367 JANUARY 2001 SELLING STOCK
Volume 11, Number 3
©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: email@example.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
In any moment of decision the best thing you can do is the right thing, the next best
is the wrong thing, and the worst thing you can do is nothing.
Story 355 PROTECTING MODEL'S RIGHTS
November 21, 2000 - For those applying technology to business, "speed and ease of use"
are the prime motivator. Everything else is secondary. Technologists insist that every
sales transaction must be fully automated and human interaction must be removed from
the selling process. At first glance this appears to reduce costs and provide greater
customer service, but in stock photography it may lead to a great disservice to the
models -- and by extension, photographers and everyone else in the selling and buying
One fact implicit in most photographer/model relationships is that in exchange for
being allowed to use the model's photograph the photographer agrees to make his or her
best efforts to see to it that the images are not used in a way that might be damaging
to the model.
There may be a release that offers the photographer some legal protection, but seldom
is that release so airtight that flagrant violations of the model's human rights are
not protected. The courts get to decide what is flagrant.
In the past, protection against such misuse has been provided by the dialogue that took
place between the seller and the prospective purchaser.
It seems a very small step from a sales person questioning the buyer about the
potential usage to fully automatic transactions. But, automatic transactions open a
very wide door to the potential for misuse. Photographers should be concerned about
both the legal and moral issues such a change raises.
Uses That Could Be Problems
Suppose you take a photograph of a loving father and daughter in the park -- warm,
family feeling. Dad signs a release. In everyone's minds, this is a "family" photo that
portrays a positive feeling and healthy family relationships. Then along comes a stock
buyer who attaches a totally bogus caption about incest or abusive families to the
Suppose you take a picture of a professional financial planner at work in her office.
This person signs a release allowing use of the picture as stock. She might be very
upset if the picture is used in a brochure of a competitive financial planning company
leaving the impression that she is their employee. Maybe this is a reason for always
using professional models who are not involved in any way in the occupation being
illustrated, but is everyone doing that?
What if a photo of a wholesome young woman is used in an HIV drug campaign, or in
connection with drug addiction, alcoholism, sexually transmitted diseases, or
illiteracy. Any use in connection with prescription drugs, tobacco, or liquor can
present problems if that was not the original intent for which the photo was produced.
Imagine a couple of 19 or 20 year old Baptist girls from Texas showing up in an ad for
a lesbian travel resort.
Use of a photo of a senior citizen could lead to embarrassment if it is used in
relation to incontinence products, or implies that the person's life has been changed
by taking certain vitamins. The copy attached to any photograph can dramatically change
the original intent the photographer had when producing the image.
Celebrity photographers have a different control problem. Many are given access to
their subjects on condition that the images will only be used in positive ways. Usually
there is a blanket prohibition on selling such images to the tabloids. Some may
consider this manipulation of the press, but the subjects have a right to exercise such
control if they are allowing access to their private lives.
What about non-people pictures? Car photographers get access to the newest models on
condition that they agree to certain rules. Most car companies will sign a property
release for a specific use not a blanket license. In other words, if Mobil Oil
(advertising their superior oils) or Union Bank (advertising their car loans) wanted to
use a shot of a Corvette for a national print ad campaign, Chevrolet would be happy to
sign a property release for each of those campaigns. And Chevrolet would not charge the
photographer or the client anything for their time. They like the publicity but they
have to make sure that images of their vehicles are used in a positive way.
The list could go on and on. It is impossible to develop a list of all uses where
"sensitive issues" may be involved. Uses need to be examined on a case by case basis.
Often it is the text connected with the image, not the image itself, that makes the use
objectionable. Thus, when the buyer says, "I want to use image XXX," it is important
for someone representing the seller to ask a few questions about how the image will be
used, and be prepared to say NO.
Without such an intermediary, sellers who make their images available through automatic
transactions must have in their possession model and/or property releases that allow
them to license rights for ANY USE WHATSOEVER to all available images.
While obtaining model releases has been standard practice among photographers for years
it is questionable whether most of these releases would allow the images to be used in
ways that would embarrass the model or damage his or her reputation. The most innocuous
photo can be used in ways that will upset the model. An iron clad release can still be
challenged in court. The plaintiff may not win ... but legal fees can be staggering.
Not only do photographers have to worry about legal ramifications to themselves, but I
believe they also have a moral obligation to try to protect the interests of their
models. This is particularly true when you are using amateur models who have little
understanding of the wide variety of uses that might be made of their image.
At the very least, it is important that legal language be attached to all photo
licenses, and be made prominent in the on-line selling process, that clearly obligates
the buyer in the event there is a misuse and says something like, "No model releases or
other releases exist for any Content unless the existence of such release is specified
in writing by the Rights Holder." Most who favor technology solutions don't want to do
this because they view it as not being a "customer friendly" act. They want to place
the liability on the photographer and the model.
(In fact it might be a "customer friendly" act because they would be helping to keep
the customer out of future messy legal problems.)
Nevertheless, many agents are looking to simplify their lives. They can accomplish this
by only handling images for which there are no restrictions. They want to be able to
sell anything they have for any purpose and not have to worry about it. They are also
opposed to obligating the buyer through the license and requiring the buyer to
indemnify the agency and photographer unless they have obtained a copy of the release
with specific permission for the intended use. The easier alternative is to require the
photographer to provide the protection and indemnify the agency and the buyer if the
model happens to complain.
The lawyers at Getty and Corbis (and maybe other agencies) have developed releases they
believe will fully protect them in the event of a misuse. No model in their right mind
would sign these releases if they fully understood the implications. What is hoped is
that the model will sign the release without a careful reading or understanding, or
that the photographer will be able to con the model into agreement. Is this the kind of
relationship photographers want to have with their models?
If photographers have trouble getting releases, it makes no difference to the agency
because they have nothing invested. They simply limit the images they will accept to
those that are accompanied by releases that will protect them and their customers.
Problems Are Rare
Problems with inappropriate uses are rare. They only occur in a small percentage of
uses, but a small percentage can cause big legal and ethical problems. The process of
checking uses is not an absolute guarantee that legal problems will not arise, but it
is much better than no checking at all. Photographers should always get the best
release possible and clearly explain to their agent any restrictions they want to place
on the image.
Are Fully Automatic Transactions Necessary?
The fundamental problem is the belief that in order to be e-commerce enabled you must
be able to offer fully automatic transactions - start to finish.
If this is necessary then the only alternatives are to remove your images from the
market or to do what you can to protect yourself from legal liability. However, there
is a big question as to whether this is really necessary.
Buyers of rights protected images want on-line search and delivery. They also seem to
like to talk to a human sales person rather than purchasing automatically. If that
wasn't the case Getty Images wouldn't need more than 665 telephone call center
personnel (more than one-quarter of their total employees) to handle sales
Some people argue that while most buyers may want to talk to a sales person now, in the
future they insist on being able to complete transactions without negotiations. I
don't think so. I can't prove it, but consider the following.
There is a lot of evidence that the reason buyers embraced RF was because it made
delivery, and searching easier, not because it was cheaper. Many traditional stock
agencies missed the boat in the early 90's because they weren't prepared to deliver
images digitally, and because the didn't market as aggressively, not because they
wouldn't sell at low prices. The recent failure of SuperStock's Express Pricing is a
notable example that a simple pricing structure is not enough to bring in customers.
Another indicator is that the recent price increases instituted by the RF producers
have not reduced their number of customers. Price is not the issue.
The number one thing buyers want is choice. When they figure out that a "no negotiation
rule" reduces the number and quality of models who are willing to let their images be
licensed as stock, they will look for other options rather than just buying the limited
choices available with automatic sales. In order to compete, sellers will need to
provide digital search and delivery, but they won't have to give up negotiations.
I believe buyers will be happy to spend a little time discussing their project, and
supplying information about the potential usage, rather than accept limited choice. In
such conversations buyers can also learn about other previous uses of the image.
Even if it turns out this is not the ideal situation for some buyers, can photographers
afford to take the financial risk, and the risk to their models reputations that are
required when they offer automatic pricing? The liability issues make our product
different from the vast majority of other products that will be sold effectively
through automatic pricing on-line.
Interestingly, technology can provide a route to greater protection for the sellers and
the models, but not via automatic sales. As we move more in the direction of on-line
search and the tracking of sales there are some neat and simple technological solutions
that provide for easier tracking of restrictions.
In the past each seller had their own separate database of information. Large agencies
might have fifty or more sub-agencies selling the same image around the world. Not only
was it necessary to supply dupes of these images to every office, but the information
about each image also had to be duplicated and kept up to date, if every office was to
remain current on usage restrictions. Without centralized databases this was an
impossible task so everyone headed in the opposite direction of requiring absolute
control and absolute protection up front.
But, now centralized databases are possible. Getty and Corbis have a single database
for all information about sales. All licensees will access the same database.
Masterfile has all of their sub-agencies supplying updated sales information to their
master database on a daily basis.
If the usable image file is only available in one location and there is a single
database where sales information about the images is updated daily, it is easy to build
into that database the restrictions on any given image.
The simple rule is that if there are any restrictions attached to a particular image
number then that image can not be licensed automatically. In such a case the buyer
would have to call the appropriate office and negotiate the usage. The sales person for
the agency could input the image number and get a list of all restrictions placed on
The vast majority of people images in stock agency files today should be tagged as not
released for "Sensitive Issues". At that point some human on the sellers side would
have to ask some questions about the use and make a judgement about sensitivity. Based
on this information the sales person could then decide whether the image could be
licensed for the use requested, or not.
The default search would be to include all appropriate images and only after an image
had been selected would the customer learn whether or not the image could be licensed
automatically. Customers would also have the option to search only for those images
which had no restrictions on usage.
Some might suggest that customers should be given access to the "restricted use"
database so they could determine for themselves if the restrictions apply. I would not
be comfortable with this approach. I believe the buyers who want to use images in
sensitive situations are exactly the people who will say, "Why would anyone be upset at
the way I intend to use this image."
The big downside to this approach from the point of view of those favoring a technology
solution for everything is that sellers will continue to need knowledgeable and well
trained human negotiators manning the phones. These are the people they had hoped to
eventually eliminate and replace with hardware and software developers.
FPG's New Policy
Recently FPG announced a new policy on "Sensitive Issues" and the type of releases they
will require in the future. Effective immediately, they have decided that they will no
longer accept images unless they are backed by a release that meets their minimum
requirements for sensitive issue uses. Use of these new images will be allowed for any
purpose whatsoever without any additional clearances.
Their terms and conditions will continue to prohibit clients from using images in a
defamatory or pornographic manner, but they are amending their back office procedures
and revising their Online Licensing Agreement to eliminate the requirement that the
client obtain prior clearance for sensitive issue uses.
In a letter to photographers FPG said, "We have devoted a considerable amount of time
and resources to carefully examining this issue in order to arrive at a decision. The
primary reasons for retiring the policy are detailed below:
"The practice of going back to the photographer or the model for additional permission
calls into question the validity of the releases themselves. Having the photographer
sign off on a Sensitive Issue usage on behalf of a model may place that photographer in
a position of liability.
"Requiring the photographer to go back to the model for signature is cumbersome and
sometimes impossible when the release, if it meets our minimum requirements, is in
place to cover all uses, including sensitive issue uses.
"An additional special clearance step represents a considerable disadvantage in an
e-commerce environment where the client's experience must be as fast, easy and as
seamless as possible. As is true with any e-business; optimizing the client's on-line
experience is paramount."
They believe that since a release, in and of itself, represents the model or property
owner's specific consent, it is not judicious to ask them, or the photographer, to give
consent a second time.
Their lawyers believe that elimination of the sensitive issue policy not only
streamlines the licensing process, but it reinforces and protects the intent of the
release as proof of the specific agreement between the photographer and model or
Photographers have pointed out that this policy is unworkable from their point of view
and some have indicated that as a result of photographer complaints FPG may be backing
away from this new position and returning to the old strategy of checking with the
photographers and getting a specific release for each sensitive issue use.
In my opinion, this is wishful thinking on the part of the photographers. FPG, TIB and
Stone will continue to push for releases that relieve them of all obligation, UNLESS
Getty Images changes its overall policy toward automatic sales. They may re-group, but
they will keep coming back with slightly different versions until they get enough
photographers and models to agree. They must have this protection if they are going to
make images available without any checking and that is their goal.
If photographers produce images and don't supply an "adequate" release, the images will
simply be rejected as not suitable for marketing. In my opinion, this is a signal that
not many of the existing people images will be selected for the FPG or Gettyone.com
Getty Images goal seems to be to remove all risk to the buyer, no matter how
irresponsible that buyer might be. Since they don't want to accept those risks
themselves the only alternative is to lay the legal liability on the photographers and
the models. This is a basic fundamental issue for them unless they dramatically change
their business model. They may back off from their current position for a while, but
they will keep coming back to it because their business model demands it.
Story 366 GETTY'S CHALLENGE
January 4, 2001 - There are widespread expectations among Getty photographers that
early in 2001 Getty will offer a new contract to TIB photographers. It is also
believed that the terms in this contact are likely to be extended to all Getty brands.
Thus the FPG, VCG and Stone photographers are equally interested in this hoped for new
Photographers want a single standard contract, with a single royalty rate, across all
brands. Getty recognizes what photographers want, and for months has been trying to
find a way to write such a single contract that would satisfy the majority of their
photographers. I'm not convinced they will be able to accomplish this task because
they are faced with a set of conflicting problems.
I believe the number one issue for Getty is that the total percentage of gross revenue
paid to photographers must not go up, and hopefully it can be reduced. In order to
make their business profitable at a level that will satisfy investors, Getty needs to
cut costs. Their biggest single cost of operation is the amount of gross revenue they
This basic principle is in direct conflict with the image
creators desire for a larger share of the total revenue collected from the sale.
TIB photographers look at Stone photographers and say, "Why should they get 40% of
gross sales and I only get 30%?" They look at FPG photographers in the U.S. and say,
"They get 50%, why can't I get 50% also." Getty now wants Stone photographers to allow
them to market some of their work under the TIB brand and pay them only 30%. Stone
photographers say, "Yes, I want more of my images marketed, but I am not willing to
give up that much of a percentage of sales to make it happen."
It appears that any royalty percentage that would appeal to a large number of suppliers
would dramatically raise Getty's cost of content. This is something they probably will
Getty appears to have other problems.
- They need new images, but a large percentage of their suppliers are sitting
back and waiting to submit until they get a satisfactory new contract. If
photographers are unhappy with the new contract terms some may allow the images they
already have on file with TIB to remain in the files, but they are unlikely to submit
The question is how long Getty can operate without a steady flow of fresh images.
- The lack of new agreements is making it difficult for Getty to publish some of
their planned marketing materials. Getty has a strategy of putting out a series of
subject oriented catalogs that they were calling "Special Collections" and were to be
marketed through the TIB brand. Some of the subjects under consideration are: nature,
wildlife, scenics, travel and sports. Some of the images they want for this series
have been produced by Stone or VCG photographers, but Getty wants them to accept the
lower TIB royalty percentage on these images. A number of photographers seem to be
resisting which is playing havoc with the editing for these catalogs. Of course, long
range this could affect the flow of Getty's marketing.
Word on the street is that the "Special Collections" terminology is no longer being
used internally as they look for new ways to get the photographers involved.
- One alternative to getting contract photographers to work for a lower percentage
is for Getty to produce the work in house. Getty has tried hiring young people right
out of photo school to shoot new work under the careful supervision of experienced art
directors. In such cases the photographer is paid a day rate, plus expenses and a
minimal royalty. In at least one case they paid $800 a day plus a 10% royalty for 10
The main reason for paying a minimal royalty is so they can tell their other contract
photographers that they don't "wholly own" much of the work in their files.
Indications are that this strategy hasn't produced the desired results. Work produced
in this manner evidently isn't selling well enough to offset the up front costs Getty
is paying, when compared with getting the freelance photographers to absorb all
production costs. Sources indicate that Getty has come to the conclusion that in house
production is not a realistic solution, and that they need to do more to encourage the
experienced freelance photographers who work for royalties to continue to produce and
supply new images.
- Getty is trying to give their separate brands unique visual identities from the
point of view of the buyer. They have defined Stone as having modern, innovative,
cutting edge imagery and TIB as having more conservative, classical imagery.
Photographers are having a difficult time figuring out what the third distinctive for
the VCG/FPG brand might be -- (a brand that also includes Bavaria, Telegraph Colour
Library). So far Getty Images has not identified a third "brand" distinctive. There
does not seem to be a clear third brand definition. Will they roll VCG into TIB and
basically have only two brands? Will they retain the FPG brand, which has a strong
user following, and basically brand it in the same way as they brand TIB without a
major distinction between the two?
One problem with this strategy is that Stone, TIB and the various VCG brands have all
been in head-to-head competition for years. All are currently perceived by the buyers
as offering a full range of quality imagery from innovative cutting edge to
conservative classical. Moreover, individual photographers associated with each of
these brands, from time to time produce images that would fall into the category of one
or the other "new" brands.
Now, Getty has to change the way they accept images for these brands, as well as the
way they market the brands to the buyers. In the past, each of these brands showed the
full range of work of their photographers. Under the new branding it will be necessary
for photographers to cross from brand to brand in order to market everything they
produce. Adding to the complexity for the photographers, each brand has different
contracts and different royalty percentages.
Getty needs to work out a simple system that will enable all their photographers to
offer work to whichever brand is most appropriate to the images that have been
produced. This argues for a single unified contract, and possibly unified editing, as
well as one royalty rate.
- One argument Getty may be able to use with Stone photographers is that fees per
usage are going up. Therefore, they will make money at existing percentage rates.
However, TIB photographers report there doesn't seem to be any rise in their average
fee per usage. If anything, the fees per use, as well as the gross royalties received,
seem to be dropping. Therefore, the above argument would be unlikely to hold much
water with TIB shooters.
- Can Getty offer a higher percentage, but take the money back in fees for various
services provided? I think this is unlikely to work, particularly in the near future.
Photographers are very sensitized to the amount they are losing as a result of fees
being charged. While the total impact of such fees are often difficult to calculate
until after the fact, photographers, especially those with previous experience with
TIB, will be wary.
Getty's recent effort to play catch up with Stone catalog fees has angered many
photographers. Stone allowed catalog fees owed by photographers to accumulate for
almost two years without taking deducting any portion of the amount owed, or even
telling photographers how much they owed. The photographers could have accepted small
deductions each month, but in the last four months of 2000 Stone deducted fees from the
photographer's royalty checks in an effort to totally catch up on the debt. This left
many photographers with small checks at the end of a difficult year, and a clear
recognition that they must be concerned about fees as well as royalty percentages.
In theory, catalog fees would be the perfect way for Getty to get more money out of the
photographers. They can set the per-image cost at almost anything they want because
there is no transparency to the numbers. On the other hand, lately they have pushed
this per-image fee so high that it is hard to imagine that photographers would not
rebel at even higher fees.
I believe Getty will repackage their contracts in an attempt to find a way to make them
more palatable, but I believe they will face a lot of resistance from many of the most
productive photographers until they offer a single royalty percentage across all
brands. To gain much acceptance that percentage would have to be at least 40% -- and
even that may not be enough.
But, as I have pointed out, I believe it will be very difficult for Getty to offer an
across the board 40%. Consequently, I expect them to go through several variations
trying to find something that a significant number of photographers will agree to
without having to raise the percentage.
Story 364 PHOTOGRAPHER ROYALTY GOES DOWN
Alaska Stock To Drops Royalty to 40%
December 18, 2000 - Alaska Stock has asked their photographers to consider a change in
the royalty percentage from 50% to 40%. In exchange the agency will make ALL of the
photographers' images available on-line as well as not charge catalog and dupe fees in
the future. Jeff Schultz, owner of Alaska Stock, provided the following explanation of
Schultz -- We represent a little over 100 photographers. I have personally corresponded
with 95% of our photographers on this change and all but two realize how important it
is and costly it is to have a very good web presence. Those 95% have voted yes to this
change. We have one photographer who wasn't willing to wait for us to make this change
and actually wanted to pay us to get his general file images up on the web. We have
another who feels that we should go to the 60/40 split AND continue to charge for
premium set/catalog fees.
JP -- What was the co-op fee charged for the last catalog?
Schultz -- Our catalog #4 which was mailed in June of 2000 cost a photographer $100 per
image if a photographer paid up front and $130 per image if they chose to take the fee
out of their sales. If they don't pay up-front, we take up to 25% out of a
photographers' portion of their monthly checks until all their catalog fees are paid.
JP -- What is the current dupe fee?
Schultz -- We call it a "premium set fee". Images in our premium set are exclusive to
Alaska Stock and are duped, keyworded, scanned, and slated for the next print catalog.
This fee is currently $28 per image.
JP -- On average after all the catalog and dupe charges are removed will the
photographers be getting smaller royalty checks, or checks the same size?
Schultz -- We expect more sales overall and therefore larger checks because of the
change to aggressively market MORE of their images and therefore a client is apt to
find the image instead of moving on somewhere else.
JP -- Is there any charge for scanning and keywording images that are put on-line or on
Schultz -- We have never charged photographers a fee for producing a CD, the web site
or for general file images being scanned and keyworded and put on-line.
JP -- Would the 40% apply on revenue received from sub-agents?
Schultz -- No, subagent sales remain at 50%.
JP -- How are sales from old catalogs handled?
Schultz -- If a sale is made because a client saw the image in a previous catalog the
split remains 50/50. Likewise, reuse of images that were originally sold at 50/50 are
still at the 50/50 split.
JP -- Can you explain why you felt this move was necessary?
Schultz -- We are adding more value to our photographers' images than we ever have
before by making them available on the web, as well as through our traditional
I don't know of anyone in the stock business that does not see the web as THE way the
majority of the stock photography business will be transacted in the future. I
absolutely agree 100%. We feel that not too long from now, images that are just filed
in a general file will simply just sit there. Of course there are also those clients
who indeed do call us and have us search for images and send transparencies. Therefore,
we now need to operate efficiently in both a digital and analog world.
Alaska Stock is faced with a much larger increased cost in doing business in order to
stay up with technology and client demands for immediate access to our images.
Many clients want to see images today. In order to make our photographer's images
readily available it must be digital. If it's scanned, our in-house sales people can
get the image to a client right away by e-mailing them a light box.
With all this said, we now not only need to do things as we have before: edit images,
enter into a database, label, file, market, send out images, re-file, invoice etc. We
now need to get all our images in a digital environment where they can be seen
instantly. This goes way beyond just scanning and keywording. It involves digital
storage, RAID systems, constant enhanced software upgrades for the web, web
maintenance, higher cost employees on the tech side, enhancing our product, etc. And we
must now do a better job of marketing our images in both digital and traditional ways.
Story 356GETTY ACQUIRES TIB-UK OFFICE
November 21, 2000 - Getty Images acquired all the outstanding shares of Cass & Cass
Limited (TIB-UK) on September 20, 2000 according to the 3rd Quarter 10Q filed with the
SEC. They paid $6.3 million in cash and 247,790 shares worth $10.4 million to Cass &
Cass Ltd. for a total of $17.1 million, including the costs of acquisition.
Companies House in the UK which provides detailed annual accounting figures of Limited
companies shows that the gross turnover (annual income) for Cass & Cass in 1999 was
6,741,654 pounds. If we assume an average annual exchange rate of 1.45 pounds to the
dollar this is equivalent to about $9,775,398 U.S.
An interesting number for photographers is the "Cost of Sales" which includes the
amount of the gross revenue paid to TIB (now Getty Images). The cost of sales was
3,054,394 pounds. This number certainly includes everything that was paid to TIB in the
U.S. and it may include some other costs such as depreciation. This number is only
slightly over 45% of the total revenue collected.
TIB-UK retains 40% of the gross fee collected for still photo sales and remits 60% to
TIB headquarters. They retain a lesser percentage of the footage sales. If all of the
3,054,394 pounds is fees paid to headquarters (TIB or Getty) then the total gross sales
that this number is calculated on would be no more than 5,090,656 pounds. It may be
significantly less depending of the proportion of these sales that are for footage.
Sources in the United Kingdom believe that only about 2.5 million pounds of the gross
revenue comes from licensing still images. If this is true, footage sales would be
slightly above 2 million pounds leaving another 2 million pounds unaccounted for.
During 1999 Cass & Cass operated a scanning bureau and earned income from their own
wholly owned imagery. In addition they may have been charging research fees, service
fees, delivery fees, etc. that were not shared with TIB or the image creators. These
factors may account for the additional 2 million in revenue.
Wholly owning such an operation greatly improves the gross sales on the Getty Images
balance sheet. If 2000 sales were flat Getty would have only recognized 3,054,394
pounds in revenue when TIB-UK was a separate company.Now, with no increase in sales
they get to recognize 6,741,654 pounds, a 120% growth in annual revenue from this
division of their operation.
In the 4th quarter of 2000 Getty's annual revenue from this acquisition should increase
by at least $1.3 million (1/4 of $5.25 million) if they have zero increase in sales.
Cass & Cass' Cost of Sales was 3,040,810 pounds in 1998. This would be about
$4,409,174 U.S. TIB (parent company) reported that their total sales in Europe in 1998
were $29,932,759. Thus, the UK market made up about 14.7% of their total European
Interestingly, the figures in the Companies House report for "Profit On Ordinary
Activities Before Taxation" was 1,171,055 pounds. Thus, the $17.1 million U.S. would
have been about 10 times gross annual profits which it is my understanding from talking
to people in the investment community is a reasonable multiple for the price being paid
for companies with profits and good growth prospects.
Mark Cass remained as VP/Marketing for the TIB Brand until the end of 2000. He will
continue to live in NYC, in a newly purchased apartment after selling his home in
Story 357DISAPPEARING NEWS ASSIGNMENT
November 21, 2000 - One of the important services an agency provides for editorial
shooters is lining up assignments, or expense guarantees, from magazines on breaking
news events. Without such minimum guarantees it is difficult for many freelancers to
justify covering news events.
Many Sygma photographers claim that since Corbis took over, the frequency of such
guarantees has fallen dramatically. This affects the overall income of photographers.
There have also been reports that in the future when no magazine is prepared to
underwrite a speculative shoot, Corbis will not independently fund such shoots as Sygma
had in the past.
Charles Borst, Executive News Director of Corbis Sygma in New York says, "We will
indeed provide expenses for future shoots. We heavily subsidized a NYC based Sygma
freelancer's trip to Israel last month, and most recently subsidized Sygma/Newsweek
photographer David Kennerly's trip to Vietnam with President Clinton. If we didn't
subsidize travel, we might as well fold up our tents and just sell rapidly aging stock.
I have, and will continue to subsidize travel whenever there is a potential sale to be
He also pointed out that earlier this year Corbis funded a major shoot by Ilkka Vinonen
to examine the state of the world's water. Vimonen traveled to Africa, Asia, India and
Israel for this project.
Borst acknowledged that there has been a falloff in magazine assignments in the past
year, but says this has been industry wide, not just at Sygma. "This has not been a
huge news year. There was little interest in the political campaigns, there was no
interest in Clinton because he was not running, and there was no major story overseas.
In addition, the big news magazines seem to be moving away from covering hard news and
more toward what we call 'infotainment'," Borst said.
Logical as this all seems, photographers can't help but be concerned when one of the
few assignments that does develop is passed to a newspaper, and its staff
photographers, rather than to a Sygma freelancer.
When the election problems in Florida developed Corbis Sygma got a guarantee from TIME
to provide coverage. The only Corbis photographer in Florida at the time was under
contract to Newsweek on a totally different story, and could not shoot for TIME. To
lock in coverage for TIME Borst called the South Florida Sun-Sentinel in Fort
Lauderdale. In the past Sygma had picked up pictures from this paper on the Elian
Gonzales "rescue," various Cuban boatlifts and other South Florida and
Caribbean-interest stories. It is a common practice of stock agencies to pick up, and
market pictures from newspapers, worldwide, when an event is over and done with and
there is no possible way of having their own photographer provide coverage.
The Sun-Sentinel had eight photographers spread throughout South Florida covering
various aspects of the story. TIME magazine gave Corbis/Sygma a guarantee for first
look at the pictures these photographers produced. All this is accepted normal
procedure for an assignment agency and is certainly the way Sygma has operated prior to
the Corbis take over.
However, the next step is what has many Sygma photographers hopping mad. Borst wanted
coverage in Tallahassee, but the Sun-Sentinel had pulled their shooter back home after
the first two days. Sources in South Florida tell us this was because the Sun-Sentinel
has put a hold on all travel assignments for the rest of the year for budgetary
Instead of trying to find a Sygma freelancer who would be willing to fly to Florida to
cover this event, Borst offered to pay for the airfare if the Sun-Sentinel would send
one of their photographer's to Tallahassee. "I had to make a judgment call here, and
the Sun-Sentinel photographer was already familiar with the story and the players,
having covered it from the beginning. I didn't feel I had any better options available
at the time. In 99.9% of scenarios, I'm able to work things out to the benefit or our
Sygma photographers, and those who have known me for a while can attest to that. In
this case I had to make a judgement call on how to provide TIME with the best possible
photos on a developing news story. In the long run, a happy customer will keep coming
back, and 99.9% of the time I'll be able to turn that into an opportunity for our
shooters. This scenario was the exception, not the rule," Borst said.
As it turned out the Sun-Sentinel photographer stayed on the assignment for about two
weeks and is being replaced today (Nov. 21st) by Sygma photographer Shaul Schwarz from
New York. Schwarz was in Israel on assignment when the story broke.
The Sun-Sentinel gets expanded coverage for their newspaper, and 50% of any fees
collected by Corbis for the pictures generated. The Sun-Sentinel splits their
percentage with their staff photographers who are also on full salary for the
newspaper. The Sygma photographers get to sit home and wait for the phone to ring.
Some Sygma photographers wonder if anyone is thinking of them, or if the motivation is
entirely one of how Corbis can make the most money. Borst says, "The profit motive is
not necessarily bad. If we keep our customers happy in the long run that will result in
more income for our photographers."
Sygma wants their photographers to focus more toward conceptual and infotainment
subjects, and put less emphasis on breaking news because that is the direction their
customers are taking. They have beefed up their sales force. When a client calls for an
archive photo they try to push them toward an assignment. They believe these are the
things that will generate more assignments and revenue for Sygma photographers.
Story 362STONE CATALOG PRICES
One Stone photographer has calculated, based on the per image fee photographers are
being required to pay, that the costs for production and distribution of the "Work"
catalog which contains about 1100 images was $2,395,272 ($786,830 for the North
American edition and $1,608,442 for the Rest of the World edition).
We asked Getty Images about two months ago how many copies of "Work" they had
distributed and if these figures were accurate. They have been unwilling to comment.In
checking with a major producer of quality catalogs in Europe we have determined that
they have recently been able to produce and distribute 100,000 copies of a 428 page
catalog with about 2200 images (twice the number of images as in "Work") for the
Printing, including shipping
About 70 dupes of each image
for at total of 160,000 dupesAbout 70 dupes of each image
for at total of 160,000 dupes
In country mailing to customers varies
but averages $4.00 per book
It they had distributed 200,000 copies the total cost would have been about $1,940,000.
These figures do not cover any internal labor costs for editing and design work. Also
keep in mind that "Work" has a page size that is about 40% of the traditional catalog
page size so Stone probably had much lower paper costs for printing.
Another thing to keep in mind is that because Stone is only putting about half as many
images in a catalog as the other agency the proportional cost per image will be twice
If Stone is paying for 50% of the catalog costs and the total fees charged
photographers was $2,395,272 then Stone probably distributed close to 500,000 "Work"
Story 362GETTY PROMOTES CORBIS
The name of the game on the internet is how many different ways you can tell customers
about your site. Get your banners on every conceivable site related to your business.
If you can get your competitor to promote your site, all the better.
Back in January Getty Images purchased a small Ontario Corporation called I/US
Corporation. They issued 49,565 shares of Getty's common stock which had an aggregate
value at the time of $2.3 million in exchange for all of the issued and outstanding
capital stock of I/US Corporation.
I/US, All Things Graphic, is a portal which is aimed primarily at desktop publishers.
However, advanced business users and graphic designers also use the site. There are
also aspects of the site that seem to be aimed at advanced amateurs and students. It is
unclear how the site itself is being marketed. It can be reached by going to
www.i-us.com.What is interesting to us is that although this site is owned by Getty, it
has three sponsors -- Adobe, CORBIS and EyeWire. Each sponsor pays advertising dollars
to get their "sponsor" position. Sponsors have a permanent button on the left hand side
of the home page. The Corbis button is the same size as the EyeWire notice. There is no
mention of Gettyone.com or PhotoDisc on the home page.
While it mentions Royalty Free under the Corbis button, if you click the button it
takes you to the Corbis site and immediately gives you the option of searching for
either Rights Protected or Royalty Free images. Corbis also has banner ads appearing on
I find this willingness of Getty Images to promote the Corbis name and venue very
interesting. Maybe next we will see Corbis being promoted on Gettyone.com -- if they
are willing to pay enough for the position.
It is also interesting when we consider that Getty doesn't want the photographers they
represent to offer to Corbis, images that Getty is unwilling to accept. Likewise,
Corbis doesn't want their photographers to make available to Getty for marketing images
Corbis won't accept.
Story 362PHOTODISC PRICE INCREASE
In 2000 PhotoDisc has instituted some dramatic increases in prices for single image
Disc prices are also up slightly over what they were a few years ago. Prices for their
major line are $329 per disc. They also offer their Signature Series and Designer Tools
at $279 and the Object Series and Backgrounds and $179.
While the Royalty Free business used to be based totally on selling discs in 2000 there
has been a dramatic shift to buying images on-line. Published information has indicated
that at least 60% of the dollar volume currently being generated by PhotoDisc is for
single image sales. The majority of those sales are for the 10MB file size.
It has generally been assumed that most customers who bought discs purchased them in
order to use a single image. Frequently they never use any of the other images on the
discs. Now when it is easy for customers to buy just the images they need, and to get
rapid delivery on-line rather than having to wait for a disc to be shipped by Federal
Express, the average price per unit sold is dropping -- $99.95 vs. $329. This may also
result in an increase in unit sales. (Those people who actually used two pictures off a
disc are now making two purchases instead of one.)
Other RF producers are reporting that in excess of 70% of current sales are for single
images rather than discs. It seems likely that disc sales are on the way out. In the
future all buyers will purchase the image they need, as they need it, be it RF or RP.
It also seems likely that prices for single image RF will continue to rise as a way of
making up for the loss of revenue from disc sales.
Story 363COMSTOCK CLOSES UK OFFICE
The London staff of the Comstock office is notifying customers and the press that the
office will be permanently closed as of the end of the year. Comstock's entire European
operation will now be based in Luxemburg.