Randon Thoughts 118

Posted on 4/14/2006 by Jim Pickerell | Printable Version | Comments (0)

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RANDOM THOUGHTS 118


April 14, 2006

ImageState Looking For Buyer

ImageState has asked the Alternative Investment Market (AIM), the exchange in the UK that trades their shares, to stop trading the company's ordinary shares "pending clarification of the company's financial position."

The last financial report ImageState filed was in January 2005 and it was for the period July 1, 2003 through June 30, 2004. At that time their gross annual revenue was $6,685,573 down from $10,778,650 two years earlier (See Story 693). It is reasonable to expect that revenue is still trending downward.

According to a press release "the directors of the company have resolved to seek purchasers for all or part of the business." However, there is no indication that anyone is likely to be interested enough to make an offer.

ImageState has offices in the United States and the UK and representatives in over 50 countries. It seems unlikely that anyone would want to buy the ImageState offices or the brand, but someone might be interested -- for the right price -- in acquiring the digital files and integrating them into their own marketing system. It is also unclear how many transparences belonging to photographers ImageState has out with its 50 distributors, or in its London offices. Sorting and returning these is a major complicating factor. No company that acquires any part of the assets is likely to want to take on the burden of returning these images. On the other hand, given the amount of money the company has lost already, ImageState is not likely to want to pile on more costs just to return images.

One photographers who visited the New York office recently says that the focus of activity seemed to be toward returning as many film images as possible and that there were boxes upon boxes waiting to be shipped or sorted.

My suspicion is that the amount someone would be willing to pay to acquire the digital files might be very low as the process of getting all photographers to sign new contracts would be burdensome. In addition the buyer would certainly lose rights to handle a significant portion of the images.

It is believed that Sir John Beckwith, the largest shareholder and principal provider of capital for the company, has spent over $50 million since 2000 trying to turn the company into a profitable venture.

Office of Fair Trading Clears Getty's Acquisition of Digital Vision and Photonica

In July 2005 the Office of Fair Trading (OFT) in the UK began a process of reviewing Getty's acquisition of Digital Vision and Photonica West to determine if these acquisitions gave Getty a monopoly position under the provisions of the UK Enterprise Act of 2002. (See story 740).

The commission has now come to the conclusion that Getty's new acquisitions were "very small relative to Getty" and therefore were not "close enough competitors" to offer "substantial competitive constraint". The case is now closed.

Workbookstock and Jupiterimages - Will They or Won't They?

At the recent PACA meeting in Chicago the most persistent rumor was that Workbookstock would be acquired by Jupiterimages and "everyone" was convinced it would happen before we left Chicago. It didn't.

In a conversation I had with CEO Alexis Scott she offered some convincing arguments as to why an acquisition (by anyone) is not likely to happen. First, Workbookstock doesn't really own any images and most of the people looking to acquire companies want to acquire wholly owned content. In addition she pointed out that Workbookstock and the directory publishing division of her company are fully integrated with most of the staff working for both divisions. Therefore, it would be necessary to clearly separate the divisions before it would be practical to sell off one and retain the other.

Based on these arguments, I was one of very few in Chicago who believed that there would be no acquisition of Workbookstock by anyone in the near future.

However, it is interesting that Alan Meckler met with institutional investors in Boston early this week. According to one of the attendees one of things he told them was that "Jupiterimages may also look to acquire stock photo distributors which can be acquired quite cheaply (compared to content)"

Where's Jupiterimages Headed

At a meeting with institutional investors in Boston recently Alan Meckler made several points.

  • He believes that Jupiterimages can gain more than 5% market share from Getty Images over time.

  • Jupiterimages will continue to buy and create wholly-owned images.

  • Jupiterimages will likely continue to buy libraries of RF music, and repackage them into an offering of music and video for the advertising market.

Investor were left with the impression that Meckler is willing to entertain the thought of selling the company - for the right price at the right time.

Searching On Google

In Story 822 Gary Shenk of Corbis listed four reasons why customers might be more likely to search for their images on professional sites rather than using Google -- differentiated content; strong rights management; metadata and search; and global marketing and distribution.

He also said that at Corbis' when they want to determine what kind of images various sites are returning they use "businessmen carrying briefcase" as a benchmark for the search.

That got me thinking and I decided to see what kind of images Google would return with that search. I went to images.google.com, did a search and got 161 images. However, most revealing thing about this search was the names of companies supplying the images.

They were: fotosearch.com; (plus these other fotosearch extensions -- se, de, fr) istockphoto.com; stormingoutlaw.com; virtualchapel.org; costmonkey.com; shutterstock.com; creatas.com; picturequest.com; levberlin.com; subscriptions.corbis.com; worldofstock.com; pictorial.com; acclaimimages.com; artzooks.com; matton.se; vermontteddybear.comj; indexstock.com; inmagine.com; deote.com; medioimages.com; freestock.co.uk; latinimagery.com; and punchstock.com.

There are a few that we've not heard of before, but most of them are well known distributors of professional stock photography. One thing that helped this search was that the words were directed toward a business situation of the kind that professional buyers often look for, and one which would seldom be of interest to any amateur. If I had searched for "dog" or "cat" I would have gotten much more mixed results with a lot more amateur images.

The important thing to recognize is that with certain kinds of searches Google customers can find a preponderance of professional images. They get images with the same degree of rights management as on most of the professional sites because that is where many of these images are coming from. There are good metadata and search capabilities and the customer service is the same they would receive by going to many professional sites.
The main disadvantage for the buyer using Google is in determining whether rights to use a specific image can be easily licensed, or not. With this particular search that was not a problem.


Copyright © 2006 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 301-251-0720, 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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