312 RANDOM THOUGHTS 18
May 24, 2000
Rebecca Taylor Leaves FPG
One of the major cost cutting measures whenever there is an acquisition and
consolidation of companies is the reduction of redundant staff. Getty has started
that process at VCG with the termination of Rebecca Taylor. Rebecca had been with
FPG for over 20 years. A Getty spokesperson said they were unable to find a
suitable role for Rebecca as the business moves forward, "We discussed a number of
options with Rebecca, but were unable to find a position that met her needs, as
well as the needs of the business."
Geri Weisman, Visual Content Director for FPG has accepted a similar position with
SuperStock and will be moving to Jacksonville. She is expected to start June 1st.
Karen Bernstein, most recently in charge of ISwoop, and highly respected by FPG
photographers has also left FPG.
Lewis Blackwell, VP of Gettyone, reports that FPG Director of Photography, Rana
Faure, and her team will be joining the gettyone creative group and will remain
focused on working with FPG's photographers.
Reportedly, a number of people at FPG have been offered the opportunity to move to
other locations and have relatively short deadlines in which to make up their
minds. Sources anticipate quite a bit of movement in the next month or so.
Getty reported recently that they have reduced the staff of TIB by 120 employees
and the reductions continue. TIB was acquired in November 1999.
Jonathan Klein told Getty investors recently that 99% of all uses of stock images
are still for print purposes. He said, "Online use is in the future."
This number is worth considering, as there has been a great deal of talk in the
last few years about the growth in overall usage that was likely to occur because
of all the new uses of images that would appear on the web.
Certainly there has been a spectacular growth in web pages in the last few years
and many of them use still images. On the other hand, if Getty's experiences are
representative, these uses are not translating into bottom line dollars for the
stock photo industry.
Assuming that Kleins number is relatively accurate (it was an off-the-cuff response
to a question so it may not be statistically precise), Getty would have had
slightly over $1 million in sales for on-line uses in 1st Quarter 2000. That would
mean that at best, for the entire industry, worldwide sales for the quarter might
have been slightly above $3 million. We also need to remember that within Getty's
figures are sales of the largest RF company, PhotoDisc, which is likely to be one
of the first companies to benefit from on-line uses.
U.S. ad spending for on-line uses in 1999 was estimated at $2.8 billion according
to Forrester Research while total ad spending in all media was estimated by Robert
Coen of McCann-Erickson Worldwide Universal at $215 billion. Thus, the $2.8
billion is very close to 1%.
Looking to the future Forrester estimates that in 2004 on-line U.S. advertising
will generate $22.2 billion with total advertising spending being around $271
Some companies report that they have not cut their advertising budgets for
traditional media and they are funding on-line advertising with monies from
non-advertising marketing budgets like sales staff and promotions. Others are
getting funds from IPO's and venture capital sources.
However, many are cutting back on traditional advertising budgets. Newspapers are
hardest hit. Close to 10% of what had previously been budgeted for newspaper
advertising is now used to fund on-line advertising. The direct mail sector is
expected to be next hardest hit and magazine advertising will also be reduced to
pay for the internet.
Klein Sells Stock
Jonathan Klein has filed with the SEC to sell 250,000 share of his holdings in
Getty Images worth about $7 million at current prices. This is about half of the
shares that he owns outright in Getty. However, he does have options to buy an
additional 1.6 million shares for a total holdings 2.1 million shares.
In explaining this sale Klein said, "My financial advisors have told me that it is
not sensible to have 100% of my net worth in a single company (Getty Images). It
would be very unusual for anyone in my position, after a long period of time, not
to begin to get liquidity in order to diversify. Having said that, it is the
beginning of a program which over the next several quarters, I will sell some
European Agency Group For Sale
A Frankfurt law firm is representing an unnamed (to all but serious investors)
stock photo agency group. According to the offer the company has been
well-established in the market for decades.
The group, has independent archives as well as sales agencies for the granting of
copyrights in its pictures in most of the lucrative markets in Europe, will only be
offered as a whole. Annual gross revenues are between 4.5 million and 6.1 million
euros. (1 euro is equal to about $.90)
The group has 1,050,000 pictures in subject areas of People, Geography, Cities,
Cultures, Economy, Finances, Communication, Industry, Food, Technology, Medicine,
Science, Business, Space, Research, Botany, Animals, Landscape, Contemporary
History, Arts, Music, Computer Graphics, Illustrations, Architecture, Sports,
Beauty, Festivities, Symbols, and adds about 20,000 new entries by photographers
and partner agencies each year.
They have 22,000 pictures digitized and the pictures are saved with text on a UNIX
computer system. The internet link-up for e-commerce is under construction.
Customers are offered free picture catalogues from which to order and up to 49,000
potential customers hold catalogues. Over 22,000 have purchased images. The
annual advertising budget is over DM 1 million. Photographers receive 50% of the
monies collected from international partner agencies, or directly from clients.
The website "Webshots.com" may be infringing upon the rights of many photographers,
stock agencies and/or their clients. Webshots.com is affiliated with Excite@home.
Webshots.com provides users with free membership and access to a database of over
400,000 photographs (and growing daily). The photographs are available for
downloading as screen savers, wallpaper, and e-cards.
In addition to providing its members individual access to these images,
Webshots.com also sells the images in its database. Upon request, the photos are
"printed" by Webshots.com in their own photo lab (framing is optional) for a fee
and shipping charge.
It is suspected that webshots.com does not have a legal license to use many of the
images appearing on its site. The Picture Agency Council of America is attempting
to learn more about how Webshots.com acquires images and put a stop to any illegal
activity. Anyone who has found one of their images on Webshots.com, or has
information about their methods of operation, should contact PACA lawyer Nancy E.
Wolff at 212-787-1640.
One of the major concerns of companies supplying broadband equipment and high-speed
Internet access is where the content will come from to fill the pipe.
Excite+Home Corp. and Hollywood industry leaders recently met in Los Angeles to
discuss the challenges that broadband will present.
Excite+Home currently has about 1.15 million of the estimated 2 million home
broadband subscribers nationwide.
By 2003, over 27 million households will access the Internet via
broadband or high-speed connections such as cable modems, according to Forrester
"We're raising the bar of the online entertainment experience. With broadband, the
consumer can now have a fast connection to the Web and rich multimedia content
without the hassles of dialing up," Joe Kraus, co-founder of Excite told reporters.
Dan Adler, an executive with Creative Artists Agency, said entertainment providers
have to come up with new forms of content specifically designed for the Web. "They
have to figure out how to get something different that is optimized by the Web
experience as opposed to watching something on film and television," Adler said.
According to Kraus, "Anything longer than 2-1/2 minutes is not appealing. You can't
have anything episodic or a cliffhanger. It must be encapsulated."
Content providers at all levels need to come to grips with this problem. Web users
will be interested in much shorter segments than are currently packaged as
half-hour television programs or films. This is not a "dumbing down" of TV to fit
the web. It is taking video and sound and text to new level. The web's ability to
use inter-activity offers option for creators that have never been available in
television or movies.
In theory there is the potential to let each viewer choose the depth and the
direction they want to go in exploring any topic or subject matter. In order to
make this rich media experience a reality the content producers must develop new
ways of thinking and working.
At this point creators are starting with a "blank slate." There are no rules and
no precise definitions as to how such content will be put together. We are at the
same stage of development of this medium as television was in the 1940's.
What Excite is telling creators is, "We've got demand and we've got a delivery
mechanism." What they are not telling you is how you make money creating this new
Adler said, "We get asked a lot from independent content creators how will they
make money and how will we protect their material on the Net." His answer was,
"The currency online is not money, but reputation. It will help them to get noticed
by traditional media and make money elsewhere,"
Obviously, this is not the answer creators want to hear. Nor, an answer that will
get many people out and creating. Someone will have to pay them for their time.
But, with all the venture capital out there looking for good ideas to fund, it is
conceivable that someone with a bold idea for creating this new content could get