts which allow them to market the same or similar images in other ways. All
the "New" photographers are expected to sign an exclusive agreement. (Please note
that in our recent survey
(Story 297) on
average non-exclusive photographers have
much better earnings than those who are exclusive.

Photographers must read the agreement carefully to realize that it is an exclusive,
not a non-exclusive agreement. The main body the agreement indicates that the
photographer can offer images either exclusively or non-exclusively on a case by case basis.
This is an ideal situation where the "Old" photographers benefit. However in one version
of Attachment E of the agreement which has been offered to some "New" photographers it says:

Out on the sidelines are The Stock Market photographers. They have been
asked to sign the following:

This assignment doesn't sound like much of a problem, but a number of photographers whose
contracts will expire in the near future are concerned. TSM has given many photographers a
verbal assurances that anytime within the next 18 months the
photographer will have the option to renew his or her existing contract (that's at 50%)
for another three years. A couple photographers who have insisted got this in
writing. But for some reason it appears most photographers only have an oral agreement.
The language the photographers have in writing says:

2 - Under no circumstances will any of ________________'s photographs be sold on a Royalty
Free basis or used to generate derivative works without ____________________'s written
permission. Corbis further agrees not to solicit a third party to imitate ________________'s
work.

All TSM photographer are advised to get these agreements in writing as a condition of
assigning their contracts to Corbis. The agreements should be signed, not only by Richard
Steedman, but by someone representing Corbis. It is unclear why some photographers are
getting this in writing, but the same offer is not being made to everyone.

Why Do Some Get 40%, some 45%, some 50%?

It is understandable that Corbis might want to offer those who joined them first,
and hung in there for several lean years, a better deal than those who are jumping
on the band wagon now. In addition Cobris had a 20 year non-exclusive contract with
the "Old" photographers. They couldn't have changed that to exclusive without losing
a significant number of the images already scanned and in their system.

But to grow Corbis seems to believe they need much more content that is
advertising oriented. Most of the images from the "Old" photographers are
editorially oriented, and may not, on a per image basis, ever generate the revenue
that might be realized from advertising images. To some extent their position with Sygma is
understandable because in that case they are also dealing with editorial images.

What makes no sense is telling individual photographers with concept images
that would be marketable for advertising that the 40% for Limited Rights is non-negotiatable.
What makes no sense is telling the TSM shooters that they will be allowed to
extend their contracts, but being reluctant to put that in writing. What makes
no sense is locking WestLight photographers who produce advertising
oriented images into 40% exclusive contracts when they are offering TSM
photographers 50% exclusive contracts and "Old" photographers 45% non-exclusive
contracts. What happens to new photographers that TSM signs in the future? Will
they get 50% agreements, 40% agreements or something else?

It is clear that Corbis wants to attact more advertising shooters. Acquiring TSM was a first
step, but they want more. Sources indicate that Corbis will be acquiring more
agencies with advertising content in the near future. In addition they also want to reach
out to individuals who are unhappy with the representation they are getting at
Stone, TIB, FPG and Telegraph. But, if there is no appearance of consistency and
they are going to offer these photographers the
same bad deals they get with Getty the photographers are unlikely to move.

Initially, it looked like the 45% and non-exclusive option were a step in the right
direction. In light of the most recent move I will have to put that initial reaction
on hold.

There may be economic justification for offering some photographers a higher
percentage than others, but Corbis needs to be careful that they don't end up
offering those who produce the high demand product the lowest return on their
investment. If they do the shooters they so earnestly want are likely to end up
selling somewhere else.

Corbis didn't learn much from Getty's efforts eighteen months ago to get
everyone to sign new contracts at once. Corbis could have presented new agreements to
their "Old" photographers, got that process finished, and later presented new
contracts to Sygma. Given the way they have approached it, they are likely to
have more people clamoring for answers than their negotiators can deal with. The
entire process will likely slow down and it could be many months before there is a
satisfactory resolution. This could delay the signing of many individual
photographers Corbis could have picked
up as a result of their acquiring TSM and Getty acquiring TIB and VCG. Unless they
quickly move to resolve the confusion among TSM photographers and offer "New"
photographers a better deal than Getty is offering, they will have lost much of
the momentum they gained by announcing the acquisition of TSM -- and that deal
isn't even complete.

Contract Issues Of Concern

There are other sections of the agreement we did not discuss in our first
story that are causing some photographers concerns. The first is copyright. The
copyright clause in the agreement says:

It is my understanding that the principle reason for such language is so Corbis can
register copyright prior to offering the image for licensing. In the U.S. if an
image is not registered prior to use it makes it very difficult to pursue legal
action. Laws about regtistration vary in other parts of the world. To protect
the photographer's rights, and theirs, Corbis wants to be
able to agressively pursue any infringer. Since very few photographers register
their images, Corbis wants to take care of the registration so they will know
that it has been done.

In addition, photographers need to recognize that they are not the only ones who have
copyright to their images. Whenever they license rights to a publication that
publication gets a "collective works" copyright which may entitle them to certain
additional rights to use the image -- particularly if the rights that were licensed
to the publication were not spelled out clearly in the invoice. That's what the
"Tasini" decision was all
about. The degree to which a "collective works" copyright can be published in
another form (CD-ROM) and can be used without
additional compensation is still being fought out with National Geographic.

Even though the photographer owns the copyright, the photographer is transferring
to Corbis, and by extension to Corbis's customers, certain rights to control the
use of that copyright for the life of this agreement. In this case the contract is
for 5 years, plus and additional 3 years once the contract is terminated.

One of the critical factors is the contract Corbis has with its customers, or that
any photographer has with their customers. The copyright is a bundle of rights.
The photographer (or Corbis) can assign to a user certain specific rights and the
user has no other rights than those assigned. Where photographers and stock
agencies get is trouble is that they are not specific enough in defining
the rights assigned. Too often they tend to do it orally, rather than in writing.

There are two things that should be added to Corbis's clause. If the
photographer is going to assign these rights then Corbis must agree to register the
copyright (the purpose of the assignment) and to transfer the copyright back to the
photographer at the end of the agreement. The language could be something like the
following:

Manipulation

Another area of concern, particularly for the editorial photographers is manipulation.
The contract says:

In my initial story I was thinking mostly of images that are created for
advertising. In these situation the photographer is usually trying to create an
"illustration," not record an actual situation. For most photographers
manipulation of the "illustration" is no big problem as long as the photographer is
compensated appropriately for its use.

Obviously, in an editorial situation it is critical that the image not be
manipulated. Editorial photographers are not suppose to "misrepresent" what
happened at an event and manipulation can lead to misrepresentation. In
addition photographers can be legally liable for such misrepresentation. Corbis
wants the right to manipulate in a way that might misrepresent, but if there is
any legal action as a result Corbis wants the photographer to be responsible
and hold Corbis harmless.

In this regard photographers need to examine item 5 in Attachment "A" very closely.
This has to do with the "Indemnification/Warranties of Artistic Content
Providers." Not being a lawyer, I am somewhat concerned with 5.1(v) which says,

It seems to me that this clause would only be effective if a model or property
release had been provided. If no release was provided, and the images were clearly
marked as having no release, it would seem to me that this clause would not be
operatable. However, I am not sure. Ideally, I would like to have 5.1(v) removed
from the contract. At the very least, if it stays, get an interpretation from
a good lawyer.

It is understandable that Corbis wants to create a single contract that works for
everyone. When they are dealing with two very different disciplines -- advertising
and editorial -- that may be impossible. The tricky part comes when a
photographer produces both editorial and advertising work. In certain cases some
types of manipulation would be acceptable and in other cases not. In the past
manipulation of editorial images has basically been prohibited
without the approval of the agent or photographer. When negotiation is part of
getting permission to use the image, this is no big problem. But Corbis wants to
set up a system that allows anyone to automatically download an image and use it in
any way they choose without complicated discussions -- and they want the
photographers to take the risk if anyone uses the image in an inappropriate way.

Editorial photographers, producing pictures of people, should consider their risks
very carefully and adjust the contract appropriately.

The Future Of Film Files

One of the major concerns for photographers with years of production in their
agency's file is how Corbis will service that file. Corbis's intent is to produce
an all-digital operation. They may discontinue service to those who want to see
images that have not been digitized, or service that market ineffectively. Images
they choose not to scan may die. Corbis editors will decide which pictures to digitize
and which to ignore. At best they will digitize a small fraction of
the historical material. What happens to the rest?

One New York magazine editor says Corbis's service for analog material has
become so poor that now he only calls on Bettmann or LGI as a last resort.
The editor indicated that Sygma and Outline have not yet been "infected,"
(his term) with this problem.

As this editor sees it, the main problem is that he can no longer speak with the
researcher who will pull the photos. Under the Corbis system, the
editor can only talk with the sales rep. The sales and research functions are kept
separate. As a result, the editor feels the quality and relevance of the pulls has
gone way down.

The other problem is that sales reps often do research in their digital database -
and that's it. Seldom, if ever, does anyone look at the analog files. I've heard
similar stories from other editors and about Getty research as well. Clearly the
on-line philosophy of Corbis and Getty is the same.

Consider another small example. I had a small non-exclusive file with WestLight. No
images in their catalogs, no images with sub-agencies. For years while the agency was
under Craig Aurness' leadership I averaged between $4,000 and $6,000 a year -- all
from file research sales. This was not a major source of income, but it was a nice
suppliment to the income I received from my other agencies.

Corbis took over and in nine months my income from this file dropped to zero -- that's
right $0.00. None of my images were scanned, or went into the on-line database. For
some reason the people who had been using my images in the past have either stopped
asking to see such images, or they no longer get what they ask for. A high
percentage of my images have now been returned, but so have a high percentage of the
images of most of the WestLight photographers who had a much larger presence than
mine in the file. Sygma photographers
need to try to talk to some of the WestLight photographers and get first hand
information about their experiences.

(Competiting agencies take note. This attitude toward film files will present a
major opportunity for many small, research oriented agencies. The big guys are
turning this market over to you if you want it.)

As part of their negotiations Sygma photographers should attempt to define a way
to get Sygma's file drawers full of slides working again once Corbis gives up on
that side of the business. The worst thing that can happen is for the file to
be broken up and returned to individual photographers.

Making the file work will take human researchers. The people who currently
know what is in those files will be immensely valuable. What is most likely to
happen is that these researchers will be laid off as the "file"
becomes less productive from Corbis's point of view. The images will be returned
to the photographers on a piecemeal basis. Then the photographer will have to try
to find another agent to take the images and refile them. Once the file has been
broken up, it will be very difficult to get anyone to refile and reorganize the
historical material. Most of the value of the older images will be lost. No one
will be able to get access to them. Now is the time to develop a plan for this
eventuality.

The breaking up of the file will be a monumental disaster, but learn from what
is happening at WestLight. Once the cream (by the Corbis editor's definition)
has been digitized the file will no longer be economically
important in Corbis's business model. On the other hand, someone with smaller
aspirations may find that managing what is left of the Sygma file is a nice
little business (and it could save Corbis the cost of breaking up the file).
Now is the perfect time for the Sygma
photographers to look to the future and negotiate this end game strategy.

Attachment E

The language in Attachment E is interesting and I have included one version of
that language below. This Attachment serves to
reverse many of the standard terms offered in the basic contract. In addition some
terms seem to be specific to a particular photographer, not just general terms.

Corbis has provided a system for dealing with negotiated issues on a case by case
basis. Seek to correct anything you don't like in the basic contract by having an
Attachment added. They wouldn't offer different people different versions if they
weren't prepared to negotiate. If serveral photographers join together as a group
and hire someone to handle negotiations for them they are likely to get better
terms than negotiating as individuals.

"Model and/or Property Releases - For all Accepted Images that contain recognizable
persons and/or depict property with unique intellectual property rights, you shall
obtain and provide to Corbis copies of model and/or property releases. You will
use your best efforts to use the current Corbis model or property release form.

"Existing agreements with other agencies - Corbis acknowledges that Photographer
has pre-existing agreements with ________________, and nothing contained herein
shall be construed to limit the rights granted under that agreement. Therefore,
Corbis shall have a right of first refusal to represent and license photographic
material that Photographer has created specifically for Corbis during the term of
this Agreement, and Photographer shall not, during the term of this Agreement and
without prior written consent from Corbis, distribute on his/her own behalf or
provide Accepted Images to any other party for any representation, licensing, or
distribution.

"Right of first refusal for images created specifically for Corbis -Corbis shall
have a right of first refusal to represent and license any photographic material
that Photographer has created specifically for Corbis during the term of this
Agreement, and Photographer shall not, during the term of this Agreement and
without prior written consent from Corbis, distribute on his/her own behalf or
provide Accepted Images to any other party for any representation, licensing, or
distribution."

Copyright © 2000 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.

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